Tremonton adopts tentative budget as finance staff warns water and sewer funds are insolvent without rate action

Tremonton’s City Council voted to adopt a tentative operating budget for fiscal year 2027 on May 5, giving staff a continuing operating plan while council and staff pursue more detailed revenue and capital planning.

The council’s finance staff delivered a blunt assessment of the city’s utility finances, saying the water and sewer enterprise funds are failing to cover ongoing operating costs once impact fees are removed from revenues. The official said the treatment-plant fund shows revenues of $2,414,000 and operating expenses of about $2,243,200 but — after excluding impact fees — the fund projects an operating shortfall of roughly $89,200. The sewer collection fund was said to show a projected operating loss of about $86,750 once impact fees are removed. “This fund is broke,” the finance staff said during the meeting, urging immediate council attention to rates and studies.

Why it matters: operating shortfalls in enterprise funds can jeopardize bond covenants and leave the city without funds for routine repairs and asset replacement. Staff warned that the water fund’s net operating margin ($~110,000 before excluding impact fees) will not meet bond requirements absent near-term action.

Council and staff response: Council members repeatedly asked for options and timing. Staff recommended returning with specific rate proposals and stressed that — unlike impact‑fee adjustments, which legally require a formal study — the city council may adopt water‑rate increases directly. Council members and staff agreed an external rate and impact‑fee study is the prudent path; staff estimated those professional studies typically take several months. In the interim, staff were asked to bring a schedule of proposed rate changes and tier adjustments (including encouragement to use secondary water where available) to the next meeting to avoid immediate covenant risk.

Numbers discussed in the meeting: staff cited the treatment plant revenue figure ($2,414,000), treatment operating expenses (~$2,243,200), and the resulting ~$89,200 shortfall after removing impact fees; the sewer collection fund showed a $406,400 revenue line, $393,150 in expenses and roughly $86,750 of projected operating deficit once impact fees are excluded. Staff offered a simple illustration that covering the water shortfall would require only small base-rate increases (roughly $2/month per typical account to cover the cited gap), but emphasized a phased, data-driven plan would be less disruptive for residents.

Next steps: The council asked staff to prepare rate scenarios and to prioritize an external rate and impact-fee study so the city can present data-backed options to residents. Staff said they would return with proposals and that the council may need to move quickly to preserve bond compliance if recommended adjustments are delayed.