Report Prepared by: Stephanie R. Dietz, City Manager
Title
SUBJECT: Review, Discussion and Direction Regarding Community Funding Requests, Water Rates, and of the City of Merced Fiscal Year 2022/23 Budget
REPORT IN BRIEF
Review of the Community Funding Requests, Discussion and Direction on Water Rates, and the City Manager’s proposed FY 2022/23 Budget.
RECOMMENDATION
For information and discussion only.
Body
AUTHORITY
Charter of the City of Merced, Section 1104.
CITY COUNCIL PRIORITIES
As provided for by the City Council during priority setting session.
DISCUSSION
The City Council and the Public to be presented the proposals for Community Funding and City Manager’s proposed FY 2022/23 budget.
Water Rate Update
The last Water Rate and Connection Fee study was completed and adopted by the City Council on November 5, 2018. The water rate study indicated 2% increase annually to rates and fees over 3 years. As of 2022-23 the adopted ordinance requires the City to increase its fees per a consumer price index (CPI) annually until the next Water Rate Study is completed and adopted. The current water rate for a single-family home is $32.25, which includes a cumulative increase of $1.86 over the last 3 years. If the city increases the Water Rate based on the ordinance it is scheduled to increase $2.41 (7%) and would be effective 7/1/2022. Attached you will find the last 3 years of increases and what the increases would be if we implemented per the ordinance.
The City will be working on completing a new Water Rate Study after the City’s Sewer Master Plan and a Sewer Rate Study has been finalized.
The Water operating fund is financially stable and healthy. It is recommended that it should have a six-month reserve and it is currently carrying two years of reserves. Due to the healthy reserve, the large increase the CPI would create, and to be consistent with Council direction on other fees in light of the ongoing COVID-19 pandemic, staff is recommending no increases to water rates at this time.
In order to not increase the water rates the City Council would need to adopt a resolution stating the water rates will not increase in July 2022. If the City Council agrees with this direction a resolution will be presented to the Council at the June 6, 2022 Council meeting for adoption.
Community Funding Proposals
As is customary during the Budget process, staff released an RFP on April 1, 2022 to allow for local community groups to provide proposals for funding in support of the City Council’s adopted Goals & Priorities for FY 2022/23. Proposals were due to the City on April 29, 2022, with a total of 10 proposals submitted for City Council consideration as summarized below:
The Council Sub-Committee on Budget is in the process of scoring proposals. Staff will work to present the aggregated scores for full Council direction once they are received.
FY 2022/23 Budget
In accordance with the Merced City Charter Section 501(b), staff will present the City Manager Recommended Budget for FY 2022/23, with a total proposed budget of $383.4 million, General Fund amount of $56.9 million, for the City Council’s consideration.
ATTACHMENTS
1. Water Rate Schedule
2. Community Funding Proposals
3. FY 2022/23 Budget Message