Council debates enterprise-fund financial policy to shore up utilities; staff to workshop ordinance

Council members and utility directors spent an extended portion of the May 19 meeting discussing a proposed enterprise-fund financial management ordinance intended to ensure utilities operate on a self-supporting basis, establish reserve policies, require annual rate reviews and place guardrails on transfers of utility revenues.

Rob (council member who introduced the item) said the ordinance is intended to prevent crisis-driven decisions, preserve flexibility for emergencies through supermajority approval, and improve transparency and grant eligibility. Utility directors Randy Guzman (gas) and Mike Macias (water) supported the ordinance, describing the need to build contingencies for expensive equipment replacements and rising component/tariff costs. Macias cited a prior example of a rectifier replacement cost and urged consistent budgeting and rate studies to keep pace with replacement costs.

Directors and council raised related operational issues including apparent water loss, performance metrics, smart meters and the need to coordinate capital improvement plans with rate studies. Council favored moving the proposal through the ordinance process, with several members asking for a workshop to walk through the policy mechanics and how it would be implemented in the FY26–27 budget. City staff agreed to prepare preamble language and the formal ordinance text and to present it for the council’s review.

Decision: Council directed staff to prepare the ordinance in proper legal form and to present the package (and supporting metrics) for either workshop discussion or to be placed on the agenda for first and second readings after two weeks’ review.

Sources: Council discussion, utility directors’ presentations, staff commentary.