4.8. SR 11-13-2000
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City of "
Elk
Item #4.8.
MEMORANDUM
TO:
Mayor & City Council
Pat Klaers, City Admi~or
November 13, 2000 ~/
SUBJECT: Enterprise Funds
FROM:
DATE:
The city has three enterprise funds under its management. These funds are the
garbage collection/recycling program, the municipal liquor store, and the
wastewater treatment system (WWTS). Attached for your review and
consideration are the details for these three budgets.
.
The f!arbaf!e collection/recyclinf! urof!ram began in November 1990. In
1993, the billing and collection responsibilities for this program shifted from the
city to Elk River Municipal Utilities.
In 2001, the city will continue to offer four main garbage collection options to the
residents and will continue to offer weekly recycling services. Disposal of the
garbage to the Refuse Derived Fuel (RDF) Plant is required by way of the city
contract with Sherburne County and by way of the city contract with the
haulers.
In 1999, the City Council approved a rate reduction for our residential
customers. This rate reduction was based on the renegotiated contract with the
haulers and based on the 2000 contract with the county. The contract with the
county has changed for 2001, but it is believed that the rates from last year can
continue. One reason for the rates not changing is that the city has accumulated
a larger than needed fund balance in the garbage enterprise fund and would like
to slowly decrease this amount over the next few years. In 2001 it is projected
that the city will use $53,500 of its fund balance in order to balance the
operating budget.
The 2001 expenditures are projected at $811,350. This is a 4.34 percent increase
over the 2000 budget. About 96 percent of the expenditures go to the haulers and
to the RDF plant.
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13065 Orono Parkway. P.O. Box 490. Elk River, MN 55330. TDD & Phone (763) 441-7420. Fax (763) 441-7425
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The wastewater treatment system (WWTS) budget for 2001 shows revenues
exceeding expenditures. This is due entirely to the projection for SAC fees, which
is based on new buildings being constructed in the urban service district.
Whenever the actual year end revenues exceed expenditures, the monies are
placed into the WWTS reserves and are used for a variety of purposes. These
purposes include helping pay the plant expansion debt when SAC fees are not
sufficient, saving funds for the second phase of the plant expansion that
increases capacity from 1. 7 to 2.1 mgd, and any major equipment or building
repairs that may unexpectedly be required. Some of these repairs, like an
estimated $300,000 for the digester cover, are known to be needed, but not when.
We do not spend these monies until necessary, but funds need to be available for
this type of expense. The depreciation expenditure line item also adds funds to
the reserve to cover these types of expenditures and are generally designated for
replacement or upgrading of the plant.
.
The WWTS budget is very straightforward and there are no surprises for 2001.
The revenues are projected to increase by 8.57 percent or $96,000 and this is due
to a higher estimate in SAC fees and a higher estimate in service charges as
there are more customers on the system. The expenditures are proposed to
increase 6.67 percent or $72,450. Most of this increase is in the capital outlay
category. The department, like it has for the past few years, includes four full
time employees.
The municivalliauor store is located at the northeast corner of the Highway
169 and 193rd Avenue intersection. This store opened in October 1997. The
second full year of operation was 1999, and these year end figures offer a true
reflection of annual operating revenues and expenditures. The attached 2001
budget is based on the 1999 year end actuals plus inflation/COLA.
The operating budget is proposed at $790,000. This is only an $8,100 or
1 percent increase in expenditures from the 2000 budget and is a 9 percent
increase from the 1999 actuals. The biggest adjustment in the expenditures is in
the personal services category. In this regard, the 2001 budget is up
approximately $42,000 from the 1999 actuals and this is based on needing more
employees during various busy periods. It should be noted that part of the
transfers category calls for $110,000 to be moved into the city general fund in
order to help finance general city services. This generally happens every year
and is a direct savings to the taxpayers in the community.
Recommendation
It is recommended that the City Council adopt a motion approving the three
attached enterprise fund budgets.
. s:\finance\budget\entfunds.doc
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GARBAGE COLLECTION PROGRAM
This budget includes expenditures for service contracts with haulers
for the collection of the city garbage and recycling material, payments
for disposal of waste at the Refuse Derived Fuel (RDF) plant, and for
the overall administration of the program, including coordination with
the Elk River Municipal Utilities for customer billing.
2001 BUDGET COMPARED WITH 2000 BUDGET
.
The city started its organized residential garbage collection and recycling
program in November 1990. Elk River Municipal Utilities collects the
garbage fees and remits the money to the city on a monthly basis. The city
then makes payments to the garbage collection firms and the RDF plant.
The garbage collection program deals only with residential properties of four
units or less. The city contract with the garbage haulers expires in October
2004. Currently the city has approximately 4,500 customers. The breakdown
of the program shows the collection of approximately 3275 ninety gallon
containers, 225 sixty gallon containers, and 700 thirty-two gallon containers,
all of which are picked up weekly, and 250 thirty-two gallon containers that
are picked up bi-weekly. Recycling material is picked up weekly except for
the households that have bi-weekly garbage service.
The 2001 garbage collection and recycling program budget is proposed in the
amount of $811,350. This is a $33,750 or 4.34 percent increase over the
adopted 2000 budget. The garbage disposal fee at the RDF Plant is going
down slightly for 2001, and this offsets some of the increase in the customer
count. Accordingly, the budget increase is 4.34 percent, while the household
growth in the city is more than this rate. It should be noted that two budget
line items, the garbage hauler payments and the waste disposal fees, amount
to 96 percent of the total budget. This figure is consistent with previous
years.
.
All budgeted revenues, in one form or another, come from customer services,
including the interest revenue. In 2000, a county payment was received for
the city having an organized garbage collection and recycling program. This
payment was a one year program and will not take place in 2001. Over the
years, the city has slowly increased its fund balance and, in 1999, received a
sales tax refund from the state. The total reserve is now higher than needed
and the city is planning to reduce its fund balance over the next few years. In
2001, the city is planning on using $53,500 of the reserve to balance the
budget. Use of the reserves is also taking place in order to support the
customer rate reduction that was approved in 1999.
GARBA GE COLLECTION
.
INTER GOVERNMENT AL
CHARGES FOR SERVICES
OTHER REVENUE
TOTAL REVENUES
USE OF RESERVES
TOTAL SOURCES OF FUNDS
REVENUE ANALYSIS
1998
ACTUAL
$ 9,851
708,509
15,948
$ 734,308
o
$ 734,308
1999
ACTUAL
$ 20,945
745,866
104,443
$871,254
o
$ 871,254
2000
ADOPTED
$ 94,000
646,000
11,000
$ 751,000
26,600
$ 748,750
2001
PROPOSED
$ 6,000
730,850
21,000
$ 757,850
53,500
$ 811,350
INTERGOVERNMENTAL
County Grant
Special Assessments
CHARGES FOR SERVICES
Garbage Customer Charges
OTHER REVENUE
Interest Income
Customer Penalties
TOTAL REVENUES
.
Use of Reserves
TOTAL SOURCE OF FUNDS
.................................... $
6,000 $
730,850
11,000
10,000
6,000
730,850
21. 000
EXPENDITURE ANALYSIS
PERSONAL SERVICES
OTHER SERVICES AND CHARGES
TOTAL
1998
ACTUAL
$ 1,768
699,981
$701,749
1999
ACTUAL
$ 4,843
743,842
$ 748,685
2000
ADOPTED
$ 3,700
773,900
$ 748,750
757,850
53,500
$ 811,350
2001
PROPOSED
$ 4,050
807,300
$ 811,350
PERSONAL SERVICES
Regular Salaries
Employee Pensions
Employee Insurance
OTHER SERVICES & CHARGES
.
Billing Services
Legal Services
Other Professional Services
Postage
Hauler Contracts
Solid Waste
................................... $
3,200
350
500 $ 4,050
25,000
500
700
100
547,000
234,000 807,300
$811,350
LIQUOR STORE
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Provides for the total operation of the Elk River Municipal Liquor store
as authorized by Minnesota State Law and the Elk River City Council.
2001 BUDGET COMPARED WITH 2000 BUDGET
The 2001 municipal liquor store operating budget is planned in the amount of
$790,900. This is an $8,100 or 1 percent increase from the adopted 2000
budget. The largest increase in this budget is for personal services and this
budget category went up $16,600. This increase is slightly offset by decreases
in the building debt payment, the transfers out to the city hall debt service,
and in the building depreciation. The capital outlay expense is to add a four
door cooler and to remove some carpet near the coolers and replace it with
tile.
The 2001 estimated income statement for the liquor store is shown below.
The sales figures have increased significantly from the adopted 2000 budget
and this 2000 figure is believed to be a low estimate. The 2001 projection is
based on the 1999 actual sales figures plus a 5 percent per year increase. The
2001 sales figure is up 16.2 percent from the 2000 budget, but up only 10.15
percent from the 1999 actual sales amount. The year end balance amount
shows a large increase from the adopted 2000 budget. The projected balance
. figure is $147,450.
The liquor store operation has a manager plus 4 full time and between 4 and
7 part time employees.
SALES
COST OF SALES
GROSS PROFIT
OPERATING EXPENSES
OPERATING INCOME
OTHER INCOME:
INTEREST INCOME
MISCELLANEOUS
INCOME BEFORE TRANSFERS
TRANSFERS OUT
INCOME AFTER TRANSFERS
CAPITAL OUTLAY
DEBT SERVICE
BALANCE
1998
ACTUAL
$3,074,852
2,383,340
691,512
455,045
236,467
24,751
94,824
356,042
131,651
224,391
170,863
53,528
.
1999
ACTUAL
$3,478,937
2,652,392
826,545
431,835
394,710
22,309
1,524
418,543
141,250
277,293
5,662
145,961
125,670
2000
ESTIMATED
$3,293,000
2,537,600
755,400
473,200
282,200
12,000
19,700
313,900
151,550
162,350
12,000
146,050
4,300
2001
ESTIMATED
$3,826,400
2,920,050
906,350
490,150
416,200
30,000
2,000
448,200
148,300
299,900
11 ,500
140,950
147,450
. 1998 1999 2000 2001
ACTUAL ACTUAL ADOPTED PROPOSED
PERSONAL SERVICES $ 272,883 $ 270,618 $ 295,800 $ 312,400
SUPPLIES 13,649 11,075 12,000 12,000
OTHER SERVICES AND CHARGES 168,513 150,143 165,400 165,750
CAPIT AL OUTLAY 5,662 12,000 11,500
DEBT SERVICE 170,863 145,961 146,050 140,950
TRANSFERS OUT 131,651 141,250 1 51,550 148,300
TOTAL $ 757,559 $ 724,709 $ 719,300 $ 790,900
EXPENDITURE ANALYSIS
PERSONAL SERVICES
Regular Salaries
Overtime Salaries
Part Time Salaries
Employee Pensions
Employee Insurance
SUPPLIES
Operating Supplies
Uniforms
.
OTHER SERVICES & CHARGES
Audit
Other Professional Services
Telephone
Postage
Advertising
Repair & Maintenance
Rug & Laundry Services
Utilities
Insurance
Conferences & Schools
Dues & Subscriptions
Depreciation
Licenses & Taxes
Bank Charges & Uncollectible Debt
CAPITAL OUTLAY
Furniture & Equipment
DEBT SERVICE
Principal
Interest
.
TRANSFERS OUT
General Fund
City Hall Debt Service
LIQUOR STORE
..... ......... ............................ $
190,250
5,000
60,000
29,000
28,150
$312,400
10,000
2,000
12,000
2,100
500
4,400
50
15,000
8,000
3,000
25,000
6,000
2,500
1,200
80,000
1,000
17,000
165,750
11,500
11,500
80,000
60,950
140,950
110,000
38,300
148,300
790,900
$
.
.
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WASTE WATER TREATMENT SYSTEM
Provides for the administration, operation and maintenance of the
sanitary sewer system, laboratory and lift stations for the sanitary
treatment of household, commercial and industrial waste deposited
into the sanitary sewer system.
2001 BUDGET COMPARED WITH 2000 BUDGET
The 2001 wastewater treatment system (WWTS) budget calls for
expenditures in the amount of $1,136,100. This represents a $72,450 or
6.67% increase over the adopted 2000 budget. Over $680,000 of this WWTS
budget is for plant depreciation and debt service.
The main reason for this budget increase is the additional capital outlay
expenditures. The 2001 capital outlay proposal calls for $10,000 to be spent
on the roof at the digester building and $66,000 to be spent on two trucks.
One of these trucks is a one ton truck that will be used exclusively for lift
station work and will transport the hoist that is needed to remove lift station
pumps. Additionally, this truck includes a larger flat bed area, which is
needed to hold and transport the pumps. The other truck being proposed is a
3/4 ton pick-up. The other increases in the budget are in the personal services
category, the other services/charges category, and in the debt service
payment plan. The WWTS department includes four full time employees.
It appears that the WWTS revenues will exceed expenditures in 2001. The
biggest uncertainty in projecting revenues relates to SAC charges, which are
based on new buildings being constructed in the urban service district. Any
excess funds will be reserved for future major repair/maintenance expenses
or for plant expansion bond payments when SAC fees are insufficient.
CHARGES FOR SERVICES
OTHER REVENUE
TOTAL REVENUES
USE OF RESERVES
TOTAL SOURCE OF FUNDS
1998
ACTUAL
$730,294
521,586
$1,251,880
o
$1,251,880
2001
PROPOSED
$850,000
376,000
$1,226,000
o
$1,226,000
1999
ACTUAL
$797,101
460,378
$1,257,479
o
$1,257,479
2000
ADOPTED
$790,000
330,000
$1,120,000
o
$1,120,000
REVENUE ANALYSIS
CHARGES FOR SERVICES
Customer Charges
$850,000
$850,000
OTHER REVENUE
Sewer Connection Charges
Interest Income
286,000
90,000
376,000
TOTAL REVENUES
$1,226,000
WASTE WA TER TREA TMENT SYSTEM
.
PERSONAL SERVICES
SUPPLIES
OTHER SERVICES AND CHARGES
CAPITAL OUTLAY
DEBT SERVICE
TRANSFERS OUT
TOTAL
PERSONAL SERVICES
Regular Salaries
Overtime Salaries
Part Time Salaries
Employee Pensions
Employee Insurance
SUPPLIES
Office Supplies
Operating Supplies
Motor Fuels & Lubricants
Equipment Parts
.
OTHER SERVICES & CHARGES
Engineering Services
Audit
Other Professional Services
Telephone
Postage
Printing & Publishing
Repair & Maintenance
Insurance
Solid Waste
Utilities
Cleaning Services
Uniform Rental
Depreciation
Conferences & Schools
Dues & Subscriptions
Licenses & Taxes
CAPITAL OUTLAY
Buildings
Equipment
DEBT SERVICE
Principal
Interest
.
TRANSFERS OUT
General Fund
1998
ACTUAL
$210,553
37,033
455,188
41,875
346,956
8,000
$1,099,605
1999
ACTUAL
$207,111
53,524
431,384
129,359
348,914
8,000
$1,178,292
EXPENDITURE ANALYSIS
2000
ADOPTED
$217,300
39,000
426,400
30,000
364,150
10,000
$1,099,650
$160,900
17,850
6,000
1 9,750
26,750
800
21,500
4,000
12,800
10,000
2,000
3,600
1,800
100
450
14,000
12,500
3,300
63,000
200
2,700
310,000
3,500
200
5,000
10,000
66,000
185,000
185,600
10,000
2001
PROPOSED
$231,250
39,100
432,350
76,000
370,600
10,000
$1,159,300
$231,250
39,100
432,350
76,000
370,600
10,000
$1,159,300