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CITY OF MORGAN HILL
FY 16-17 and 17-18
OPERATING AND CIP BUDGET
CITY OF MORGAN HILL
FY 16-17 and 17-18
OPERATING AND CIP BUDGET
CITY OF MORGAN HILL
FY 16-17 and 17-18
CITY OF MORGAN HILL
FY 16-17 and 17-18
OPERATING AND CIP BUDGET
CITY OF MORGAN HILL
FY 16-17 and 17-18
OPERATING AND CIP BUDGET
CITY OF MORGAN HILL
FY 16-17 and 17-18
OPERATING AND CIP BUDGET
CITY OF MORGAN HILL
Wastewater Operations
(continued)
FINANCIAL COMMENTS
In FY 15-16, the City Council went through an extensive utility rate study to ensure both public safety and public health
for the Morgan Hill community are maintained. As a result of the rate study, the Council approved a five year annual
rates increase plan to ensure that the integrity and reliability of the essential community assets can be maintained,
aging and inefficient infrastructure replaced, provide proper reserve levels in accordance with Council policy and
legally required debt coverage, and that sufficient annual operating revenue would be generated to pay all annual
operating expenses. The new rates became effective January 1, 2017 with ratepayers seeing an increase of 2.0 percent
in fixed meter and consumption charges, and further rate adjustments of 2.0 percent on January 1 of each subsequent
years through 2020. The Council did not implement the previously approved 3.5% rate increase on January 1, 2016.
The two-year recommended budget in Wastewater Operations incorporates a reduction in water consumption from
the 2013 base year level by 30% in FY 16-17 and 20% in FY 17-18. This reduction level is projected to have a nominal effect
on sewer service fees revenue. The recommended revenue for sewer service fees are $10.2 million in FY 16-17 and
$10.6 million in FY 17-18.
With the approved rate increases, the Water Operations would transfer $250,000 per year to the Wastewater Rate
Stabilization Fund. Debt service payments for the 2015 Sewer Revenue Bond are $1,936,300 in FY 16-17 and $1,845,120
in FY 17-18 (budgeted in the Transfer Out-643 line item). The Sewer Charges Maintenance/ Operations (SCRWA)
budgets are consistent with previous forecast assumptions at $4.2 million in FY 16-17 and $4.4 million in FY 16-17.
SCRWA has adopted policies that increased the amount that the City contributes to the reserve fund and it is expected
that the reserve fund contributions will continue to increase over the next 15 years in order for the plant to maintain
adequate operations and major maintenance reserves funds.
The FY16-18 recommended budget also includes a new GIS Manager position, which will be funded 13% by Wastewater,
and remainder by the General, Community Development, Park Maintenance, Water Funds.