UNION — Fund balance and retained earnings will be used to balance the proposed 2014-2015 City of Union Municipal Budget which will also include increases in electric, water, and sewer rates.
In a budget work session Monday morning, Finance Director Walker Gallman presented Union City Council with the proposed 2014-2015 budget.
The proposed budget totals $45,357,390, an increase of $3,487,040 or 8.3 percent over the current budget of $41,870,350.
The city budget is made up of the general fund which covers municipal government functions such as the public safety department, public service/street department, city court, community services, city attorney, and general administration; solid waste management fund which covers municipal garbage collection; and the utility department which includes the electrical, natural gas, water, and sewer divisions.
The largest part of the city budget is the utility fund which totals $37,634,120 in the proposed budget, an increase of $3,577,880 over the current budget of $34,056,240. Gallman said the increase in the utility fund budget is due to the increased cost of energy.
While utility expenditures total $37,634,120, revenues are projected to total only $36,624,240, leaving a deficit of $1,009,880. Gallman said the utility budget will be balanced with a transfer from the department’s retained earnings.
The increased cost of energy will be passed along to city customers who will see increases in their electric, water, and sewer rates. Gallman said that based on an average usage of 4,000 gallons a month plus the electric basic facilities increase of $3.26, residential customers living within the city will see their utility bills increase by $7.86 while those living outside the city will see their utility bills increase by $10.13.
Gallman said the natural gas base rates are not being increased in the proposed budget due to the growth in the city’s residential customer base and increased use by industrial customers.
While there is no rate increase in the budget, Gallman cautioned that customers could still experience higher bills due to the cost of natural gas increasing. He said this was because each month the city will “true up” the cost of the gas it purchases and this will be reflected in customers’ bills. In addition, Gallman said that many city customers experience higher gas bills, not because of the increased cost of gas, but because of colder weather this past winter and that this could happen again.
The proposed 2014-2015 general fund budget totals $5,704,070 or $12,410 less than the current budget of $5,716,480. Gallman said that the decrease occurred despite increases in the cost of general insurance for tort and liability coverage and for city attorney services. It also occurred despite the inclusion of two part-time employees employed by The Union Connection; increased health insurance costs; and a one percent cost of living allowance.
Gallman said the decrease was due to the elimination of the transfer from the general fund to the solid waste management fund which this year totaled $49,110. He said the transfer was eliminated from the proposed budget due to the inclusion a $1 increase in the monthly fee charged municipal residents for garbage collection. The additional dollar — which increases the fee from $15 a month to $16 — will generate approximately $48,200 in additional revenue. With the increase, solid waste management revenue is projected to total $771,260 for fiscal 2014-2015 while expenditures are projected to total $763,200 leaving a positive balance of $8,060.
Even with the decrease, general fund expenditures ($5,704,070) are still projected to exceed revenues leaving a deficit of $576,190. The general fund budget will balanced with a combination of a 1.7 mill tax increase allowed by law which is projected to generate $24,650 in additional revenue with the balance of the deficit covered by a transfer from the city fund balance.
The proposed budget also includes an 8.3 mill property tax surcharge to enable the city to recoup prior year deficits from fiscal 2012 and 2013. Gallman said a homeowner with a house valued at $100,000 will pay $33 under the property tax surcharge. The surcharge, however, is for one year only and will be eliminated from the municipal tax rolls at the end of fiscal 2014-2015.
Despite the increases, Gallman said the municipal tax rate will remain the same as this year’s at 92.5 mills. He said this is due to the fact that the city already has a property surcharge on this year’s rolls which will drop off at the end of the current fiscal year.