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Council reviews FY2027 utility funds; staff proposes a package of modest rate adjustments
Summary
Finance staff presented FY2027 utility fund updates: broadband subsidy needs, IT capital requests, proposed culinary water rate increase of ~12%, a $2 stormwater fee increase, and options to absorb some sanitation and sewer pass-through increases; council stressed transparency and timing for any rate changes.
Finance Director Anna Montoya walked through proposed adjustments across utility and special funds and explained that the budget remains a working document until tentative adoption in May.
"The broadband fund currently has a deficit fund balance, requiring a contribution of 5% of its revenue from the general fund each year in accordance with state code, which equates to approximately $22,668 for the current year," Montoya reported. She also explained the IT fund includes a $100,000 capital request for the annual computer replacement program and a placeholder for future finance software implementation.
On utilities, Montoya said culinary water rates are proposed to increase by approximately 12% based on a recent study, pressurized irrigation rates are being held flat pending direction, and staff recommend a $2 increase to stormwater fees with a $2 decrease to the City’s portion of sewer rates to offset impacts for customers. She noted a potential TSSD pass-through increase in January that staff are still evaluating for absorption.
Council Member Clark Taylor cautioned against using fund balance to defer needed rate adjustments long term, and Mayor Frost emphasized staff should ensure adjustments are sustainable. Staff outlined the budget schedule: additional work session in late April, tentative budget in May, final adoption in June.
