10-26-2010 Council Work Session Packet

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Enterprise Fund Budgets October 22, 2010 Page 2 Sewer Fund: Like the Water Fund, the Sewer Fund has been operating at a loss, but non-operating revenues have offset the operating loss. In 2010 it is estimated that the fund will show a small operating profit. This is the result of lower than budget wages and a significant decrease in maintenance during the year. The 2011 expenditure budget is increasing by $49,300 (4.32%). The increase is primarily due to an increase in waste water charges from the Metropolitan Council Environmental Services (MCES) in the amount of$53,400 (12%). Many cities around Lake Minnetonka are experiencing increases from the MCES. This is an indication that we still have a significant amount of I&I in the system. The revenue budget is set to increase by 4% for 2011; this is in line with the rate study. Because most of our sewer accounts are billed a flat rate, sewer revenues are not impacted by changes in usage. Capital expenditures in the amount of$370,000 are being planned. They include upgrading two lift stations ($65,000), adding a generator ($35,000), and a rehab project in South Orono ($270,000). These expenditures will be paid for by funds currently in the Sewer Fund. Staff would like the Council's input into the rate increase and capital purchases for 2011. Storm Water: A line item Storm Water budget has not been prepared. Significant expenditures in this are all capital projects. A copy of the SWPPP projects is attached to this memo. They total over $2,000,000 between now and 2020. The current fund balance is approximately $400,000 with annual revenues of$125,000. In order to pay for the scheduled projects without bonding, the rate study calls for annual rate increases of 10%. Staff would like the Council's input into the rate increase and capital purchases for 2011. Golf: The Golf Course has been operating at a loss for the last 10 years. The revenue increases in 2009 have not carried over into 2010. As a result the course is projected to lose $65,000 in 2010. The 2011 expenditure budget will decrease by 10.33%. This is being accomplished by reducing insurance charges to the fund, and by decreasing the administrative fee. Even with the decreases, the course is budgeted to lose $22,115 in 2011. Because the funds cash balance has been used up during the last decade, this loss will need to be covered by a transfer from the General Fund.