Temple officials are preparing to approve a $6.1 million budget for next year, which will include a $623,000 transfer of SPLOST funds to balance lagging revenues from the city’s underperforming water-sewer fund.
A public hearing for the 2018 proposed budget was held Tuesday night, but produced no comments by the dozen or so residents who attended, according to City Administrator William Osborne.
A second public hearing was scheduled for Wednesday night, at which the council was also expected to approve amendments to the 2017 budget. Those amendments include surpluses in some city revenues, above what was forecast last year when the 2017 budget was planned. Some of that excess revenue, totaling $194,000, was expected to be placed into a contingency fund.
The council is expected to approve the 2018 budget during its Dec. 4 regular meeting.
The budget is divided into two parts, a general fund — for operating the traditional functions of government — and the water and sewer fund, which is a so-called “enterprise fund,” that covers water, sewer and sanitation services. Enterprise funds are supposed to self-sustaining; that is, generating incomes that match expenses.
Next year’s general fund budget balances $2,910,088 in revenues against the same amount in expenses, most of which will fund the city’s police and public works departments.
The 2018 water-sewer fund budget anticipates $2,549,440 in revenues to match the same amount in expenses, but does so applying virtually all of the city’s share of 2015 SPLOST revenues — $622,765 — to servicing the debt on the revenue bond that built the city’s wastewater treatment plant.
That debt remains the main financial concern for city officials, particularly since the enterprise fund, which is supposed to meet the bond payments and the system’s other costs, has consistently been underperforming.
The situation will become critical in January 2021, when the city must meet a $4.6 million balloon payment to its bondholders. That figure represents 32 percent of the entire 2018 budget.
Refinancing the bond — an option that has been floated several times by city officials — will depend on getting a favorable interest rate based on past performance of the enterprise fund. The revenues are supposed to be 1.05 times higher than the system’s operating expense, but the revenues have consistently underperformed that level.
This is the second year that Temple has spent SPLOST revenue of debt service, which means those revenues have been unavailable for capital projects.
In a letter to the council submitting the budget, City Administrator Osborne said “finding a long-term solution to handling the water and sewer debt is of paramount importance in 2018.”
Osborne further warned that the city, which next year will have a new mayor, Michael Johnson, and a new Ward 1 council representative, Terron Bivens, that the revenue stream from the 2015 SPLOST will come to an end in 2020, the year before the balloon payment on the bond is due.
“During the first half of 2018, the city must make sufficient changes in its revenue and expenditure streams in its water and sewer fund in order to achieve the 1.05 ratio requirement set by the financial institution holding these bonds,” Osborne wrote.
Water customers in Temple could see an increase in their water and sewer fees next year, as the city absorbs an increase in the fee the Carroll County Water Authority charges its municipal customers. That increase will amount to 20 percent, or an additional $110,000 per year.
To meet that expense, the proposed budget anticipates increased water and sewer fees, although such increases have not yet been approved by the city council.
Osborne’s letter to the council states that adjustments in sewer rates and “some other adjustments in water billing practices” should be considered by springtime.
The general fund budget anticipates $2 million in tax revenues for the city, with the two largest sources being property taxes and LOST (local option sales tax) revenues. The city also expects $275,000 in insurance premium taxes, and fines and forfeitures through the municipal court are expected to created $450,000 in revenue.
Public Works will receive the largest share of money from the general fund, $1.7 million. The city’s Police Department will receive $1.1 million.