Sewer shows room for growth; water fund faces immediate shortfall as drought and legal costs bite

Council heard contrasting updates for Dillon's utility enterprise funds. Staff reported the sewer fund posted net position gains and still has modest available cash for capital, but stressed that much of the reported net position is non‑spendable fixed assets. "What we can work with is $2,600,000, not $7,000,000," the presenter said, explaining how audit presentation of net position can be misleading when capital assets are included.

By contrast, the water fund faces an immediate funding challenge. Staff said predicted water revenues are lower than the adopted 2026 budget and irrigation and other usage have declined. Legal and payroll costs related to drought response and augmentation planning have risen; staff reported "revenues don't cover expenses by $308,000." The presentation described options to delay portions of the water plant expansion, capture O&M fees, and adjust the microfiltration membrane replacement reserve schedule to preserve near‑term cash. Council asked staff to continue exploring timing changes, financing and rate‑study implications and to return with options at the August session.