BERLIN – Town officials reviewed Berlin’s enterprise fund budgets at a work session this week.
The Berlin Town Council on Monday met to review proposed utility fund budgets for the coming fiscal year. Town Administrator Jeff Fleetwood said the 5% and 20% increases for water and sewer rates approved last year were serving their purpose.
“Both funds, the trend is in the right way with the rate increases that were done,” he said.
Fleetwood said in an overview of the various utility funds that employee wages were being increased by 2% while health insurance rates would increase close to 4%. Liability insurance is expected to increase 5%.
“I wish to remind everyone that the utility funds operate as a quasi-business so they can operate with a profit with the exception of the electric utility because they are regulated,” he said.
Fleetwood said the electric budget was expected to increase 3% and would have a contingency of $13,000. He said that was less of a rainy day fund than in the past because of the increase in the cost of purchasing renewable energy credits.
“Those costs have gone up significantly,” he said.
Fleetwood said the stormwater budget was projected to be down 16% in the coming year because the town wasn’t anticipating receiving any grants. He said the water fund budget was up 3% but that revenues had increased by $43,000 thanks to the rate increase the council approved last year.
Fleetwood said the sewer fund revenues were up 32% because of the 20% rate increase approved last year. He said that EDU (equivalent dwelling unit) sales were down, however. In the current fiscal year, the town expected to receive $466,000 in EDU fees. Instead, the town has received $126,000.
“If you look at the annual debt, it requires the sale of 59 EDUs to pay the debt,” Fleetwood said, adding the town would experience a shortfall this year. “We are estimating the sale of 37 EDUs in the coming year.”
Mayor Gee Williams said that in the past, EDUs had come in lower than projected some years and higher than projected other years and usually balanced out.
“At this point we’re trying to take a conservative approach,” he said.
Fleetwood said the sewer fund was projected to transfer $50,000 to the general fund at the end of fiscal year 2021 to begin to repay the longstanding debt that existed, depending on its year-end balance.
“If nothing happens, everything goes well, we can make the transfer of $50,000 to the general fund,” said Finance Director Natalie Saleh. “But that’s in a perfect scenario.”
Councilman Zack Tyndall said he thought the $50,000 could be better used on capital projects.
“I think it would be better served going toward capital projects than attempting to try and repay this debt service that in my opinion we’ve not been making any effort to repay and should almost be looked at as bad debt that is uncollectable,” he said.
Saleh said writing it off as bad debt would hurt the general fund. She added that the town had only just increased water and sewer rates. Councilman Dean Burrell said he thought in light of the newly increased rates it was too early to make a decision regarding the debt.
“Writing off the debt is premature,” he said. “This is the first year of the increased rates.”
Town officials are expected to introduce the fiscal year 2021 budget at a meeting in May. A public hearing will be held soon after.
