Mike Roth, Grand Marais city administrator, asked the Public Utilities Commission (PUC) board to consider advertising for bids to purchase a new bucket truck for the city’s electrical line workers. His request came at the commission’s September 17 meeting.
“This truck was purchased 10 years ago for a cost of $78,767,” said Roth, adding, “We intended to keep this vehicle for 15 years, but increasing maintenance expenses have led us to believe it would be prudent to replace the truck earlier.
“If we replace the truck now it will lower our maintenance expenses and provide greater reliability and availability for service,” Roth said, adding, “We have plenty of cash to pay for this in the electric fund.”
The estimated trade in value of the truck is $25,000, said Roth. A new truck will cost between $100,000 and $125,00, he said, adding, “This is one thing that they [the crew] needs and uses all of the time. They need a reliable bucket truck.”
PUC Board Member Tim Kennedy moved with a second from Adam Harju to have Mike Roth solicit bids to purchase a new truck. PUC Chair Karl Hansen made the vote unanimous.
Telling the board that he had a “napkin budget sketch” to present to them, Roth laid out reasons to increase the water fund budget and sewer fund budget each by 2 percent for 2015, but called on the board to keep the electric utility rates the same for 2015.
“The increase prepares the water fund and sewer fund to contribute to city council priority projects which are the public works facility, and the First Street area reconstruction project,” Roth said.
Explaining his rationale for proposed increases, Roth said he was presenting a budget that would pay the bills, generate revenues, and create reserves while keeping the rates as low as possible for the public.
The water fund proposed increase would generate $7,600 in new funding while the sewer fund increase would add $10,200 to the sewer fund, which has a proposed 2015 budget of $586,200.
Roth said water sales were continuing to decline but the city’s fund balance was healthy. In 1999 the city sold 44,819,520 gallons and in 2013—the last year figures were tabulated— sold 40,531,628 gallons of water. He attributed the decline to people and businesses using water more frugally and purchasing and using more efficient mechanical products that use less water.
Following the lead of Southern Minnesota Municipal Power Agency (SMMPA), which recommended that wholesale rates remain unchanged from 2014, Roth proposed no rate increase in the city’s 2015 electric fund budget of $2,573,579, adding that the 2013 power sales were up from previous years.
However Harju said he just attended a meeting where SMMPA announced it was now leaning towards increasing its utility fees 2 percent for the next two years because they can’t get all of the coal that they need. SMMPA will make a decision on the 2 percent increase at its October meeting, said Harju.
The board discussed the matter and said as a group they were leaning towards increasing electrical rates by 2 percent this year, but they would wait until the vote by SMMPA.
“A 2 percent rate increase in the water fund isn’t going to cost your average home owner even a dollar a month,” said Tom Nelson, the city’s director of water and sewer.
“There is another way to look at it,” said Roth. “I know my salary isn’t going up 2 percent at the city. I know no one who works for the city is going to get a 2 percent pay increase. Most people aren’t. And I know the assessor came by my house, so I know my taxes are going up. We have to think about that when we raise rates.”
Even though the electric fund has debt, Roth said there were adequate funds to cover that debt and sill generate $50,000 to $75,000 that could be put towards a new public works building.
“The refinance of the power plant bond in 2012 and the refinance of our other two bonds in 2013 show a significant decrease in debt service, which includes only the interest portion of the debt payment,” said Roth.
“We have $60,700 in excess capital funds for new debt payments or building reserves,” Roth said. “Our electrical budget still shows revenues netting $167,000 more than expenses, leaving room for improvements, and increasing our savings for electrical capital projects. For the public works facility, I have roughed in $300,000 cash and $50,000 to $75,000 annual debt payment (from the electric fund) towards the $3.7 million public works facility.”
All told Roth said the city could put down $900,000 on the estimated $3.7 million public works building and would have $225,000 in revenues generated from the sewer, water and electric funds each year to cover payments on the building.
“Right now we have the capacity to build a new public works facility,” Roth said.
The board will look at Roth’s proposals for the 2015 budget and come back next month to vote on them.
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