Finance Committee Agenda and Packet 2024 11 21

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City Council Finance Committee Meeting Minutes October 17, 2024 Page 2of4 Committee Comments: Councilmember Hoefner asked if Chandler believes it will be a soft landing. Julie Hughes responded that Chandler does believe it will be a soft landing. Councilmember Hamlington asked if there are any changes to the portfolio planned in order to position the city well for upcoming economic changes. Julie Hughes responded that the portfolio is very well positioned at this time. Public Comments: None. Utility Rate Update: The Director of Public Works provided a presentation on the 2025 preliminary utility rates. The presentation was included in the meeting packet. After Fiscal Year End, Public Works will come back to the committee with a report on 2024 actuals and a final proposal for 2025 utility rates. Committee Comments: Councilmember Hoefner asked about the risks of option D. The Deputy Director of Utilities responded that, as we move funds from the Water fund to the Wastewater fund, we anticipate that the Water fund has enough balance to cover the expenditure. If there is an unexpected expenditure, less funds will end up being available and would lower the flexibility of the Water fund. Councilmember Hamlington asked if money could be moved from the General Fund to the Water fund if an event happened which would deplete the water fund. The Director of Finance responded that he doesn't believe this is possible because enterprise funds are generally required to pay their own way. The Director of Finance will confer with Legal and follow up with the committee on Legal's opinion in this matter. Councilmember Hoefner asked if the cash reserve presented on the water slide included the loan option. The Deputy Director of Utilities responded that the slide in question does include option D. The Director of Public Works added that the biggest risk to utility rate estimates is seasonal weather impacts. There was a discussion about smoothing rates. Councilmember Hamlington asked for more information about the O&M Turnback to better understand the history of the 10% turnback amount in relation to the proposal for 0%. The Director of Public Works responded that city utilities had always modeled 0% turnback in the past while the general fund uses 10% turnback in its modeling. During the 2022-2023 budget process direction was received from the Interim Mayor and City Council to align utilities' turnback approach with the general fund. Having 0% turnback would enable staff to perform more accurate estimates. Councilmember Hoefner commented that he would prefer to see the city to move away from turnback as a budgeting tool and instead having more accurate budgets with money the city expects to spend in a year.