Title
Preliminary 2024 Utility Operating Budget, Rates and General Facility Charges
Recommended Action/UAC Deliverable:
Briefing only. No action requested. Review staff’s briefing on preliminary utility rates and budget for 2024.
Issue:
Review 2024 preliminary utility rates (including LOTT), operating budgets and General Facility Charges (GFC, including LOTT). Forward UAC recommendations to City Council’s Finance Committee for review on October 18, 2023. The UAC will also forward their recommendations to the City Council for review during their budget deliberations in November/December.
Staff Contact:
Gary Franks, Public Works Waste ReSources Director, 360.753.8780
Jesse Barham, Public Works Water Resources Director, 360.753.8164
Mike Vessey, Public Works Drinking Water Utility Director, 360.753.8318
Presenters:
Same as above
Background and Analysis:
The Utility Advisory Committee (UAC) reviews City utility finances, rates, and general facilities charges annually. In August, staff briefed the UAC on the preliminary 2024 operating budget key drivers for the Drinking Water, Wastewater, Storm and Surface Water, and Waste ReSources utilities.
City Utilities are expected to provide uninterrupted public health services for our community. Our responsibilities include ensuring that drinking water supplies are safe and adequate quantity, sewer infrastructure safely conveys wastewater to the LOTT treatment facility, solid waste is managed for reuse or disposal, flooding is minimized, and water quality and our urban natural resources are protected. As municipal utilities meeting the needs of our community while maintaining and upgrading our increasingly aging infrastructure is the core of our mission. Utility staff focus on effectiveness and efficiency in the delivery of these services.
Proposed 2024 Rate Increases:
Budget Review Committee recommendations for utility rate adjustments are not available at the time of writing this staff report but will be provided along with a summary of historical and bi-monthly residential utility rates at the meeting. The overall increase is expected to be 5% or less.
General Facilities Charges
Consistent with financial consultant fiscal analyses, staff is proposing increases in general facility charges (GFCs) for Drinking Water (7.4%), Wastewater (8.4%) and Storm and Surface Water (17.3%) in 2024. GFCs are a one-time charge collected from new development. The GFC increases are consistent with the City’s rate consultant’s recommendations. The charges reflect the financial value of the existing Utility infrastructure and the benefits the system provides to new development. Each of the water-related Utilities collects a unique GFC. A 2% GFC increase was also included to offset the cost of providing a 50% discount to low-income housing projects beginning in 2024 as recommended by the UAC in June of this year. The LOTT Clean Water Alliance (LOTT) collects a similar fee called a capacity development charge (CDC). LOTT proposes a 3.5% increase in the CDC for 2024. A summary historical and proposed residential GFCs and CDCs (2019 - 2024) is attached.
Climate Analysis:
Utility budgets do not have an immediate impact on greenhouse gas emissions. However, utility budgets and rates allow adaptation to address risk and vulnerability of utility infrastructure to climate impacts.
Equity Analysis:
Utility budgets and rates have potential impacts on the most vulnerable portions of the Olympia community with this least ability to pay. Utility services funded by rates also protect the environmental and human health of these communities. Utility assistance programs offset these impacts for eligible customers.
Neighborhood/Community Interests:
City utilities provide essential public health services to Olympia residents.
Financial Impact:
None at this time. However, utility rates impact our community by the utility rates that customers pay.
Attachment:
Proposed Residential GFCs and CDCs and Historical Summary (2019 - 2024)