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March 19, 1983 <br />Page 7 <br />rational Needs - Sewer Fund <br />The ideal situation for an Enterprise Fund is that current <br />sales should be sufficient to cover the costs of current operations, <br />current maintenance needs and depreciation expense on assets acquired <br />from contributions and acquired with own funds. The exhibit entitled <br />Sewer Fund - Ideal Situation outlines these costs and the required <br />sewer rate per REC to generate the necessary revenues. Amounts used <br />for operations & contingency are from the previously adopted 1983 <br />Interim Sewer Budget. Depreciation on Assets Acquired from Contri- <br />butions is based upon audited depreciation schedules. Maintenance <br />is per the Public Works Director's recommendation rounded to the <br />nearest nickel per REC. Based upon these figures a sewer rate of <br />34.26 per REC per quarter would be required. For various reasons <br />a rate of $34.26 per REC per quarter is not realistic and is, there- <br />fore, not recommended. <br />The 1983 Sewer Budget proposed during last fall's budget <br />process is contained in an attached exhibit. It should be noted <br />that the rate proposed per REC of $27.75 would not generate enough <br />revenue to meet current operating expenses of $27.9677. The addi- <br />tional $0.2177 necessary to pay for current operations financed from <br />non -sales revenues. <br />Staff recommends that sewer rates be set at a level sufficient <br />to ensure that revenues from Sewer Use Fees cover the costs of current <br />operations, depreciation on assets acquired with own funds, and <br />contingency. The exhibit entitled Sewer Fund - Rate Needed To Equal <br />Current Expenses illustrates that a rate of $28.00 per REC per quarter <br />would Be required. <br />Maintenance Needs - Sewer Fund <br />Public Works Director Johnson has recommended an inspection, <br />maintenance and system improvement program that has an annual cost of <br />approximately $33,100. A rate of $1.75 per REC per quarter would be <br />required to finance that program. Staff recommends that the rate per <br />REC per quarter be increased $1.75 to finance the recommended mainten- <br />ance program. <br />Staff further proposes that 1983 Sewer Use Fees be set at <br />29.75 per REC per quarter and that the 1983 Sewer Fund Budget be <br />adopted as proposed in the exhibit labeled Sewer Fund - 1983 Proposed <br />Income Statement. <br />DB/ ds <br />Attachments