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Manager warns thin utility margins, recommends reserves for maintenance
Summary
City Manager Henry said water, sewer and trash enterprise margins averaged roughly 2.7% over four audited years and cautioned that slim margins and rising material costs mean the city should plan reserves for repairs and potential simultaneous equipment failures.
City Manager Henry told council the enterprise funds have narrow historical margins and that the city should plan for maintenance and replacement costs.
"I took the 4 audited years of the enterprise, fund revenues and then the expenses. And I think the margin in those 4 years was, 2.7 for the water, sewer, trash," Henry said. He added the gas enterprise margin was about 5% and warned that thin margins leave little buffer for simultaneous equipment failures or unexpected maintenance.
Councilmembers and staff noted workforce shortages and aging equipment as compounding risks; Henry recommended building conservative assumptions into the enterprise projections and considering borrowing for major capital projects where appropriate.
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