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MEMORANDUM <br />To: Mayor Walsh & the City Council <br />From: Maggie Jin, Finance Director <br />Subject: 2025 Enterprise and Internal Service Fund Budgets <br />Date: August 26, 2024 <br />Attachments: 2025 Enterprise and Internal Service Fund Budgets <br />Staff has completed the preliminary 2025 Enterprise and Internal Service Fund Budgets for <br />review by the City Council. <br />Staff is recommending continuing with the minor rate increases that were identified as part of the <br />2019 rate study. They are 2% for Water and Sewer, 1% for Stormwater, and 6% for Recycling. <br />Looking to the future (2026 and beyond), the utility rates will need to be analyze to ensure the <br />future continuance of each fund. 2024 is the final year for the City’s recycling contract with <br />Waste Management; the recycling budget will be updated prior to budget adoption in December <br />after a new contract or a contract renewal is proposed and accepted. <br />Union wages are increasing by 3% in 2025 base on the Union contracts. Staff is in progress of <br />reviewing non-union wages and a conservative increase of 5% has budgeted. <br />Enterprise Funds <br />Water Fund <br />In 2024, Water revenue is at a lower point than in previous years due to the rainy summer <br />compared to droughts in previous years. For 2025 budgeting, staff have conservatively budgeted <br />revenue based on prior years actual and a rate increase of 2%. Water expenditure is stable with a <br />1.75% increase. The biggest increase is in Personal Service for wages and in Professional <br />Service for IT and fleet service. <br />The cash balance of the water fund on 6/30/2023 is $1,712,775. The 2025 budget is anticipating <br />a $298,350 positive net income. <br />Sewer Fund <br />For 2025 budgeting, staff have conservatively budgeted revenue based on prior years actual and <br />a rate increase of 2%. In terms of expenditure, MCES wastewater charges is decreasing by <br />approximately 5.68%. Meanwhile, non-operating transfer is decreased significantly with big <br />capital item purchases completed in 2024 and minor purchases in 2025. This relieves a lot of <br />pressure on rates and helps to decrease the overall expenditure budget by 19.43%. <br />The current sewer fund cash balance is $2,777,450. The 2025 budget is anticipating a $31,350 <br />positive net income. <br />1 of 31 3