.KPU Gen~ral Maua;er 334- Frant.Strcct Ke!chilcm, AK ~~'90 I

Transcription

1 .KPU Gen~ral Maua;er 334- Frant.Strcct Ke!chilcm, AK ~~'90 I Ph.-m~ (907) Fax (907) Sa TRANSMITTAL MEMORANDUM DATE: The Honorable Mayor and City Council Karl R. Amylon, General Manager December 3, 2015 RE: Resolution No Adopting The Budget For The Year 2016, Appropriating From The Ketchikan Public Utilities Enterprise Fund For The Fiscal Year 2016; And Establishing An Effective Date The City Council has scheduled its first deliberation session on the draft 2016 Ketchikan Public Utilities Operating and Capital Budget for Wednesday, December 9, 2015 at 7:00p.m. in the City Council Chambers. Budget updates are attached for City Council review. The table below lists the KPU budget updates and indicates whether motions are recommended. Update 2016 Ketchikan Public Utilities Operating and Capital Budget Update No. 1 - Impact of Proposed Rate Increases 2016 Ketchikan Public Utilities Operating and Capital Budget Update No. 2 - Revised Appropriation Requests for Telecommunications 2016 Ketchikan Public Utilities Operating and Capital Budget Update No Cost of Living Adjustment for KPU Non Represented Employees 2016 Ketchikan Public Utilities Operating and Capital Budget Update No. 4 - Correction to Letter of Transmittal " Motion Recommended No Yes Yes Yes

2 Additional budget updates and/or revisions may be submitted to the City Council at its meeting of December 9, AGENDA /15- KPUNB1

3 Get!~!':~ ; : ~~'!-g~ :n/i. frant.srrcct: Ke.lchik;ln, AK9~~9rj I Phm\c:(9tjn 22 ~~%113 F~ (907) TRANSMITTAL MEMORANDUM DATE: RE: The Honorable Mayor and City Council Karl R. Amylon, General Manager November 16, Ketchikan Public Utilities Operating and Capital Budget Update No. 1 - Impact of Proposed Rate Increases At the budget deliberation session of November 12, 2015, Councilmember Coose requested a schedule showing the actual financial impacts of the rate increases proposed in the draft 2016 General Government and KPU Operating and Capital Budgets. Attached for City Council review is a memorandum from Finance Director Bob Newell, which responds to Councilmember Coose's request. FY16 Ketchikan Public. Utilities Operating and Capital Budget Update No. 1

4 "U NAPPROVED" November 12, 2015 Harbor Construction Fund was going to have a fund balance of $1,353,000, and if the Council adopts the recommended motion, the fund balance will decrease to $837,000. Councilmember Coose said he would like to see actual dollar amounts for sewer, water and garbage rates that are increasing. He also commented on switching the City's wireless to KPU, and Manager Amylon said that is a recommendation that is going to be pulled back and staff will provide revised numbers. In response to Councilmember Gage, Finance Director Newell said the head tax was last raised in 2006, and it was recently extended when it was scheduled to sunset. He went on to explain how the head tax is assessed and utilized, and the regulations that drive its use. Discussion regarding the state audit on such funds ensued. Councilmember Gage asked about using CPV funding to support infrastructure (water, sewer) projects, and Manager Amylon explained if it could be shown to benefit the cruise industry, it may be possible to use a portion. Mayor Williams asked that staff provide the totals for the cost-of-living increases for the non-represented employees. In response to a question from the mayor, Finance Director Newell said the City earned $10.8 million and staff was projecting $11.78 million for He went on to say so far the projections are to come in at $11.45 million, but there has been no third quarter report yet. Mayor Williams asked about revenue sharing, and Manager Amylon said he expects some funding from the state. Finance Director Newell said approximately $38 million has been set aside for revenue sharing, but the governor is going to try to kick that up to $50 million. He said if that happens the City will receive $408,000, but if the governor is not successful the City's share will be $299,000. Finance Director Newell answered Mayor Williams about the money owed to General Government that was borrowed by KPU, saying money will be going into the Community Facilities Development Fund, the Self-Insurance Fund and the Port Enterprise Fund. He said the total amount will be $487,000. Councilmember Coose questioned how the charges were dealt with concerning ambulances, and Finance Director Newell noted there were several tiers depending on the acuity level. He commented we do not break even. Councilmember Sivertsen suggested that perhaps CPV funds could be used to partially support ambulance services due to the number of runs made for cruise ship passengers. Councilmember Coose asked for the allocation percentage for the interdepartmental charges attributed from the Solid Waste Division and Wastewater Division for the past several years. Finance Director Newell explained the auditor has approved the method used to determine the amounts of the allocations. 3

5 MEMORANDUM CITY OF KETCHIKAN, ALASKA Finance Department Office of the Finance Director Bob Newell, Finance Director Camille Nelson, Financial Analyst Phone: (907) Facsimile: (907) Karl R. Amylon, City Manag Bob Newell, Finance Director DATE: November 13, 2015 SUBJECT: 2016 Ketchikan Public Utiliti Operating and Capital Budget Update No. 1: Impact of Proposed Rate Increases The schedule showing the annual financial impact of the proposed rate increases to residential customers of the City's utility services is as follows: Current Proposed Amount of Monthly Monthly Monthly Amount of Annual Utili~ Rate Increase Cha!lJe Charge Increase Increase Electric 5% $88.62 (1) $93.06 (1) $4.44 (1) $53.28 (1) Water 8% $48.19 $52.05 $3.86 $46.32 (1) Cost per kwh will increase from $ to $ Based on an average montly consumption of 925 kwh.

6 K_PU Geot"?l Manag~ 334 forcnt Sm:cr Ke!dllk~n, A'K 999(,:01 Phm~e-(9')7) ns Fax (907) 22'5-5117) TRANSMITTAL MEMORANDUM DATE: RE: The Honorable Mayor and City Council Karl R. Amylon, General Manager November 16, Ketchikan Public Utilities Operating and Capital Budget Update No. 2- Revised Appropriation Requests for Telecommunications At its budget deliberation session of November 12, 2015, my office advised the City Council that the deployment of a KPU wireless voice offering would not take place on schedule and that staff would be proposing revised appropriation requests for Telecommunications (Account No ) for the various Ketchikan Public Utilities divisions. Attached for City Council review is a list of revised 2016 appropriations requests for Telecommunications for the various Ketchikan Public Utilities divisions. Approval of the revised requests would result in a net reduction of $27,842. A motion has been prepared for City Council consideration.. RECOMMENDATION It is recommended that the City Council adopt the motion revising the 2016 Ketchikan Public Utilities Operating and Capital Budget departmental appropriation requests for Telecommunications (Account No ) as detailed in the General Manager's memorandum dated November 16, 2015 resulting in a net reduction of $27,842. Recommended Motion: I move the City Council revise the 2016 Ketchikan Public Utilities Operating and Capital Budget departmental appropriation requests for Telecommunications (Account No ) as detailed in the General Manager's memorandum dated November 16, 2015 resulting in a net reduction of $27,842. FY16 Ketchikan Public Utilities Operating and Capital Budget Update No.2

7 "UNAPPROVED" November 12, 2015 of living adjustments have yet to be programmed next year for PSEA employees and non-represented employees. Consistent with the Council's policy of raising rates for each $1 million of debt issued, a seven percent increase in harbor rates has been proposed for He explained this was largely attributed to the Council's decision to move ahead with the Hole-In-The-Wall Harbor Replacement Project. Wastewater rates are programmed to increase by eight percent. He said the Wastewater Services Fund lacks the financial resources to fund operations and urgently required infrastructure replacement. He reminded this was confmned by the study conducted by the FCS Group and staff recommends that the Council follow through on the recommendations in the company's report. Solid waste disposal rates have been programmed to increase twenty percent and solid waste collection rates have been programmed to increase ten percent. He commented the increases are largely due to the new solid waste disposal contract with Regional Disposal Company that was approved by the Council earlier this year. The assumption was that a KPU-branded or Verizon wireless voice would become available on or about January 1, He noted based on current discussions with Telecommunications Division staff, it appears that such an offering may not be available on that schedule. He said he will be working with staff to Qresent alternative projections for next year's Telecommunications Services accounts, and he requested that the Council take no action on those draft figures until such time as the alternative numbers are presented. Expected reductions in state revenues are anticipated. He said while not expected to have a major impact on the budget, state revenue sharing and commercial passenger vessel revenues may be at some risk at some point in the future as the legislature attempts to deal with the state's fiscal restraint. On the expenditure side, he went on to say staff believes that outstanding issues need to be addressed, including major capital improvements such as storm water infrastructure enhancement, and additional expansion or modification to the Port of Ketchikan's berthing capacity infrastructure. Manager Arnylon said next year's draft spending plan is not a fixed document, reminding that Budget Update No. 1 was presented tonight regarding raw fish tax funds. He commented the receipts for 2016 are now projected at $237,875 and clearly the Council will need to respond accordingly. In response to Mayor Williams, Finance Director Newell said the Raw Fish Tax Fund is being dedicated to two things: capital improvements for the Harbor Department, and last year the Council decided to put $100,000 into KPU to offset the subsidy for seafood processors' water rates. He said based on what we thought we were going to get, the 2

8 "UNAPPROVED" November 12, Harbor Construction Fund was going to have a fund balance of $1,353,000, and if the Council adopts the recommended motion, the fund balance will decrease to $837,000. Councilmember Coose said he would like to see actual dollar amounts for sewer, water and garbage rates that are increasing. He also commented on switching the City's wireless to KPU, and Manager Amylon said that is a recommendation that is going to be pulled back and staff will provide revised numbers. In response to Councilmember Gage, Finance Director Newell said the head tax was last raised in 2006, and it was recently extended when it was scheduled to sunset. He went on to explain how the head tax is assessed and utilized, and the regulations that drive its use. Discussion regarding the state audit on such funds ensued. Councilmember Gage asked about using CPV funding to support infrastructure (water, sewer) projects, and Manager Amylon explained if it could be shown to benefit the cruise industry, it may be possible to use a portion. Mayor Williams asked that staff provide the totals for the cost-of-living increases for the non-represented employees. In response to a question from the mayor, Finance Director Newell said the City earned $10.8 million and staff was projecting $11.78 million for He went on to say so far the projections are to come in at $11.45 million, but there has been no third quarter report yet. Mayor Williams asked about revenue sharing, and Manager Amylon said he expects some funding from the state. Finance Director Newell said approximately $38 million has been set aside for revenue sharing, but the governor is going to try to kick that up to $50 million. He said if that happens the City will receive $408,000, but if the governor is not successful the City's share will be $299,000. Finance Director Newell answered Mayor Williams about the money owed to General Government that was borrowed by KPU, saying money will be going into the Community Facilities Development Fund, the Self-Insurance Fund and the Port Enterprise Fund. He said the total amount will be $487,000. Councilmember Coose questioned how the charges were dealt with concerning ambulances, and Finance Director Newell noted there were several tiers depending on the acuity level. He commented we do not break even. Councilmember Sivertsen suggested that perhaps CPV funds could be used to partially support ambulance services due to the number of runs made for cruise ship passengers. Councilmember Coose asked for the allocation percentage for the interdepartmental charges attributed from the Solid Waste Division and Wastewater Division for the past several years. Finance Director Newell explained the auditor has approved the method used to detennine the amounts of the allocations. 3

9 ~ --~ KPU Operating and Capital Budget Revised 2016 Appropriation Requests for Telecommunications (Account No ) foepartm mt Draft Telecommunications 2016 Revised Telecommunications - I General Manager 3,850 2,000 Sales, Marketing & Customer Service 32,250 30,000 Electric 138, ,000 Telecommunications 161, ,500 Water Division 36,195 35,000 Totals 372, ,500 ($27,842)

10 Gcn~ral Mlu~agcr 3J4 Frnm Sm:cr Kelchik:w, AK9999 I Phon<'l (9()7),22S-5c;(),3 F~ (!i'oih~ TRANSMITTAL MEMORANDUM DATE: RE: The Honorable Mayor and City Council Karl R. Amylon, General Manager November 18, Ketchikan Public Utilities Operating and Capital Budget Update No Cost of Living Adjustment for KPU Non-Represented Employees At the budget deliberation session of November 12, 2015, Mayor Williams requested a schedule showing the cost of a two percent COLA for KPU non-represented employees in Fiscal Year Attached for City Council review is a memorandum from Finance Director Bob Newell, which responds to Mayor Williams' request. In the event that the City Council wishes to add the cost of the COLA to the draft budget, a motion has been prepared for formal consideration. RECOMMENDATION It is recommended that the City Council adopt the motion amending the 2016 Ketchikan Public Utilities Operating and Capital Budget to increase the cost of personnel services and benefits by $41,918 in order to provide a 2% cost of living adjustment for the classified non-represented employees of KPU. Recommended Motion: I move the City Council amend the 2016 Ketchikan Public Utilities Operating and Capital Budget to increase the cost of personnel services and benefits by $41,918 in order to provide a 2% cost of living adjustment for the classified non-represented employees of KPU. FY16 Ketchikan Public Utilities Operating and Capital Budget Update No.3

11 "UNAPPROVED" November 12, 2015 Harbor Construction Fund was going to have a fund balance of $1,353,000, and if the Council adopts the recommended motion, the fund balance will decrease to $837,000. Councilmember Coose said he would like to see actual dollar amounts for sewer, water and garbage rates that are increasing. He also commented on switching the City's wireless to KPU, and Manager Amylon said that is a recommendation that is going to be pulled back and staff will provide revised numbers. In response to Councilmember Gage, Finance Director Newell said the head tax was last raised in 2006, and it was recently extended when it was scheduled to sunset. He went on to explain how the head tax is assessed and utilized, and the regulations that drive its use. Discussion regarding the state audit on such funds ensued. Councilmember Gage asked about using CPV funding to support infrastructure (water, sewer) projects, and Manager Amylon explained if it could be shown to benefit the cruise industry, it may be possible to use a portion. MaY.or Williams asked that staff provide the totals for the cost-of-living increases for the non-represented employees. In response to a question from the mayor, Finance Director Newell said the City earned $ 10.8 million and staff was projecting $11.78 million for He went on to say so far the projections are to come in at $11.45 million, but there has been no third quarter report yet. Mayor Williams asked about revenue sharing, and Manager Amylon said he expects some funding from the state. Finance Director Newell said approximately $38 million has been set aside for revenue sharing, but the governor is going to try to kick that up to $50 million. He said if that happens the City will receive $408,000, but if the governor is not successful the City's share will be $299,000. Finance Director Newell answered Mayor Williams about the money owed to General Government that was borrowed by KPU, saying money will be going into the Community Facilities Development Fund, the Self-Insurance Fund and the Port Enterprise Fund. He said the total amount will be $487,000. Councilmember Coose questioned how the charges were dealt with concerning ambulances, and Finance Director Newell noted there were several tiers depending on the acuity level. He commented we do not break even. Councilmember Sivertsen suggested that perhaps CPV funds could be used to partially support ambulance services due to the number of runs made for cruise ship passengers. Councilmember Coose asked for the allocation percentage for the interdepartmental charges attributed from the Solid Waste Division and Wastewater Division for the past several years. Finance Director Newell explained the auditor has approved the method used to determine the amounts of the allocations. 3

12 s MEMORANDUM CITY OF KETCHIKAN, ALASKA Finance Department Office of the Finance Director Bob Newell, Finance Director Camille Nelson, Financial Analyst Phone: (907) Facsimile: (907) DATE: SUBJECT: Karl R. Amylon, City Manager/KPU General Manager Bob Newell, Finance Director 0 J November 18, 2015 (}f 2016 KPU Operating and Capital Budget Update No. 3: Cost of Living Adjustment At the City Council's budget work session of November 12, 2015, Mayor Williams requested that staff provide an estimate of a 2% cost of living adjustment for the classified non-represented employees of KPU. Assuming a January 1, 2016 effective date, a 2% cost of living adjustment would cost $41,918, including benefits of$10,457. In the event that the City Council desires to amend the 2016 Operating and Capital Budget to include a 2% cost of living adjustment for the classified non-represented employees of KPU, the following motion has been prepared. I move the City Council amend the 2016 KPU Operating and Capital Budget to increase the cost of personnel services and benefits by $41,918 in order to provide for a 2% cost of living adjustment for the classified non-represented employees of KPU.

13 Geo('ml Manager ;}J4 Front Street ~tchika.n, AK9990 I Phone (907) Fax (907) TRANSMITTAL MEMORANDUM DATE: RE: The Honorable Mayor and City Council Karl R. Amylon, General Manager November 18, Ketchikan Public Utilities Operating and Capital Budget Update No. 4 - Correction to the Letter of Transmittal The attached budget update which corrects the Letter of Transmittal for the Ketchikan Public Utilities Operating and Capital Budget was prepared by Finance Director Bob Newell. No action is required. FY16 Ketchikan Public Utilities Operating and Capital Budget Update No.4

14 MEMORANDUM CITY OF KETCHIKAN, ALASKA Finance Department Office of the Finance Director Bob Newell, Finance Director Camille Nelson, Financial Analyst Phone: (907) Facsimile: (907) DATE: SUBJECT: Karl R. Amylon, City Manager/KPU General Manager D \ Bob Newell, Finance Director November 24, 2015 ~ 2016 KPU Operating and Capital Budget Update No. 4: Correction to the Letter of Transmittal Councilmember Bob Sivertsen has advised me that there is an error on page B-6 of the transmittal letter for the 2016 KPU Operating and Capital Budget. A $1 million decrease from prior year appropriations should have read a $1 million increase from prior appropriations. The page has been corrected, reproduced and attached to this memorandum.

15 are ongoing regarding a final determination, budget projections may need to be modified accordingly. The cost of power purchased from the Southeast Alaska Power Agency has been programmed to remain at the current rate of 6.8 cents per kwh. A purchased power rebate from the Southeast Alaska Power Agency in the amount of $450,000 has been programmed. In 2015, the City Council scaled back KPU's participation in the Community Grant Program. Prior to 2015, the cost of the program was shared equally between General Government and KPU. In 2015, the City Council reduced KPU's support from $175,940 to $52,685 and limited participation to the Telecommunications Division. The 2016 Budget has been programmed in accordance with the City Council's new policy. liability and property insurance premiums have been projected to remain stable in The divisions may experience some differences in their insurance accounts due to the fine tuning of the methodology used to allocate the cost of insurance. In addition, the requests for 2016 may be higher than the insurance cost estimates for 2015 because the City received a $97,000 rebate in 2015 that temporarily lowered the cost. Electric and water utility rates have been programmed to increase by 5% and 8%, respectively, effective April 1, The Proposed 2016 Budget is a working document intended to initiate discussion by the City Council and the public over next year's spending plan. As the City Council and the public review and evaluate service delivery and long-range issues, alternate concepts and additional concerns may materialize that will warrant consideration. It is staffs desire that the final product which emerges from this process will be a spending plan for 2016 that is acceptable to the community at large and will allow KPU to continue to provide adequate and reliable electric, telecommunications and water services to its customers. FINANCIAL OVERVIEW OF THE KETCH IKAN PUBLIC UTILITIES 2016 ANNUAL OPERATING AND CAPITAL BUDGET The 2016 Budget includes all operating and support divisions of KPU. The total amount requested for appropriations is $45.9 million, an ineecrease of $1 million from the amount appropriated with the adoption of the 2015 Budget. The key components of total appropriations for 2016 and a comparison with 2015 appropriations are as follows: B-6