Ignacio town trustees have approved a total $3.6 million budget for 2017. It reflects sewer and water rate increases approved in November.
In his budget message, Interim Town Manager Mark Garcia reported that spending will be somewhat above revenue in several budget funds, including sewer and water despite the customer rate increases. The gas and irrigation funds also show spending above revenue. These are categorized as enterprise funds and are supposed to be self-supporting.
Treated water, sewage treatment, and natural gas are purchased from the Southern Ute Utilities Division (SUUD).
In his budget message, Garcia said, "All of the utility services require regular and ongoing operation and maintenance, completion of minor and extensive capital infrastructure improvements, regular meter reading, billing, general management and oversight. The associated funds have fund balances necessary to ensure proper operation and funds for infrastructure improvements."
He continued, "The town has requested a comprehensive rate analysis to be completed by SUUD on the water and sewer treatment rates. The town will also complete rate analysis for the town portion of water and sewer utility rates. Rate adjustments will be considered once the rate analysis work is complete."
The general operations budget shows revenue above expenses - $1.75 million for revenue versus $1.70 million for expenses. Garcia said general operating revenue and expenses are projected to change little from 2016.
"Local sales tax is trending upwards, and county sales tax is trending flat or slightly down," he said. The impact of tribal sales tax exemptions still isn't known. The tribe started pushing that issue in May with notifications to town businesses.
The total budget including the enterprise funds has expenses at $3.6 million versus revenue of $3.4 million, resulting in an equivalent reduction of total fund balances.
Given these issues, Garcia's budget message concludes, "Overall, the town is in sound financial position and able to provide essential town services for 2017. However, fund balances are low and currently meet minimal (government accounting) standards. All large expenditures will be reviewed and prioritized for excess or surplus revenues used to grow fund balance totals" that will be needed to support future capital or infrastructure projects.
Garcia predicted, "New retail businesses and improvements in the downtown area and expansion of the Southern Ute Indian Tribe campus will continue to help promote business activities and increase sales tax revenues overall. The future financial picture is definitely positive and shows signs of growth and prosperity for the town and local businesses."
Combined town and a share of county sales tax will account for 58 percent of general operating revenue, just over $1 million. Property tax provides only 2 percent of operating revenue, just over $30,000.
Gaming grants are projected to provide 9 percent of operating income, and federal drug enforcement funding is listed at 5 percent. The rest is a variety of fees and other sources.
The general fund includes town administration, town board, police, public works, and parks maintenance. A share of salaries and benefits is allocated to the utility funds.
The water fund is budgeted with revenue of $241,500, with customer payments accounting for $220,000.
Water fund expenses are listed at $243,955 including $127,800 for purchase of treated water.
The sewer fund budget projects revenues at $502,220, all from customer fees.
Expenses are budgeted at $508,187, including $418,500 paid to the tribe for sewage treatment.
The gas fund shows revenue of $788,005, including a $360,000 Energy Impact Grant for replacement of gas main lines, $220,000 paid by residential gas customers and $190,000 from commercial customers.
Gas system expenses are listed at $952,563, including $180,000 for gas purchases and $574,840 to replace 1,320 feet of gas line.
That includes the grant money plus $214,840 from the town.
