HomeMy WebLinkAboutCouncil Minutes Public Works & Engineers Budget Meeting - May 14, 2026 (208) 359-3020
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Rexburg, ID 83440
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City Council Fiscal Year 2027 Budget Meeting Minutes – May 14, 2026
Mayor Jerry Merrill
Council Members:
Bryanna Johnson David Reeser
Colin Erickson Bill Riggins
Eric Erickson Alisha Tietjen
City Staff:
Spencer Rammell – City Attorney
Matt Nielson – Finance Officer
Keith Davidson – Public Works Director
Alan Parkinson – Planning & Zoning Administrator
Scott Johnson – Economic Development Director
Deborah Lovejoy – City Clerk
2:30 P.M. Fiscal Year 2027 Budget Meeting – Public Works, Engineers, and Mayor & Council, Mayor Youth Advisory Board (MYAB).
Finance Officer Nielson reviewed the Sanitation/Recycling Budget Report.
Discussion regarding reserve investments and reduced investment earnings after spending over $1 million in cash to build a new shop. The new shop, is located behind the police training
facility, they consider it a good investment despite minor complaints about reduced police area space and unfinished fencing. The project freed up space in the larger shop for streets
department equipment, improved yard organization, and cleaned up the area. A new concrete wash pad was added to make vehicle washing easier.
Discussion focused on sanitation revenues and the possibility of changes through a future study examining commercial and residential categories. Public Works Director Davidson also
discussed the recycling program, which had become primarily residential. There is interest in conducting a resident survey to determine whether the recycling program should continue,
since the city heavily subsidized it. Concerns were raised about contamination in recycling loads caused by improper items being placed in bins. Although contamination did not ruin entire
loads, it increased costs because some materials had to be transferred to landfills. Improving resident recycling practices was seen as important, but increased contamination also led
to higher charges for the city.
Discuss regarding the high subsidy cost of the recycling program, noting that eliminating it could save the city around $220,000 to $250,000 annually. Concerns were raised that ending
the program could increase weekly garbage service demand and require more residents to use additional trash cans. The city is currently paying about $261,000 annually for recycling services,
with costs remaining unchanged for the past four years. The possibility of surveying residents about whether they would continue recycling if they had to pay the full cost, estimated
at about $7 per month. Residents now covered more of the recycling costs than they had in the past, making the financial impact more noticeable.
Sanitation expenses: Salaries FT, Full Time Overtime and Part Time Wage: The department has four full-time employees, with two shared employees counting as one additional full-time
equivalent between streets and sanitation. Finance Officer Nielson noted that wages for several employees, including management, electricians, and building maintenance staff, are allocated
across sanitation, water, and wastewater departments to reflect shared services. Billing overhead costs were also distributed through an overhead rate. The department experiences some
overtime costs, but officials felt overtime is more efficient and cost-effective than hiring another full-time employee. Part-time wage expenses in relation to seasonal or shared work
activities.
Benefits, Persi Pension Expense, W/C Refund, Uniforms, Supplies, Supplies-Janitor, Fuel and Oil: There are benefits and upcoming expense increases within sanitation operations. A 2.73%
cost-of-living adjustment (COLA) for full-time employees was included in salary projections and would take effect in October. Pension expenses were also noted as part of required accounting
calculations under GASB standards. The department received a workers’ compensation refund due to strong safety performance. Uniform expenses remained relatively small, though costs for
items such as work shoes have increased. Unlike some departments, sanitation employees generally did not require full uniforms because much of their work is performed inside trucks,
though some city-branded outerwear and safety gear are provided. A small increases in supplies along with higher projected fuel and oil costs. The Supplies – Janitor fund expenses reallocate
to the streets department.
Small Tools/Equipment, Hired Work-Mad C Tip Fees-San and Hired Work-Aerial Photos: Additional funding has been added in the current year to help the department catch up on equipment
needs, with $2,000 projected for the following year. Landfill tipping fees and transfer station costs, which represented a major sanitation expense. The city accounted for slightly more
than 50% of the waste delivered to the transfer station. The aerial photography and GIS mapping expenses, which are budgeted at about $3,400 annually. The newest aerial imagery would
provide one-inch pixel resolution, giving staff highly detailed mapping and improved zoom capability for operational planning and route management.
Insurance, Training Travel, & Meetings, Banking Fees, Credit Card Processing Fees, and Statement Billing: Finance Officer Nielson said he will update the insurance expense next week.
Statement billing costs of approximately $18,400 annually.
Equipment Repairs, Depreciation, Overhead-GIS Expenses, Overhead-Shop Expenses, Overhead Charges-General and Truck: the costs for equipment repairs tend to fluctuate, they were especially
high the previous year due to multiple equipment problems, but projections for the coming year are estimated at around $140,000. Depreciation expenses for business-type funds were also
noted. Additional overhead charges included approximately $29,000 for GIS services and about $195,000 in shop labor charges related to vehicle maintenance. The garbage trucks are among
the most expensive and demanding vehicles to maintain because of constant stop-and-go operation. General overhead expenses covered payroll, HR, finance, budgeting, legal services, and
utility billing operations. Capital projects included purchasing a new garbage truck for approximately $335,000 and beginning the long lead-time process for another truck chassis and
bed, which could take up to two years for delivery. City Staff suggested maintaining a regular vehicle replacement schedule to avoid falling behind on fleet maintenance.
Finance Officer Nielson reviewed the Street Budget Report.
Prop Tax-County Road & Bridge: the county road and bridge tax revenue shared with the city. Under the system, the county collected road and bridge taxes from residents, then returned
50% of the amount collected within the city back to the city. Concerns were raised because the county has gradually reduced the road and bridge levy over time, lowering the amount returned
to the city. At one point, the city had received around $900,000 annually, meaning city residents had contributed roughly $1.8 million in road and bridge taxes. The revenue later dropped
significantly before beginning to increase again, with projections now estimated around $420,000 to $445,000.
State Fuel Tax, Franchise Fees-RMP-6% and Parking Permits: there are concerns about declining state fuel tax revenues for street funding. Estimates showed projected revenue dropping
from approximately $3.3 million this year to around $2.4 million next year, continuing a downward trend from previous years. The state is significantly reducing funding allocations,
which would heavily impact street budgets. Franchise fee revenues, however, remained stable. The franchise fees existed because utility companies used city rights-of-way, and revenue
from those fees had gradually been shifted entirely into the streets fund over several years to better support street maintenance. Parking permit revenues. Streets currently receive
24% of parking-related collections because parking infrastructure, signage, and street maintenance are tied directly to street operations. Public Works Director Davidson argued that
parking rates should eventually increase to fully cover long-term street maintenance and replacement costs associated with parking use. The remaining parking revenue primarily supported
the general fund and police parking enforcement operations.
Reimbursements-Claw Back Fees and Miscellaneous Revenue: “claw back” revenues, which occur when the city builds street infrastructure upfront and later requires developers to reimburse
the city when development occurs in those areas. Claw back revenues have been high over the previous two years but remained difficult to predict. Overall street revenue trends, noting
a significant decline in total revenues from approximately $6.8–7 million in 2024 to a projected $4.9 million next year. Declining state funding and reduced right-of-way related revenues
are identified as major contributing factors.
Salaries FT, Full Time Overtime, Benefits, W/C Refund, Supplies, Fuel & Oil: the streets department has 11 full-time employees, plus two employees shared 50/50 with sanitation operations.
Like other departments, portions of management and public works overhead costs are allocated across the department. Overtime expenses are relatively low, projected at about $29,000 for
the following year. The mild winter likely reduced snow removal costs. Employee benefits remained a significant budget item. The department received a workers’ compensation credit of
roughly $14,000 due to strong employee safety performance and low injury claims. Operating supplies, including street signs, paint, radar equipment, flowers placed along streets for
events, fuel, oil, and striping work such as crosswalk painting. Fuel and oil costs are projected to increase because of higher fuel prices and ongoing street maintenance needs.
Hired Work, Hired Work-Eng/Small Projects, Hired Work-Tree Remove/Replace, Hired
Work-Sheriff Dispatch, Hired Work-Snow Removal and Hired Work-Street Light Maintenance: the streets budget, including sheriff dispatch services, snow removal, and street light maintenance.
The city pays approximately $37,000 annually toward county dispatch operations so
dispatchers could route public works and street-related calls. Dispatch services carried significant fixed operating costs regardless of call volume, with total dispatch operations costing
roughly $1.2 million annually. Snow removal expenses, the city spent approximately $23,300 on contracted snow removal services during the year, mainly for hiring outside equipment and
operators during large storms. The regular city crews handle most snow removal operations, while contracted graders and additional equipment are brought in only when necessary. Approximately
$60,000 budgeted for street light maintenance. Finance Officer Nielson said he would shift some of those costs to the street lighting fund, which has historically covered related lighting
expenses and still maintained available reserves.
Equipment Repairs-Traffic Signal, Overhead-GIS Expenses, Overhead-Shop Expenses: they reviewed additional street operation expenses, including equipment repairs, GIS costs, shop labor
charges, and general overhead allocations. Shop labor expenses are based directly on actual usage, meaning the streets department would only be billed for maintenance labor used during
the year. Staff also discussed ongoing evaluation of new asset management software systems.
Building Addition/Storage Shed: the “red shed,” a storage building planned near the dog pound. Officials budget approximately $60,000 in the current year and $30,000 the following year
to complete the project, though final costs are still uncertain. The structure was a dismantled former shop building that would be repurposed for additional storage space, including
materials such as crack seal and mastic used in street maintenance operations.
Loader/Telehandler and Fund TFR-Street Repair Fund: purchasing a mid-sized loader to replace heavy reliance on the backhoe for snow removal and parking lot maintenance. The new loader
would improve maneuverability, reduce equipment wear, and allow existing blades and attachments to continue being used. The articulated steering would make the equipment safer and more
efficient around streetlights and tight spaces, while also helping with operations such as filling the brine shed. Finance Officer Nielson noted that any remaining funds in the streets
budget would be transferred into the street repair fund. Historically, the city often had around $2.5–$2.8 million available for projects, but projections for next year showed only about
$1.7 million available. These declining revenues would eventually reduce the city’s ability to complete major street improvements.
Finance Officer Nielson reviewed the Street Impact Fund Budget Report.
Discussion: the Street Impact Fund and projected impact fee revenues. At the beginning of fiscal year 2026, the fund had approximately $2.5 million in reserves. Finance Officer Nielson
projected collecting about $400,000 in street impact fees during the current year, with expectations for additional large developments still pending. For the following year, projected
revenues increased to approximately $480,000 because of proposed substantial increases to impact fees. The city has not updated street impact fees since around 2020. Public Works Director
Davidson explained that street impact fees are generated primarily from new development projects based on trip generation. Large commercial developments such as Home Depot, gas stations,
fast food restaurants, and similar high-traffic businesses typically generated significant street impact fees because of the additional traffic they create.
Finance Officer Nielson reviewed projected spending within the Street Impact Fund. At the end of fiscal year 2026, the city anticipated carrying over approximately $2.7 million in reserves.
Most of those funds were expected to be committed to future street projects, including a planned transfer of about $3 million for a major upcoming project that would be discussed later
in the meeting. He emphasized that the city was preparing to spend down much of the accumulated reserve balance on future infrastructure improvements and street-related capital projects.
Finance Officer Nielson reviewed the Street Reconstruction Budget Report.
Discussion: the Street Reconstruction Fund, which finances Local Improvement District (LID) projects and major street reconstruction work. The primary revenue source for the fund was
transfers from street operations, along with additional revenue from fiber lease payments. Approximately $50,000–$75,000 annually from fiber lease revenues is split between the general
fund and the streets fund because fiber infrastructure occupied city streets and required administrative support and maintenance. The fund carried an unusually large reserve balance
of about $6.1 million at the beginning of the fiscal year. By year-end, reserves are expected to decrease to around $3.2 million as major street projects moved forward. All of the remaining
reserves will be committed during the following year. Planned projects included increased chip seal and slurry seal maintenance work, with the budget increasing from $250,000 this year
to $350,000 next year. There are aapproximately $5.6 million in projects planned for the current year and about $4.6 million projected for the following year.
Contributions-Urban Renewal Agency: the Urban Renewal Funds are a major role in financing new street construction projects. Urban renewal revenues are projected to contribute approximately
$4.6 million toward street improvements in the coming year. The fund also carried over about $670,000 at the beginning of fiscal year 2026. The largest upcoming project discussed was
the 9th East Bridge project, extending from Barney Dairy Road to 7th North. The project included both roadway and bridge construction and was estimated to cost approximately $11 million.
Finance Officer Nielson reviewed the New Street Reconstruction Budget Report.
2nd E & Yellowstone Widen/Lights-Fed Grt: the Second East and Yellowstone project, is largely funded through a federal grant. The project involved widening the roadway from the railroad
tracks north to the area near Christensen Auto Body, extending the existing five-lane section. The goal is to eliminate the traffic bottleneck where the road narrowed near the railroad
crossing until a larger railroad crossing upgrade can eventually be completed.
Finance Officer Nielson reviewed the Street Lighting Budget Report.
Discussion: the remaining balance in the street lighting fund. After paying approximately $60,000 annually for street light power costs, the fund is projected to carry over about $297,000
this year and approximately $237,000 after the following year. Finance Officer Nielson questioned whether to continue using the fund for power costs or preserve more of the balance for
future street lighting projects and filling gaps where additional street lights were needed.
Public Works Director Davidson revisited snow removal expenses. The previously mentioned $23,000 represented only contracted or hired snow removal assistance, such as bringing in outside
equipment and operators during large storms. Total city snow removal costs are much higher when accounting for city labor, equipment usage, and operational expenses. He clarified that
unused snow removal funds did not disappear but instead rolled into the street reconstruction fund, where they became available for future street projects.
Finance Officer Nielson reviewed the Engineering Budget Report.
Discussion: the Engineering Department operated within the general fund, but staff time is billed directly to the specific projects engineers worked on. Approximately $780,000 in engineering
costs are projected to be billed out next year, primarily covering salaries, benefits, and operational expenses.
IT-Plotter: a new plotter for the engineering department had recently been purchased as a result, the engineering department was able to remove the planned $30,000 budget allocation
for the equipment, creating an unexpected savings in the budget.
Finance Officer Nielson reviewed the Building Maintenance Budget Report.
Salaries FT, Benefits, Uniforms, Fuel & Oil, Equipment Repairs, and Building Maint Addition-70%: the employee salaries costs are allocated across multiple departments based on the work
performed for each area, including streets, streetlights, traffic signals, City Hall, recreation facilities, and the Romance Theater/Tabernacle. Salaries and benefits represented the
primary allocations, while smaller operational expenses such as fuel are generally kept within the general fund instead of being divided among departments. Increase to the uniform budget
to help provide shirts, boots, and other work apparel. Fuel and oil costs were increased slightly in the budget because the department now operated two trucks. Equipment repair expenses
remained modest, with approximately $2,000 budgeted for repairs. Building Maint Addition-70% about $5,000 remained budgeted for final improvements and wiring updates. Most major work
on the shop addition have been completed, with only a few finishing projects remaining.
Finance Officer Nielson reviewed the Shop Budget Report.
Overhead Charges-Shop, Salaries FT, W/C Claims Surcharge: the department operated within the general fund, but costs are billed out to the specific projects, departments, and buildings
the staff supported. Approximately $598,000 in overhead charges are projected for the following year, with more than half of those expenses tied to salaries and wages. The shop has three
full-time employees on payroll. Long-term injuries significantly increase workers’ compensation costs, including a surcharge of approximately $15,600 that would remain in place for three
years.
Supplies, Fuel and Oil, Roof Heat Tape/Rain Gutters: Supplies and oil costs had increased because of higher prices. A planned building maintenance projects for the maintenance shop,
including approximately $35,000 budgeted for rain gutters, roof improvements, and safety upgrades around the facility. Staff emphasized concerns about snow sliding off the metal roof
and creating hazards for delivery personnel and employees.
Finance Officer Nielson reviewed the Wastewater (WW) Operations Budget Report.
Fund TFR IN-WWCAPRES-lines/bnd: the capacity reserve funds are intended to pay for projects that added system capacity. However, upcoming wastewater expansion projects would exceed
the available capital reserve balance, meaning the city would begin using reserves generated through depreciation rather than immediately borrowing additional money. Leadership emphasized
that debt should only be used when reserves were fully depleted and borrowing became necessary. The budget shows an approximately $850,000 transfer from the capital reserve fund into
the operating fund during the current year, but no transfer is planned for the following year because reserves needed to remain available for future projects. City Staff noted that large
wastewater treatment plant projects routinely cost millions of dollars, with future needs potentially exceeding $30 million.
Monthly Bill-City Sewer Base, Monthly Bill-Sewer-Sugar City, Monthly Bill-TetonCity: Revenue projections included wastewater base rates, volume charges, treatment payments from Sugar
City and Teton, septic dump fees, and investment earnings from reserve funds. Officials also noted that upcoming wastewater rate studies could alter the balance between residential and
commercial base and volume charges as new rate categories were implemented. The projected amount is approximately $1.6 million from reserves will need to be used next year to support
wastewater capital funding needs.
State Grant: approximately $3.6 million in federal grant funding, those funds helped support construction of the Sugar–Teton–Rexburg wastewater transmission line project, which is expected
to go online in the fall. The city planned to initially front-load approximately $3.4 million in project costs and later bill Sugar City and Teton for their shares based on system usage
and flow percentages.The total project cost was estimated at approximately $9 million. Rexburg’s share was about $3.8 million, with roughly $1.9 million covered by grant funding, leaving
the city responsible for about $1.9 million. Sugar City’s share is estimated around $4.3 million, with grants covering about $1.6 million and the city responsible for roughly $2.7 million.
Salaries FT, Benefits, Inventory-Chemicals-Treatment, Hired Work-Sample Testing, and Insurance: the wastewater treatment plant operated with seven full-time employees, consistent with
previous staffing levels. Employee benefits represented one of the department’s largest expense categories. A major operational cost involved chemical inventory, particularly polymer
used during the sludge dewatering process. Approximately $130,000 is budgeted for those chemicals. Additional large expenses included required testing and contracted services. The insurance
costs will be updated once final premium quotes are received.
Page 3, Wastewater Treatment Plant operating and capital expenses. Power Old TFR/Blower, Power-New Transforment, Fower-Gravity Belt Thickner, Equipment Repairs, Depreciation: power
costs are projected at approximately $500,000, equipment repairs at $142,000, and depreciation at about $950,000. They discussed the Headworks Phase 1 project, which was delayed until
October but remained on track to meet the December 1 deadline required to utilize the remaining $630,000 in ARPA funding. City Staff postponed the purchase of a pull truck until at least
2028 and reviewed other planned capital expenditures, including a pickup truck, HVAC unit, laboratory equipment, VFD system upgrades, and a new security system for the Headworks building.
City Staff reviewed major upcoming capital projects, including a $220,000 dewatering system and a $180,000 pasteurization system, both of which remained dependent on future operational
decisions. The SCADA and electrical upgrades, including a previously funded transfer switch project and a proposed $150,000 generator purchase, which could change depending on project
direction.
Discussion focused on biosolids management. City Staff explained that the current pasteurization system had not performed as originally expected, prompting consideration of an alternative
dryer system. The proposed process would first remove water through dewatering and then use a natural gas dryer to produce Class A biosolids that could be disposed of more easily. The
facility already has access to natural gas at the site, and the project is expected to help the plant achieve regulatory compliance. An engineering firm would be engaged to develop the
design and evaluate the new system.
Finance Officer Nielson reviewed additional wastewater treatment plant capital projects, including approximately $90,000 for restoration work on the plant's clarifiers. He noted that
total capital spending within the operating fund was projected at about $443,000, with additional capital projects to be discussed separately.
Finance Officer Nielson reviewed the Wastewater (WW) Collections Budget Report. Starting at the bottom of page 5.
Benefits: benefit costs, clarifying that the projected $93,000 figure combined wages and benefits for the year and would later be allocated to the appropriate budget lines if approved.
Finance Officer Nielson reviewed wastewater collection system operating expenses, noting that most budget items required only modest adjustments. City Staff reviewed a budgeted $15,000
allocation for lift station repairs.
Depreciation, Pickup, Connex Storage/Pipe Storage, Pump Refurbishing, and Lift Station Pump Replacement: depreciation expenses of approximately $685,000, along with overhead charges
allocated for GIS, shop services, and general administration. Capital expenditures, including a $50,000 pickup truck and the removal of a planned Conex container purchase because it
has already been acquired. City Staff reviewed ongoing budgets for pump refurbishment and lift station pump replacements, with $60,000 allocated for the current year and $18,000 planned
for the following year. The strategy is to use available funds not only for replacements but also to install larger pumps where additional capacity is required. Summerfield was identified
as a current upgrade project, while Yellowstone is expected to require similar improvements soon due to anticipated development. Potential upgrades at Yellowstone could include larger
pumps, electrical improvements, generators, transformers, and pressure line enhancements. City Staff emphasized that these targeted upgrades would provide a cost-effective way to increase
system capacity and support future growth in the area.
Moody Lift Station: sewer line replacement project, which was identified as the wastewater system's largest current capital project. The project is expected to cost approximately $5
million, with an additional $892,000 budgeted for the following year to account for work that might extend beyond the current construction schedule.
Finance Officer Nielson reviewed funding for sewer extension and replacement projects, noting that a general budget line is maintained each year to support system improvements as needed.
Public Works Director Davidson explained that these funds are often used to increase sewer infrastructure when new development occurs. For example, when a developer's project could be
served by an 8-inch line, the city may choose to install a 10-inch or 12-inch line instead to accommodate future growth, with the additional cost covered through these extension project
funds.
Finance Officer Nielson reviewed the scale of planned wastewater collection system expenditures, noting that approximately $6.7 million will be spent in the current year and about $3
million the following year. They highlighted significant transfers from the collections fund to the sewer capital construction fund, including approximately $778,000 in the current year
and $3.7 million in the following year to support major infrastructure projects.
Discussion then focused on the availability of cash reserves and how future projects are financed. City Staff noted that, despite substantial cash balances, the utility would likely
need to pursue judicial confirmation for a revenue bond or similar borrowing mechanism to fund upcoming capital needs.
Finance Officer Nielson reviewed the Wastewater Capital Reserve Fund 35 Budget Report.
Discussed regarding the long-term sustainability of funding major wastewater infrastructure projects. The fund began the year with approximately $4.6 million in reserves and is expected
to receive nearly $1.8 million in revenues and surcharges, providing about $6.4 million available for projects. Planned expenditures totaled approximately $6.1 million, leaving only
about $300,000 in remaining reserves at year-end. Looking ahead, the remaining balance would be carried forward and combined with future revenues, but approximately $2 million in additional
project spending was anticipated the following year. As a result, the Capital Reserve Fund would be nearly depleted if all planned projects moved forward as scheduled.
Finance Officer Nielson reviewed the Wastewater Treatment Plant Construction Budget Report.
Finance Officer Nielson reviewed funding sources for the Wastewater Treatment Plant Fund and discussed how major capital projects would be financed. Funding included transfers from
the wastewater collections fund of approximately $778,000 in the current year and $3.7 million in the following year. Additional transfers from the Capital Reserve Fund totaled approximately
$2.1 million in the current year and $1.85 million the next year.
Discussion also highlighted the importance of grant funding in supporting wastewater projects. City Staff reviewed federal grant revenues and noted that multiple grants had been awarded.
Participants referenced ARPA funding, a grant secured through Congressman Mike Simpson's office, and another grant that provided approximately $500,000 for project design work. The number
of grants received have been significant and beneficial in reducing the amount of local funding required for major infrastructure improvements.
Finance Officer Nielson reviewed the NE Side of Town Construction Fund 84 Budget Report.
Finance Officer Nielson noted that approximately $3 million would be spent on projects in the current year and about $869,000 in the following year. A significant portion of the funding
is being supplemented by the Urban Renewal Agency, which is contributing more than $2 million toward a sewer project serving the area near the new temple and Walmart. Urban Renewal is
covering approximately 35% of that project's cost, making it a critical funding source for infrastructure expansion.
Discussion emphasized the importance of maintaining urban renewal funding, particularly as state legislators had considered efforts to eliminate or reduce urban renewal districts. Substantial
investments in sewer infrastructure are necessary to support continued community growth. The contrast between rapidly growing communities and areas with little or no growth, recognizing
that growth creates ongoing challenges in planning, financing, and expanding utility infrastructure but also drives the need for projects that support future development.
Finance Officer Nielson reviewed the Water Budget Report.
Finance Officer Nielson noted that as of the end of March, the Water Operating Reserve Fund held approximately $7.7 million, while the Water Capital Reserve Fund held approximately
$2.8 million. City Staff then discussed planned transfers from the capital reserve fund, including approximately $375,000 in the current year and $677,000 in the following year.
Discussion highlighted that a portion of these transfers are used to cover payments on the city's DEQ water loan. City Staff estimated that approximately $6 million remained outstanding
on the loan, which is structured on a 30-year amortization schedule. The loan has been especially beneficial because it carried a low 1.75% interest rate and included a loan forgiveness
component, helping reduce the financial burden of water system improvements while supporting the city's continued growth.
Water utility revenues and reserve investments, noting that reserve funds are generating a healthy return of approximately 4%, with about $220,000 budgeted in investment earnings. Some
funds must remain available for cash flow needs and therefore cannot be fully invested. Additional revenues included approximately $180,000 from building permit activity, water meter
purchases, and related development fees. Discussion regarding contributed assets, which represent water infrastructure donated by developers. These contributions for budgeting purposes,
actual amounts, can vary significantly. Over the previous two years, developers have contributed more than $1 million in water assets, but these assets eventually become maintenance
liabilities for the city.
Water rate revenues, noting that monthly base and volume fee projections could change the results of the city's ongoing utility rate study. A consultant presentation scheduled for June
3 at 5:00 p.m., where findings from the water, sewer, and sanitation rate study will be presented and discussed before final rate recommendations are developed.
Salaries FT, Full Time Overtime, and Part Time Wage: the department currently has 10 employees, with an additional employee expected to start soon, bringing the total to 11 full-time
positions. The budget also included approximately $48,000 in overtime and $28,000 for seasonal part-time employees, who are typically hired during the summer months to meet operational
demands.
Benefits and W/C Claims Surcharge: represented a significant expense at approximately $493,000. The discussion also focused on workers' compensation costs, which are budgeted at approximately
$51,000 to $60,000 due to several substantial claims over the past three years.
Operating expenses and identified employee training as an area requiring additional funding. City Staff explained that several new employees and newly appointed lead workers would need
specialized training through Idaho Rural Water, cross-connection certification courses, and responsible charge training. These programs are intended to improve operational knowledge,
safety practices, and regulatory compliance.
Discussion reallocating funds from the uniform budget, which had been underutilized, to help cover the increased training costs. After reviewing past spending and upcoming training
requirements, city staff estimated that an additional $6,000 may be needed for the current year. They agreed to increase the training budget to approximately $14,000–$16,000, with the
expectation that training costs would decline in future years once current certification and leadership training needs are completed. There is
the possibility of hosting training courses locally to reduce costs and allow employees from multiple departments to participate.
Power costs: which represent one of the department's largest operating expenses. As a result of delaying seasonal well startup and avoiding demand charges during the winter months,
staff estimated that the city may have saved approximately $50,000 to $60,000 in power-related costs.
Pump repairs: have fluctuated significantly in recent years. Repair costs have reached approximately $33,000 in one year and are around $31,000 in the current year, leading them to
maintain a budget of approximately $22,000 despite the variability. City Staff indicated that the budget for these repairs appeared adequate and did not recommend any adjustments. Depreciation
expenses, which are projected to increase slightly to approximately $885,000, along with overhead allocations and contributed asset accounting. City Staff explained that developer-contributed
water infrastructure is recorded as both revenue and expense, creating an accounting offset without any actual cash transaction.
Capital projects: include the ongoing replacement of older fire hydrants. The department routinely budgets for hydrant replacements as part of its effort to modernize aging infrastructure
and maintain system reliability.
Capital expenditures: for the water system, including approximately $120,000 for water meter replacements as part of the department's ongoing meter maintenance and upgrade program.
The current project involved painting the elevated water tower, while painting and repairs to two ground storage tanks—located near 7th North and 1200 South—have been completed previously.
The repairs and repainting were intended to extend the service life of those facilities, helping protect the city's water infrastructure and postpone the need for more costly replacements
in the future.
Discussion regarding the proposed projects: to deepen or replace Well No. 3 in Water Zone 1, a well currently owned by the university. The well is not deep enough to meet peak summer
demand. As groundwater levels decline during the summer months, the water level drops below the well's effective pumping depth, eventually causing the well to draw air and become unusable.
Hydrologists evaluated the well and recommended against deepening it because of the way it was originally constructed. Instead, they advised constructing a new well. The existing well
location presents challenges from a DEQ regulatory standpoint, making replacement a more practical long-term solution.
Discussion regarding the proposed recharge diversion structure project, which is being developed in partnership with Madison County and other stakeholders. City Staff reported progress
in addressing concerns raised by local canal companies and are working to secure a diversion point that would allow water to be routed from the North Fork of the Teton River into a county-owned
gravel pit near Newdale in Fremont County for groundwater recharge.
Finance Officer Nielson reviewed the Water Capital Reserve Fund 34 Budget Report.
Finance Officer Nielson noted that it began the year with approximately $2.5 million and is projected to end the year with about $1.3 million remaining. However, nearly all of that
balance is expected to be committed to planned capital projects in the following year, leaving the fund close to fully depleted if all projects move forward as scheduled.
Discussion regarding smaller projects near the Walmart and Temple development area that could occur in the next year, although its timing remained uncertain.
Finance Officer Nielson reviewed the Water Construction Fund 42 Budget Report.
Finance Officer Nielson noted it is unclear whether the full budgeted amount for the proposed Well No. 10 project, will spent during the current year. Well No. 10 is located near Burton
and is associated with the city's newer reservoir system. City Staff explained that a recently drilled well in the area performed significantly better than expected, producing approximately
750 gallons per minute instead of the anticipated 2,000 gallons per minute. Engineers are evaluating a pre-packaged well and booster station system that could streamline construction
by incorporating the building and equipment into a single installation. This project is separate from another planned well on the hill, which is intended to help the city establish and
maintain its water rights while supporting future growth. That future project will also require an additional reservoir to meet long-term water supply demands.
Discussion emphasized that the project remains in the planning stages, with site selection dependent on engineering evaluations, water rights requirements, and the city's long-term
growth needs. The area near Harvest Heights appeared to be a promising location for future water system expansion.
Finance Officer Nielson reviewed the Mayor and Council and General Revenues Budget Report.
Finance Officer Nielson explained the Mayor and City Council Department where the general city revenues are budgeted. He noted the property tax revenues, estimating approximately $7.6
million for the upcoming year. The final figure will not be available for several more weeks because it depends on
information received from the county, particularly regarding new construction values and any annexations that could increase the tax base.
Sales tax revenues: state's sales tax estimate to decrease, but instead the projection came in at approximately $4.47 million. While this represented only a modest increase over the
current year's expected revenue of nearly $4.4 million.
General Fund Revenue: there was a change in the state liquor fund distribution. The city typically receives about $74,914 annually, with little variation from year to year. However,
the state's latest estimate projected only $70,800, which staff found unusual and planned to monitor until more information becomes available. Additional revenues included approximately
$36,000 from rental income, primarily from a cell phone tower lease, as well as investment earnings. The city actively invests available funds whenever possible and has generated strong
returns through those investments. The General Fund also earns interest by providing short-term cash flow loans to other city funds, with interest payments returned to the General Fund.
Proposed sale of city-owned surplus property, specifically the former shop and pump house site located near 2nd East and 1st South. The property had previously been declared surplus
by the City Council and is intended to be sold, with proceeds returned to the General Fund. However, the sale has been delayed for several years due to title and deed issues that prevented
the property from being marketed. City Staff recommended including approximately $300,000 in anticipated sale proceeds in the budget because the property has already been designated
for disposal and could provide much-needed support to the General Fund. At the time of the discussion, the General Fund is projected to have a budget shortfall of nearly $1.5 million,
and removing the anticipated sale revenue would increase the deficit to approximately $1.8 million. City Staff emphasized the need to identify all available revenue sources to help restore
the fund's financial position. They agreed to leave the proposed $300,000 property sale revenue in the budget for planning purposes while deed ownership issues are resolved.
The city's overhead charge allocation: this charge covers administrative and support functions provided by City Hall and other departments. The overhead allocation would likely decrease
somewhat as budget reductions are implemented throughout the organization, resulting in lower administrative costs that would be distributed across city departments.
Expense portion of the General Fund budge: the Mayor and City Council Department budget, noting that personnel costs included approximately $171,000 in wages and $166,000 in benefits.
The benefit costs are nearly equal to salaries. Operating expenses, which remained largely consistent with prior years. City Staff recommended a modest increase to the protocol budget,
which covers items such as flowers sent on behalf of the city following employee or family bereavements, as well as small hospitality expenses for visiting dignitaries and special guests.
Hired work budget, which is used for professional services, studies, appraisals, and special projects. Recent expenditures included appraisals for city-owned properties, including the
former pump house property, as well as consulting work by Method Studio, an architectural and planning firm that developed conceptual ideas related to future community projects such
as potential auditorium or event district concepts.
Supplies and technology purchases, including the potential replacement of aging iPads used by Councilmembers. City Staff noted that the supplies budget has already exceeded its original
allocation but is being forecast at approximately $5,200 for the year. Despite the increase, the department remained well within its overall budget because total expenses are projected
at approximately $388,000, compared to a total budget of about $415,000.
Supplies budget: appeared to be significantly over budget. Staff explained that while the current year's budget had been set at approximately $3,200, actual spending is trending closer
to $5,200, which is nearly identical to the previous year's spending. The difference was largely due to budget estimates being prepared before the prior year had ended, making it difficult
to accurately predict final spending levels. City Staff noted that the supplies account functions as a catch-all category for many small purchases, including items such as Fourth of
July parade beads, shirts, lanyards, shipping costs, cell phone accessories, and other miscellaneous office and event supplies.
Travel and training: has been increased to approximately $17,800. City Staff noted that spending had already reached about $12,000, with additional travel expected later in the year.
Historical expenses varied significantly, ranging from approximately $14,000 to $20,000 annually. Travel costs are difficult to predict because they depend heavily on the Mayor's travel
schedule and attendance at conferences, meetings, and other official events throughout the year.
General Fund Contingency: has been proposed at $100,000 for the upcoming year. Contingency funds are reserved for unexpected expenses and budget adjustments throughout the year. While
they preferred to begin with a larger contingency amount, they acknowledged that it is often reduced later during the budget balancing process. The current year's contingency budget
started at approximately $80,900, and only about $17,600 remained available, demonstrating how frequently contingency funds
are used during the year. Contingency is typically one of the first areas considered when making budget cuts.
Discussion concluded with recognition that balancing the upcoming budget will be challenging due to the projected General Fund shortfall. City Staff emphasized that difficult decisions
would likely be required and that contingency funding, along with other discretionary expenditures, would be part of future budget reduction discussions.
Adjournment
APPROVED:
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Jerry Merrill, Mayor
Attest:
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Marianna Gonzalez, City Deputy Clerk