5.5. SR 11-18-1996ITEM 5.5.
_ay of
MEMORANDUM
iver
TO:
FROM:
DATE:
Mayor and City Council
Patrick Klaers, City or
November 18, 1006
SUBJECT: Budgets for the City Enterprise Funds
The City Council has three enterprise funds under its management. These
enterprise funds are for the liquor store, Waste Water Treatment System
(WWTS), and the garbage collection program. Attached for your review are
the details of these three enterprise budgets as projected for 1997 activities.
The City Council should review, discuss, and as appropriate, make changes to
these budgets and then consider a motion to approve the budgets for 1997.
The garbage collection program began in 1990. In 1993, the billing
responsibility for this program shifted to the Elk River Municipal Utilities.
Historically, almost all of this budget (97%) is for the fees that are paid to the
three garbage collection firms that provide services in the city. These firms
are regulated by the garbage collection contract that is approved by the city
and agreed to by the three garbage collection firms. The city offers recycling
to the residents on a bi-weekly basis and offers three different options for
garbage collection services. In 1997, there will be a change in the garbage
collection program and budget. In the past, fees were paid to the garbage
collection firms for collection and disposal of the garbage. Beginning in 1997,
the city will pay a fee to the garbage collection firms only for the collection of
garbage and recycling materials, and then the city will pay for the disposal of
the garbage directly to the RDF plant which is the designated destination for
the garbage. However, as in previous years, the fees paid to the hauler and
the tipping fee paid to the RDF plant will still be approximately 97% of the
budget.
The 1997 liquor store operating budget is very similar to the operating
budget that was adopted last year. One exception to this statement is the
anticipated purchase of land for a future westbound store. Also, it should be
noted that in the capital outlay category there are expenses for the
refurbishing of the old Northbound Liquor Store so that the building will be
in a leaseable condition for a future business. A new liquor store is
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
anticipated to be constructed in 1997 and these expenditures for the project
and for the furniture, £Lxtures, and equipment are not in the 1997 operating
budget.
In addition to the expenses for the liquor store building project that is
planned for 1997, the liquor store will also continue to transfer a significant
amount of funds into the city general fund in order to keep taxes low. The
liquor store transfers also helps finance the 1991 fire hall expansion project
and the 1993 City Hall building project. It is anticipated that the liquor store
will transfer $123,450 out of its profits in 1997 to help finance the general
operation of the city and for these two building projects
The WWTS budget receives operating revenues that are sufficient to meet its
operating expenses. Excess operating revenues from the rate payers are
combined with the sewer connection charges to help finance the plant
expansion project and to provide for the depreciation funding. A I million
dollar (Phase I) treatment plant expansion was undertaken in 1994 and 4.8
million dollar treatment plant expansion was started in 1996. The debt for
these projects are listed in the operating budget.
Recommendation
It is recommended that the City Council adopt a motion approving the three
attached enterprise fund budgets.
s:\councilXbudentfd.doc
GARBAGE COLLECTION PROGRAM
Provides for the coordination with the Elk River Municipal Utilities
for the billing of the garbage collection program. The garbage
collection program includes expenditures for the total administration
and service contracts for the operation of the city garbage and
recycling collection program.
1997 BUDGET COMPARED WITH 1996 BUDGET
The 1997 Garbage Collection Program budget is proposed in the amount of
$664,600. This is a $31,150 decrease from the adopted 1996 budget. The
reason for this budget decrease, in spite of additional garbage collection
customers, is a decrease in the garbage collection rates. The major expenses
in the 1997 Garbage Collection Program are for the hauler contracts and for
waste disposal at the Refuse Derived Fuel (RDF) plant. These two
expenditures equal approximately 97 percent of the total budget. In previous
years these two expenses were combined as the city's contract with the
haulers called for payment to the hauler for collection of the garbage and the
disposal at the RDF plant. The new contract for 1997 calls for the city to pay
the hauler only for collection of the garbage and for the city to directly pay
the RDF operation for the waste disposal fee. In this manner, the city hopes
to be able to respond more immediately to changes in the solid waste fee
which would affect the customer charges.
The revenues for the Garbage Collection Program are shown on the adjacent
page. All of the revenues come from customer charges. This includes the
penalty fees and the special assessment method for collection of non-paid
bills. The projected garbage collection revenues match the projected garbage
collection expenditures.
The Elk River Municipal Utilities department collects the garbage fees and
remits the money to the city on a monthly basis. The city then makes
monthly payments to the three garbage collection firms which are under
contract with the city and, in 1997, will also begin making payments to the
RDF operation for waste disposal charges. Currently this city program bills
approximately 3,750 customers for service and this number is expected to
increase to 3,800 by the end of 1997. The breakdown of the program shows
the collection of approximately 2,750 ninety gallon containers, 750 thirty-two
gallon containers, both of which are picked up weekly, and 250 thirty-two
gallon containers which are picked up bi-weekly.
GARBAGE COLLECTION
PERSONAL SERVICES
OTHER SERVICES AND CHARGES
TOTAL
PERSONAL SERVICES
Regular Salaries
Employee Pensions
Employee Insurance
1994 1995 1996 1997
ACTUAL ACTUAL ADOPTED PROPOSED
$1,911 $1,934 $2,350 $1,600
680,354 689,958 695,400 663,000
$682,265 $691,892
EXPENDITURE ANALYSIS
$697,750 $664,600
$1,300
150
150
$1,600
OTHER SERVICES & CHARGES
Billing Services
Legal Services
Other Professional Services
Hauler Contracts
Solid Waste
20,000
2,000
1,000
435,000
205,000
663,000
$664,600
1994 1995 1996 1997
ACTUAL ACTUAL ADOPTED PROPOSED
INTERGOVERNMENTAL
CHARGES FOR SERVICES
OTHER REVENUE
TOTAL
$28,345 $16,817 $12,000 $10,000
672,405 678,046 670,000 646,000
11,383 13,645 11,100 8,000
$712,133 $708,508 $693,100 $664,000
INTERGOVERNMENTAL
Special Assessments
CHARGES FOR SERVICES
Garbage Customer Charges
OTHER REVENUE
Customer Penalties
REVENUE ANALYSIS
$10,000 $10,000
646,000 646,000
8,000 8,000
$664,000
LIQUOR STORE FUND
Provides for the total operation of the Elk River Municipal Liquor
store as authorized by Minnesota State Law and the Elk River City
Council.
1997 BUDGET COMPARED WITH 1996 BUDGET
The 1997 municipal liquor store budget is planned in the amount of
$876,200. This is a $393,150 increase from the adopted 1996 budget. Almost
all of the increase is located in the capital outlay category. The 1997 budget
proposal includes $400,000 in capital outlay expenses for the purchase of
land for a future westbound liquor store and $25,000 for the refurbishing of
the old Northbound store in order to make this facility leaseable to another
business.
The 1997 revenues projection for gross operating profits are listed below.
Excluding the capital outlay expenditures, which will be funded from the
hquor store reserves, the revenues projected for 1997 exceed the proposed
expenditures and this includes the depreciation expenses and the transfers
out expenses. Any excess revenues over expenditures will be placed into the
liquor store reserve for future capital outlay expenditures such as the
planned new northbound store.
All expenses associated with a new northbound store project are not in the
proposed 1997 operating budget. Any furniture, fixtures or equipment that is
needed for the new facility will be funded outside of. the operating budget.
1994 1995 1996 1997
ACTUAL ACTUAL ESTIMATED ESTIMATED
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
BALANCE AFTER CAP. OUTLAY
$2,334,287 $2,420,704 $2,350,000 $2,605,000
1,800,784 1,857,526 1,815,000 2,024,500
533,503 563,178 535,000 580,500
266,204 275,855 318,250 322,750
267,299 287,323 216,750 257,750
38,394 36,612 38,000 10,000
819 637 - -
306,512 324,572 254,750 267,750
173,450 183,450 163,450 153,450
133,062 141,122 91,300 114,300
8,549 430,424 1,350 400,000
124,513 (289,302) 89,950 (285,700)
Liquor
Beer
Wine
Pop
Other Taxable Sales
Othcr Non-taxable Sales
Freight
REVENUE ANALYSIS
Sales
..................................... $ 738,000
..................................... 1,465,000
..................................... 265,000
..................................... 3,000
..................................... 113,000
..................................... 21,000
Cost of Sales
572,000
1,132,0O0
195,0O0
2,500
95,000
18,OO0
10,000
2,605,000 2,024,500
LIQUOR STORE
1994 1995 1996 1997
ACTUAL ACTUAL ADOPTED PROPOSED
PERSONAL SERVICES
SUPPLIES
OTHER SERVICES AND CHARGES
CAPITAL OUTLAY
TRANSFERS OUT
TOTAL
189,908 $ 195,373 $ 220,000 $ 226,000
6,353 8,482 6,000 8,000
69,943 72,000 92,250 88,750
8,549 430,424 1,350 400,000
173,450 183,450 163,450 153,450
$448,203 $889,729 $483,050 $876,200
PERSONAL SERVICES
Regular Salaries
Overtime Salaries
Part Time Salaries
Employee Pensions
Employee Insurance
SUPPLIES
Operating Supplies
OTHER SERVICES & CHARGES
Audit
Other Professional Services
Telephone
Postage
Advertising
Repair & Maintenance
Rug & Laundry Services
Utilities
Insurance
Conferences & Schools
Dues & Subscriptions
Depreciation
Licenses & Taxes
Cash Short
Bank Charges
CAPITAL OUTLAY
Leasehold Improvements
Land
TRANSFERS OUT
General Fund
General Fund - Fire Station
City Hall Reserve
EXPENDITURE ANALYSIS
........................................... $ 134,000
........................................... 5,000
........................................... 48,000
........................................... 19,000
........................................... 20,000
8,000
........................................... 2,500
........................................... 5,000
........................................... 3,000
........................................... 9,000
........................................... 7,000
........................................... 1,500
........................................... 16,500
........................................... 10,500
........................................... 4,800
........................................... 850
........................................... 23,000
........................................... 450
........................................... 500
........................................... 4,000
25,000
375,000
95,050
28,400
30,000
$226,000
8,000
88,750
400,000
153,450
$876,20O
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.
1997 BUDGET COMPARED WITH 1996 BUDGET
The 1997 Waste Water Treatment System (WWTS) budget calls for
expenditures in the amount of $1,075,100. This represents a $275,600
increase from the adopted 1996 budget.
Almost all of the 1997 budget increase can be located in the debt service line
item. Regarding the capital outlay category, it should be noted that the 1997
expenditure is for a sludge truck and trailer. The personal services category
is scheduled to decrease in 1997 due to the fact that the city decided to hire
an operator and not an electrician when this electrician position became
vacant in 1996.
The city award bids for the 4.8 million dollar plant expansion in 1996. The
bond payment begins in 1997 and is scheduled to last twenty years. This
payment is in addition the 1994 sewer debt payment for the trickling filter
project. The total debt service increased by $289,700 in 1997.
The revenues to finance the WWTS operation, depreciation, capital outlay,
and debt program all come from customer charges, connection fees and
interest income. These revenues are shown below.
CHARGES FOR SERVICES
OTHER REVENUE
TOTAL
CHARGES FOR SERVICES
Customer Charges
OTHER REVENUE
Sewer Connection Charges
Interest Income
1994 1995 1996 1997
ACTUAL ACTUAL ADOPTED PROPOSED
532,020 $ 554,537 $ 525,000 $ 600,000
413,000 631,789 425,000 475,000
$945,020 $1,186,326 $950,000 $1,075,000
REVENUE ANALYSIS
..................................... $ 600,000 $ 600,000
425,000
50,000 475,000
$1,075,000
WASTE WA TER TREATMENT SYSTEM
1994 1995 1996 1997
ACTUAL ACTUAL ADOPTED PROPOSED
PERSONAL SERVICES
SUPPLIES
OTHER SERVICES AND CHARGES
CAPITAL OUTLAY
TRANSFERS OUT
TOTAL
167,830 $ 201,046 $ 215,600 $ 208,000
22,568 30,251 34,000 34,400
274,900 311,058 272,300 288,600
8,869 142,523 137,300 114,000
6,000 88,722 140,300 430,000
$480,167 $773,600 $799,500 $1,075,000
PERSONAL SERVICES
Regular Salaries
Overtime Salaries
Part Time Salaries
Employee Pensions
Employee Insurance
SUPPLIES
Office Supplies
Operating Supplies
Motor Fuels & Lubricants
Chemicals
Rug & Laundry
Repair & Maintenance Supplies
Uniform Allowance
Small Tools
OTHER SERVICES & CHARGES
Engineering Services
Legal Services
Audit
Other Professional Services
Telephone
Postage
Printing & Publishing
Other Repair & Maintenance
Insurance
Solid Waste
Utilities
Depreciation
Conferences & Schools
Dues & Subscriptions
Licenses & Taxes
CAPITAL OUTLAY
Equipment
TRANSFERS OUT
General Fund
1994B Sewer Debt Service
EXPENDITURE ANALYSIS
$154,330
8,250
4,600
17,670
23,150
$208,000
2OO
11,700
3,7OO
2,70O
2OO
11,700
2,700
1,500
34,400
5,000
2,500
3,000
1,100
9OO
100
1,200
9,000
25,000
2,200
52,000
180,900
2,000
200
3,500
288,600
114,000
114,000
6,000
424,000
430,000
$1,075,000