Management Report and Recommendations 12/31/1982

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City of Lino Lakes Management Report, Page 41 Percent Current Proposed Increase Water: Flat charge per quarter 7.50 20.00 167% Usage charge per thousand gallons 1.00 1.50 50% Sewer: Flat chage per quarter 25.00 39.50 58% 1 1 1 1 The above increases were proposed based on losses sustained in the utility operations 11 over the past several years. Additionally, the analysis included a provision for unan- ticpated repairs. The effect of not funding utility operations is to require other funds of the City to absorb the losses of such operations. The cash overdraft of the Utility Fund was $16,583 at December 31, 1982. This overdraft will continue to increase if utility operations are not fully financed through user rates or other City sources. Operating expenses can be monitored and reviewed with one major exception - the pass through costs of the MWCC (see previous discussion). There will be, however, a limit to the degree of expense reduction available before the quality of service declines. Because this remedy is limited, the City must consider changes to the revenue sources available. The use of a subsidy from other City funds must be carefully considered. The City does not have operating reserves available in other City Funds at this time to sub- sidize utility operations. Additionally, the philosophy of subsidizing such operations with general City monies should be reviewed in that it is contrary to the overall prin- ciple of "self sustatining" operations normally applied to enterprise operations of this type. The final alternative is utility rate increases. This alternative may be t he most viable under the current circumstances. The rate increases recommended in the rate 1 1 1 1 1 1 1 1 1 1 1 1 1