3.2. SR 11-29-1993
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ITEM 3.2.
TO:
FROM:
MAYOR & CITY COUNCIL
PAT KLAERS, CIT~J~~STRATOR
NOVEMBER 23, 199~
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DATE:
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SUBJECT: ENTERPRISE FUNDS BUDGET
The City has three enterprise funds under its control. These
budgets are for the Liquor Store, the Wastewater Treatment
System (WWTS), and the Garbage Collection Program. The City
Council has approved these budgets in the past by consensus, or
sometimes by formal motion. No formal action is necessary as
the revenues generated in these self-sustaining funds generally
dictate the level of operating expenses that is necessary and
appropriate. Even though no formal action is necessary by the
City Council, it is always good policy for the City Council to
review and comment on these enterprise fund budgets.
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The Liquor Store has generated a surplus of revenues over
expenditures in the past few years. These profits have been
funneled into the General Fund in order to offset operating
expenses on a city-wide basis. Some funds are retained within
the Liquor Store reserve for cash flow and inventory purposes.
Additionally, after all the transfers have taken place, the
City attempts to move $75,000 annually into a designated
reserve for a second future liquor store. In addition to the
transfer in to the City General Fund for City operating
expenses, the Liquor Store also puts money into the General
Fund to help finance the Fire Department building expansion and
the new City Hall facility.
One item of note in the Liquor Store budget in 1994 is the
designation of some funds for a possible expansion of the
existing liquor store. This possible project will have to be
closely evaluated in terms of its cost versus the benefits of a
slightly larger facility. At this time, it just seems prudent
to include some monies in the budget for this possible
expenditure.
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The WWTS budget generally has sufficient revenues to meet its
operating expenditures. There is an increase in the need to
place monies into the plant replacement reserves and the
revenues available the past few years have not been sufficient
in order for the City to move forward with the plant expansion
as soon as desired. It is a goal of the City to expand the
plant and have this project completed in 1996. This issue will
need a great deal of discussion by the Council in the next few
months and will include a discussion on a possible rate
increase.
The Garbage Collection Program began in 1990. The billing for
this program was shifted to the Utilities Department in 1993.
P.O. Box 490 · 13065 Orono Parkway · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
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The most significant component of this budget is the fee paid
to the contract haulers. The City has subsidized the garbage
collection budget the past few years as revenues have not met
expenditures. This is due mainly to the City subsidizing the
32 gallon bi-weekly collection and the addition of plastics to
the recycling program.
LIQUOR STORE FUND
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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.
1994 BUDGET COMPARED WITH 1993 BUDGET
The 1994 planned operating expenditures for the Municipal
Liquor store are listed on the adjacent page. The projection
for 1993 year end income and an estimated 1994 year end income
statement are shown below.
The 1994 Municipal Liquor Store budget is planned in the amount
of $497,750. This is a $48,550 or 10.8% increase over the
adopted 1993 budget.
The Personal Services category is projected to increase $13,200
or 7% over the adopted 1993 budget. This increase is due
mainly to more part-time help being needed at the store and a
significant increase in the Employee Insurance line item. The
supplies and Charges category decrease is offset by a
contractual Services category increase. This is a result of
shifting the Advertising line item from one category to
another. The increase in the Other Charges category is due to
an increase in the Depreciation line item. The $10,000
decrease in Transfers is located in the City Hall reserve line
item.
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The biggest change in this budget is in the Capital Outlay
category. Funds in this category are for an expansion of the
liquor store facility. This mayor may not happen depending on
the cost estimates for this project and the desires of the City
Council. If an economical minor square footage expansion can
take place on the south and west sides of the building, which
would also allow for an enclosed entryway, then this proposal
will be submitted to the City Council in 1994 for its
consideration. It is appropriate to at least provide some
monies in the proposed budget for this possible project.
1994 1993
Proiected Budqet
Sales $ 2,400,000 $ 2,220,000
Cost of Sales 1,848,000 1,709,400
Gross Profit $ 552,000 $ 510,600
Operating Expenses 302,300 284,500
Operating Income $ 249,700 $ 226,100
Other Revenue (Expenses)
Interest Income 15,000 20,000
Miscellaneous (Capital outlay) (52,000) (14,250)
Net Income Before Transfers $ 212,700$ $ 231,850
Transfers In (Out)
City Hall Reserve Fund (30,000) (40,000)
. General Fund (85,050) (85,050)
General Fund-Fire Lease (28,400) (28,400)
Income After Transfers $ 69,250 $ 78,400
. LIQUOR STORE
1991 1992 1993 1994
ACTUAL ACTUAL ADOPTED PROPOSED
PERSONAL SERVICES $ 167,768 $ 177,797 $ 186,100 $ 199,300
SUPPLIES AND CHARGES 10,155 1 2,033 14,650 6,700
CONTRACTUAL SERVICES 42,006 45,716 49,700 58,200
OTHER CHARGES 26,291 27,930 34,050 38,100
CAPITAL OUTLAY 15,005 15,830 11,250 52,000
TRANSFERS OUT 129,400 262,550 153,450 143 .450
TOTAL 390,625 541 ,856 449,200 497,750
EXPENDITURE ANALYSIS
PERSONAL SERVICES
Regular Salaries ...................................... $ 118,100
Overtime Salaries ...................................... 1,050
Part Time Salaries ...................................... 40,000
Employee Pensions ...................................... 17,000
Employee Insurance ...................................... 23,150 $ 199,300
SUPPLIES AND CHARGES
Rug & Laundry Services ...................................... 700
Operating Supplies ...................................... 6,000 6,700
CONTRACTUAL SERVICES
. Audit ...................................... 6,250
Other Professional Services ....................................... 1,500
Telephone ...................................... 800
Postage ...................................... 150
Advertising ...................................... 7,500
Repair & Maintenance ...................................... 7,000
Utilities ...................................... 16,500
Insurance ...................................... 18,500 58,200
OTHER CHARGES
Conferences & Schools .............."....................... 4,800
Dues & Subscriptions ...................................... 850
Depreciation ...................................... 27,500
Licenses & Taxes ...................................... 450
Cash Short ...................................... 500
Bank Charges ...................................... 4,000 38,100
CAPITAL OUTLAY
Building & Land Improvements ...................................... 52,000
Furniture & Equipment ...................................... 0 52,000
TRANSFERS OUT
General Fund ...................................... 85,050
General Fund - Fire Station ...................................... 28,400
City Hall Reserve ...................................... 30,000 143,450
$ 497,750
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WASTE WATER TREATMENT SYSTEM
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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.
1994 BUDGET COMPARED WITH 1993 BUDGET
The 1994 Waste Water Treatment System (WWTS) budget calls for
expenditures in the amount of $639,550. This represents a
$62,450 or 10.8% increase from the adopted 1993 budget.
However, when depreciation and reserves for plant replacement
and expansion is removed from both the 1993 adopted budget and
the 1994 proposed budget, it is more accurate to indicate that
the WWTS budget actually decreased by $12,550. This decrease
is reflected in less Capital Outlay equipment being proposed.
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The major change in the WWTS budget is an increase in the
reserve (for new equipment, equipment repairs and plant
expansion) and depreciation line item. In the 1993 budget,
this amount was $225,000 and in the 1994 budget this amount is
$300,000. Even with this increase, it is very questionable
whether or not a plant expansion, as discussed by the City
Council during the Capital Improvement Program (CIP)
worksessions, can be completed in 1996. Funds do not appear to
be available to handle the debt on a plant expansion as
previously discussed. This issue will receive more discussion
during the January/February 1994 CIP worksessions.
There are no major changes in this budget other than in the
Capital Outlay category as indicated in the above paragraphs.
However, one budget change is a decrease in the Other
Professional Services line item as all expenses related to the
Ultraviolet System project and the plant expansion will be
charged directly to the WWTS reserves as they are Capital
Improvements.
Customer charges for 1994 are estimated at $488,000. Excluding
the reserve/depreciation line item, this amount is sufficient
to meet the operating expenses. However, this amount of
revenues does not provide for sufficient funds to be placed
into reserves for the planned expansion of the treatment
plant. This $488,000 excludes connection charges and interest
revenue which are placed directly into the plant reserve.
1994 Projected
1993 Budget
Plant Administration $ 51,100 $ 66,400
Plant Operations 164,700 145,700
Laboratory 46,650 44,300
. Sewer System Collection 24,450 31,250
Lift Stations 52,650 64,450
$ 339,550 $ 352,100
Reserve/Depreciation 300,000 225,000
$ 639,550 $ 577,100
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WASTE WATER TREATMENT SYSTEM
PERSONAL SERVICES
SUPPLIES AND CHARGES
CONTRACTUAL SERVICES
OTHER CHARGES
CAPITAL OUTLAY
TOTAL
$
1991
ACTUAL
163,673 $
23,916
89,668
126,936
286,934
689,016
1992
ACTUAL
169,133 $
36,671
117,266
128,227
126,000
676,187
1993
ADOPTED
180,660 $
32,600
108,460
3,700
261, 700
677,100
1994
PROPOSED
189,060
28,200
104,900
7,700
303,200
633,060
EXPENDITURE ANALYSIS
PERSONAL SERVICES
............ ..................... .... $
Regular Salaries
Overtime Salaries
Employee Pensions
Employee Insurance
SUPPLIES AND CHARGES
Office Supplies
Operating Supplies
Motor Fuels & Lubricants
Chemicals
Rug & Laundry
Repair & Maintenance Supplies
Uniform Allowance
Small Tools
CONTRACTUAL SERVICES
Engineering Services
Legal Services
Audit
Other Professional Services
Telephone
Postage
Other Repair & Maintenance
Insurance
Solid Waste
Utilities
OTHER CHARGES
Conferences & Schools
Dues & Subscriptions
Licenses & Taxes
CAPITAL OUTLAY
Equipment
Reserve for Plant & Equipment*
*Includes Depreciation Expenses as part of Reserve
142,660
7,700
16,100
22,700 $
200
4,960
3,300
6,200
160
10,600
2,200
1,700
7,600
2,600
2,600
2,600
900
100
16,600
24,000
1,600
46,900
3,600
200
4,000
3,200
300,000
$
189.060
28.200
104,900
7,700
303.200
633.060
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GARBAGE COLLECTION PROGRAM
Provides for the total administration, operation and
maintenance of the City garbage collection program.
1994 BUDGET COMPARED WITH 1993 BUDGET
The City began organized garbage collection services in
November, 1990. In 1993, the Elk River Municipal Utilities
took over the responsibility for the garbage billing process.
The single largest item in the Garbage Collection Program
budget is the fee paid to the garbage haulers. In 1994, the
projection for this fee is $696,000. This is the same amount
as in the 1993 budget and the amount has not increased due to
this projection being high in 1993. This expenditure
represents 97% of the total budget in 1994.
The 1994 Garbage Collection Program budget is proposed in the
amount of $716,400. The City has to pay a sales tax on the
garbage services, but no sales tax amount shows up in the
budget, as this is a direct expense that is paid to the State.
In 1994, the customer charges will be slightly under $700,000.
This is more than the 1993 estimate due to an increase in the
number of households in the community, a possible increase in
the garbage tipping fee, a possible increase due to inflation,
and may be more costs for additions to the recycling program.
In 1992, the Garbage Collection Program showed a net loss
(approximately $16,000). This is due to the City subsidizing
the 32 gallon bi-weekly pick up service and due to the City
subsidizing the plastics recycling program. It is estimated
that the City will lose a similar amount in 1993. It is
projected that the deficit in 1994 will be less than what was
experienced in 1992 and what is projected in 1993, due to lower
administration charges associated with the Utilities taking
over the billing process.
The Utilities department currently collects fees, passes the
money on to City, which then pays the garbage haulers for the
collection of approximately 2,550 ninety gallon containers, 425
thirty-two gallon containers which are picked up weekly and 250
thirty-two gallon containers that are picked up biweekly.
Projected 1994 revenues for customer charges, late penalties,
and interest income are anticipated to be slightly less than
$700,000. This will be sufficient to cover the proposed 1994
expenditures only if the hauler contract estimate of $696,000
is slightly higher than the actual fees.
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GARBAGE COLLECTION
PERSONAL SERVICES
SUPPLIES AND CHARGES
CONTRACTUAL SERVICES
OTHER CHARGES
CAPIT AL OUTLAY
TOTAL
$
1991
ACTUAL
8,272 $
1,365
604,185
5,000
o
618,822
1992
ACTUAL
5,834 $
431
632,369
5,000
o
643,634
1993
ADOPTED
23,100 $
1,750
704,050
5,000
o
733,900
1994
PROPOSED
2,100
o
714,300
o
o
716,400
EXPENDITURE ANALYSIS
PERSONAL SERVICES
Regular Salaries
Overtime Salaries
Employee Pensions
Employee Insurance
....................................... $
SUPPLIES AND CHARGES
CONTRACTUAL SERVICES
Billing Services
Legal Services
Hauler Contracts
Other Professional Services
OTHER CHARGES
CAPIT AL OUTLAY
1,600
100
200
200 $
15,600
1,500
696,000
1 ,200
2.100
Q
714.300
Q
$
Q
716.400