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Presenter says town will align utility budget with audit after discovering $2.5M unfunded depreciation
Summary
Presenter told residents the utility budget will be updated to match audit accounting after a depreciation line item was removed from budgets, creating about $2,500,000 in unfunded depreciation; the change is meant to ensure rate sufficiency under town code section 17.8.
Presenter opened the session by saying the engagement is intended to recap what was introduced and give residents time to ask questions before the June 9 public hearing. "The public hearing for the utility fund is set for June 9," the Presenter said, and explained that enterprise funds must be separate and self-sustaining.
The Presenter and staff described that an annual depreciation line item was removed from approved budgets after 2019 while depreciation continued to appear in audits, creating roughly $2,500,000 of unfunded depreciation to date. "When you look at that, you'll end up with being app or a positive bottom line income, but you will have cash that's greater than that because depreciation is a non cash item," a Staff member said while explaining how depreciation affects cash reserves. Officials said the budget will be revised so the public-facing budget mirrors the audit and clarifies rate calculations to meet town code section 17.8 requirements.
