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PR council sets budget for enterprise funds

Not including depreciation costs, capital projects and transfers out to other funds, the Park Rapids airport, water, sewer, stormwater, liquor store and internal service funds could see a combined net income of more than $500,000 next year.

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Park Rapids City Hall (Enterprise file photo)

The Park Rapids City Council on Dec. 14 approved 2020 budgets for the city’s enterprise, airport and internal service funds.

The enterprise funds include water, sewer and stormwater utilities and the municipal liquor store. The internal service fund concerns the operation of the city’s public works/public safety building.

“The enterprise funds are no different than anybody that has a business,” said City Treasurer Angela Brumbaugh. “We have revenue that supports the expenditures on them.”

Unlike the general fund and bond service budgets, she explained, these expenses are not funded by taxes but by other revenue, such as rental income, grants, fines, penalties, interest, service fees and retail sales.

In a general summary of these proposed budgets, Brumbaugh reported:

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  • Airport fund revenues totaling $262,833 and expenses of $279,536 are expected – a loss of $16,703. Not counting $20,000 in capital expenses, that’s a net income of $3,297.
    Overall, the 2020 airport expenditure budget is decreasing $970,000 compared to 2019.

  • Water fund revenues of $706,230 and expenses of $1,230,125 are projected – a loss of $523,895. Not counting $225,000 in capital expenses and $495,000 in depreciation costs, that’s a net income of $196,105.
    The overall $345,000 decrease from 2019 water fund budget is largely due to the city’s water towers being painted this year.

  • Projected sewer revenues of $474,830 and expenses of $874,383 make a loss of $399,553. Disregarding $75,000 in capital expenses and $400,000 in depreciation costs, that’s a net income of $75,447.
    The overall $742,000 decrease from 2019’s sewer fund budget is because the RDO sewage treatment facility is fully depreciated, so this cost will no longer affect the city’s budget; also, main lift station improvements were completed this year.

  • Stormwater utility revenues are pegged at $117,700 and expenses at $177,440 – a loss of $59,740. Disregarding $12,000 in capital expenses, $60,000 in transfers out to other funds and $25,500 in depreciation costs, that’s a net income of $37,760.
    The 2020 stormwater fund budget is decreasing $197,000 compared to 2019.

  • Liquor store revenues are budgeted at $3,201,500 and expenses at $3,077,774 – an income of $123,726. Not counting $10,000 in capital expenses, $10,000 in transfers out and $41,000 in depreciation, that’s a net income of $184,726.
    Liquor fund expenditures are expected to increase $29,000, or 19 percent, compared to last year’s budget. Liquor revenues are expected to go down approximately $2,000 from 2019, a difference of less than one-tenth of a percent.

  • Internal service revenues of $125,437 and expenses of $132,670 are expected – a loss of $7,233. Disregarding $60,000 in capital expenses and $17,000 in depreciation, that’s a net income of $69,767.
    Overall, the budget for this fund is increasing $34,000 from last year.

Brumbaugh walked the council through the enterprise fund budgets to discuss major changes from 2019 to 2020.
On the expenditure side, they noted:

  • A $1,500 increase for airport building maintenance will go toward replacing T-hangar light fixtures with LED lighting and updates to the arrival-departure building.

  • A new $1,500 is budgeted for airport vehicle maintenance to share repair costs on Public Works Supervisor Scott Burlingame’s pickup, because Burlingame also serves as airport manager.

  • A $2,600 increase for airport vehicle fuel costs and a $2,000 decrease for airport electric utilities are both based on actual 2019 expenditures.

  • A $140,000 decrease for airport architect’s fees was due to a planned project being delayed until 2021.

  • A $20,000 increase for airport capital outlay is to upgrade T-hangar door locks. Public Facilities Superintendent Chris Fieldsend said this is to address a security concern and will be paid for by an increase in rent.

  • A $3,000 expenditure for a possible online payment system, split between the water and sewer funds, was pulled from the budget. Council members asked staff to explore this in more detail for discussion with the 2021 budget.

  • Increases totaling $5,000 for minor equipment, also split between water and sewer, were for GIS (geographic information system) mapping of city utilities and a machine to help utility workers open valves more easily. An additional $5,000 is budgeted for stormwater engineering expenses for the same GIS project.

  • A $3,600 budget for water permit fees was corrected to $2,100.

  • Capital outlay for the water department is being reduced by $365,000. The remaining $225,000 budgeted for that line-item breaks down to $75,000 for a heated storage shed and $150,000 to drill a new well. “That way we’re not dependent on a single well, so if that fails, like what happened this year, we’re not scrambling to get that back online,” said City Administrator Ryan Mathisrud.

  • A $1,000 increase for sewer building maintenance is for lift station building repairs.

  • A $2,500 increase for liquor store building maintenance is for tile, paint and concrete sealing.

  • A $1,600 increase for janitorial services at the liquor store is due to that expense being moved from a different line-item.

  • Liquor store manager Scott Olson explained a $44,000 increase in the cost of merchandise for resale as being based on projected sales revenues. He also noted that recently implemented tariffs are affecting cost of some liquor products, but on-shelf process are being adjusted as well.

  • A stormwater grounds maintenance cost of $30,000 is planned for 2020. Burlingame explained this is to enlarge the drainage basin in the Timbers neighborhood, where there have been flooding issues in past years.

  • A $12,000 expenditure for stormwater capital outlay will allow the public works department to acquire a new trailer-mounted steamer and to get rid of the old Ford pickup used to haul around the old steamer.

  • Transfers out from the stormwater fund help with bond payments.

  • A $40,000 increase in the budget for capital outlay at the public works/public safety building is largely to install access-control door locks.

On the revenue side, the council noted:

  • The state reimbursement for the airport’s maintenance and operations is increasing by $22,123 for 2020. “In the 17 years I’ve been here, I’ve never seen them raise it this much,” said Brumbaugh, noting that the state pays 70 percent of the city’s reported expenses in the airport fund.

  • Rental income to the water fund is increasing $2,780 next year from cellular service providers renting space on the water towers.

  • Based on a four-year average of actual revenues, budgeted revenue from water service fees is going down $6,000, but merchandise sales in the water fund are going up $4,500.

  • Brumbaugh explained that a new tiered system for water billing, designed to encourage users to conserve water, was required with the financing for the city’s water treatment plant. Sewer billing is based on the volume of water used, except for irrigation purposes.

  • Special assessment revenues for the water and sewer funds come from unpaid utility bills being added to customers’ county tax bill.

During the regular city council meeting that followed the budget workshop, council member Erika Randall moved to approve the budget for these funds as presented, with a few changes discussed during the workshop. The motion passed without dissent.

Related Topics: GOVERNMENT AND POLITICS
Robin Fish is a staff reporter at the Park Rapids Enterprise. Contact him at rfish@parkrapidsenterprise.com or 218-252-3053.
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