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HomeMy WebLinkAbout7 Adoption Budget 2006 Agenda Item # �,, �J zilr r s +8� Staff Report To: Board of Directors From: Peter Holzmeister Date: January 27, 2006 Subject: Adoption of the budget for 2006 Why this matter is before the board: This matter involves adoption of the budget for 2006. Only the Board can adopt the annual budget. History: A draft budget has been presented to the Board of Directions. The draft budget recommended that water and electric rates increase 7% each, 5% for operations and 2% for cash reserves. The budget also recommended that electric and water connection charges increase by 5% each. A series of lively budget workshops were conducted. As a result of the workshops staff presented to the Board a series of possible budget cuts that result in reduction of the proposed rate increases (a copy of that analysis is attached). A public hearing was conducted at the last Board meeting. New information: Adoption of the budget for 2006 is proceeding in a manner quite different that in previous years. As of the writing of this report, the Board has not agreed upon a water and electric rate increase. Although it is unusual to adopt rate increases prior to adopting a budget, that seems to be what is necessary in this case. And I think it is workable. I think the Board has options regarding budget adoption once it has adopted rates for 2006. Option 1: If you adopt the 7% rate increases that the draft budget recommends you can adopt the budget as presented to you. Option 2: If you adopt a 6% water and electric rate increases (4% for operations and 2% for reserves), I suggest you leave the budget as is and it will be my job as General Manager to make it work. Option 3: if you adopt a 5% water and electric rate increase 3% for operations and 2% for reserves), I suggest you ask me to return to you at the next meeting with a revised budget that reflects the reduced revenue projection. € Recommendation: I recommend that the Board choose one of the above options. # T Ctj Public Utility District Resolution No. 2006 - XX ADOPTING THE BUDGET AND OVERHEAD RATES FOR 2006 WHEREAS the Board of Directors and staff of the District participated in departmental workshops in the months of August and September of 2005 to identify priority issues to be addressed by the District during 2006 and to initiate budget preparation; and WHEREAS District staff has prepared a draft budget for District operations and capital spending forthe year 2006 taking into account the strategic plan issues; and WHEREAS the Board of Directors of the District has participated in budget workshops and have conducted a public hearing on the draft budget; and NOW THEREFORE BE IT RESOLVED by the Board of Directors of Truckee Donner Public Utility District as follows: 1. The draft budget for 2006 is hereby adopted 2. The following budget overhead rates are adopted Overhead Item Overhead Rate Labor Overhead 83.67% Transportation Overhead 31.48% Inventory Overhead 26.48% Administrative Overhead 1.30% Construction Overhead 43.56% Non-inventory Material Overhead 25.00% PASSED AND ADOPTED by the Board of Directors at a meeting duly called and held within the District on the first of February 2006 by the following roll call vote: AYES: ABSTAIN: NOES: ABSENT: TRUCKEE DONNER PUBLIC UTILITY DISTRICT By J. Ron Hemig, President ATTEST: Peter L. Holzmeister, Clerk of the Board