Title
Preliminary 2024 Utility Operating Budget Drivers and Trends
Recommended Action/UAC Deliverable:
Briefing only. No action requested.
Issue:
Review 2023 preliminary operating budgets drivers
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 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 will brief the UAC on the preliminary 2024 operating budget key drivers for the Drinking Water, Wastewater, Storm and Surface Water, and Waste ReSources utilities. Draft operating budgets will not be complete until August 2 at the earliest. Greater detail will be presented at the meeting, but at this time, key drivers for the utilities operating budgets include:
• Inflationary costs for materials and services (CPI was 3.0% June 2022-June 2023)
• Cost of living adjustments of between 4.0 and 5.5 percent
The following critical needs have been requested to be added to the 2024 budgets:
• A request for a Program Specialist to support pollution source control inspections in Storm and Surface Water
City Utilities are expected to provide uninterrupted public health services for our community. Our responsibilities include ensuring that drinking water is healthy, sewer infrastructure safely conveys wastewater to the LOTT treatment facility, solid waste is managed for reuse or disposal, flooding is minimized, 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.
The City Utilities are municipal enterprise funds. They are financially self-supporting without the input of general tax funds. Conversely, Utility revenue does not support tax-based City programs. However, the Utilities pay a fair share of various City overhead costs (e.g., building mortgage, legal and executive services). Annual savings remain in the Utilities and carry-over to the following year or are diverted to the capital budget.
On August 14th, the Budget Review Committee comprised of the City Manager and selected members of his executive team, will evaluate the draft operating budgets and make recommendations.
In September, those recommendations will be presented to the UAC. At that time, the UAC will be asked to forward a recommendation to the City Council’s Finance Committee for review on in September.
In order to balance each of the Utilities Operating Budgets, we anticipate the need to increase rates and will present rate recommendations to the UAC in September. The LOTT Clean Water Alliance has proposed a 3.0 percent rate increase for 2024.
In October, the UAC will have a final opportunity to review the 2024 utility operating budgets, utility rates and general facility charges and will be asked to forward their recommendations to the City Council for review during their budget deliberations.
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.
Attachments:
None