CC WORKSESSION 02041997 - Laserfiche WebLink

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z In 1988, the City Council passed ordinance 1988 -004 relating to sewer rates and charges. It states that all sewer charges shall be at the rate of $1.20 per hundred cubic feet of water used plus a Metro Waste surcharge as determined by the following formula: Metro Waste Rate Surcharge Formula X = .88Y -$.88 $315,000 X = Surcharge per 100 cubic feet Y = Metro Waste charges for calendar year ($448,148 in '97) Using this formula, the charge for sanitary waste disposal in 1997 is $1.58 per 100 cubic feet. This would produce a projected sewer revenue of $632,000. With expenditures of $675,500, a deficit of ($43,500) exists. What this points out, is that the current formula is inadequate to produce revenues needed to balance the 1997 operating budget. The formula works fine when there is an increase in Metro Wastes charges, but, when sewer disposal costs decrease and inflationary increases occur in other portions of the sewer budget (salary & benefits) the formula is inadequate and needs revision. To balance the 1997 operating budget, the sewer rate needs to be $1.72 per hundred cubic feet commencing the first quarter in 1997. Recommendation: The formula be change to included inflationary increases to the annual operating budget other than Metro Waste's charges. I discussed this issue with the City Auditor and we are recommending the ordinance be changed to: Metro Waste Rate Surcharge Formula X = .88Y -$.88 + Z $315,000 X = Surcharge per 100 cubic feet Y = Metro waste charges for calendar year Z = Inflationary adjustment for operating budget By making this change the sewer rate for 1997 would be established at $1.72 per 100 cubic feet and balance the 1997 sewer budget. In addition, the revision corrects the formula for future years.