HomeMy WebLinkAboutIR 9519 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9519
To the Mayor and Members of the City Council October 16, 2012
`�` Page 1 of 1
r
SUBJECT: IMPACT OF DENIAL OF WATER RATE INCREASE ON WATER AND
rF SEWER FUND
At the September 18, 2012, City Council meeting, the Council amended M&C G-17679 to
authorize an increase in retail rates for sewer volumes and deny a proposed increase in retail
water rates. As a result, budgeted expenditures in the Water and Sewer Fund exceed budgeted
revenue by $5.9M in the FY2013 Adopted Budget.
The City Manager's Proposed Budget included an increase of 3.26% for retail water services.
This included an increase in the monthly service charge and a 3% across the board increase for
retail water volumes. Following discussions with the Water Department's Retail Rate Structure
Advisory Committee, the Water Director recommended the across the board increase to phase in
the impact of projected raw water rates charged by the Tarrant Regional Water District (TRWD).
Based on preliminary projections provided by TRWD, raw water rates will increase 11.27% in
FY2014 and will continue to change over the next 10 years. City Council action denying the
across the board increase for FY2013 will result in the absorption of the full cost of the raw water
increase into the FY2014 budget, potentially requiring significant increases to retail water volume
rates.
Choosing not to include the across the board increase in FY2013 did not impact budgeted
expenditures for water services; however, denying the proposed increase in the monthly service
charge created a gap of water expenditures to revenue of $1.1 M or 0.6%. The department will
use reserves to offset the loss of revenue.
In addition to covering budgeted expenditures and phasing in the impact of increased raw water
charges, the proposed water rate increase would have balanced overall revenue to the Water and
Sewer Fund. As presented to the City Council, lower than projected sewer flows over the last
several years necessitate an increase in sewer volume rates. The City Council approved a 2.6%
increase to retail sewer rates as part of a three-year plan to restore sewer rates to cover the cost
of providing sewer services. The FY2013 adopted budget for sewer services includes a $4.8M
gap between revenue and expenditures. The department will use reserves to close the funding
gap. The department will also closely monitor actual revenues and manage expenditures to limit
the use of reserve funds.
Should you have any questions, please contact Frank Crumb at 817-392-8207.
Tom Higgins
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS