Sterling staff outline proposed FY2027 Water Fund budget, no vote taken

City Manager Ian Hutcheson presented the proposed Fiscal Year 2027 Water Fund budget to the Sterling Board of Commissioners on June 1, 2026, explaining that sales to customers account for about 94% of the fund's revenue and that the city implemented a 22.1% water rate increase in April 2026 to meet debt-service obligations and strengthen the utility's financial position.

Hutcheson reviewed revenue categories (sales, connection fees, hook-ups/tank sales, tower rent/capital improvement, new service and miscellaneous) and detailed the fund's department-level expenses. He said production expenses include chlorine and power for pumps; distribution includes salaries, water meters and operating supplies; administration/commercial general includes debt interest and implementation costs for new enterprise resource planning (ERP) software. The proposed FY2027 budget incorporates a 4% increase in salary-related accounts, a 15% increase in health-insurance costs, and added funding for capital project EV.1 (water meters and software upgrade).

Hutcheson also reviewed capital improvements and the Water Fund cash balance, telling the commissioners that maintaining adequate reserves helps the city meet obligations and respond to unexpected events. He referenced guidance from the Government Finance Officers Association noting that, while GFOA does not set enterprise fund reserve levels, a target around 25% of annual operating expenses plus debt service generally aligns with best practices.

Commissioners asked clarifying questions about the presented figures and the distribution of expenses; Hutcheson answered the questions but no formal action or vote was taken on the FY2027 Water Fund budget at the meeting. The commission is expected to consider the Sewer Fund budget at a future meeting.