Item 04 - Sanitation Users Charge Adjustment

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projection period from FY 2024 – FY 2034. The model then calculates the level of revenue adjustments required for the fund to meet its revenue requirements. It replicates the cash flows in each year of the projection period, based upon City policies and available fund balances. In each year, the model utilizes unrestricted fund balances, revenues, and capital funds to pay for any operating or capital expenditures in that year. To the extent necessary to fund all of the projects and vehicle/equipment replacements in the capital program, the model can identify the level of borrowing and the resulting debt service payments that would be required. RESULTS Based on the source data and input provided by City staff, and the assumptions and policies described herein, the City’s current revenues are not sufficient to fund its ongoing operating, capital, debt service and coverage requirements, and working capital reserve targets throughout the projection period. Additionally, a new street sweeping contract of $4.1 million will begin in FY 2025 and is a major driver for the user charge increase required. This represents an increase of $3.0 million in ongoing expenses that will be used to expand street sweeping services, including increasing annual sweeping by 20,000 curb miles and commercial sweeping to twice per week, increase required staffing, and provide better service to customers and $1.1 million for contract maintenance staff to boost sanitation services. In order for the City to be sustainable, their fund balance must meet the minimum reserve target in each year of the projection period. The graph below shows the City’s fund balance (in yellow) without any increase in the users charge and the fund balance (in blue) with the necessary increases. As can be seen, the fund balance without user charge increases falls significantly below the reserve target beginning in FY 2025 and the fund is exhausted by FY 2026. 10