ITEM 6G: TRANSFER FROM ENTERPRISE FUNDS
Topic:
Resolution No. 26-022 Authorizing the Transfer of Monies
from Enterprise Funds to Other City Funds in Fiscal Year 2027
Staff Contact:
Danyce Steck, Administrative Services
AUTHORITY TO TRANSFER
Utah State Code Section 10-6-135.5
“…a city may transfer money in an enterprise fund to another fund to pay for a good, service,
project, venture, or other purpose that is not directly related to the goods or services provided by
the enterprise for which the enterprise fund was created.”
NOTICING REQUIREMENTS
1. 2. 3. Provide notice of the intended transfer
Clearly identify the transfer in the budget
Provide notice of an enterprise fund hearing
4. Hold a public hearing
PUBLIC HEARING REQUIREMENTS
1. Hearing must be separate and independent
2. Explain the intended transfer
3. Provide enterprise fund accounting data to the public
4. Allow comment
ITEM 6G: TRANSFER FROM ENTERPRISE FUNDS
A FRANCHISE TAX
This is the same as the franchise tax that every utility customer pays on their
electric, natural gas, cable, and telecom bills.
A franchise tax is an amount paid to the City for the use of the City’s property to
provide a service. It’s renting the City’s space for a business.
The water, sewer, and stormwater utilities are considered businesses just like the
power company or a telecom provider.
The transfer is based on 5% of utility sales (compared to utility franchise taxes
which are 6% of sales).
ITEM 6G: TRANSFER FROM ENTERPRISE FUNDS
RECURRING TRANSFER
Will this transfer happen every year?
Yes, the transfer is a more equitable and progressive revenue source than property
tax in that it is based on consumption versus ownership.
If this transfer were to go away, an additional 12.5% property tax increase would be
needed to sustain a balanced budget.
ITEM 6G: TRANSFER FROM ENTERPRISE FUNDS
FINANCIAL IMPACT
GENERAL FUND REVENUE
* Transfer from the Streetlight Fund
discontinued due to changes in legislation
for transportation utility funds
With transfer Without transfer
Tax Tax Increase Increase Certified property tax $ 22,167,144 $ 22,167,144 New growth 750,000 750,000 Tax increase 500,418 2.26% 3,270,418 14.76% Transfers in 2,770,000 - Other revenue 55,756,560 55,756,560 Transfer Tax
Amount Increase
Water $ 1,575,000 7.1%
Sewer 895,000 4.0%
Stormwater 300,000 1.4%
Streetlight* -- --
$ 2,770,000 12.5%
$ 81,944,122 $ 81,944,122
ITEM 6G: TRANSFER FROM ENTERPRISE FUNDS
ACCOUNTING DATA – WATER FUND
FY 2027 Budget
Operations
Water sales $ 27,835,000
Water purchase (13,000,000)
Operations (10,009,633)
Transfer to General Fund (1,575,000)
3,250,367
Capital
Base fees 4,740,000
Impact fees and other revenue 2,502,000
Improvements (16,050,000)
Debt (1,339,240)
(10,147,240)
Beginning reserve balance $ 36,994,599
Net change (6,896,873)
Ending reserve balance $ 30,097,726
Debt
3%
Water purchase
31%
Improvements
38%
Operations
24%
Transfer to
General Fund
4%
ITEM 6G: TRANSFER FROM ENTERPRISE FUNDS
ACCOUNTING DATA – SEWER FUND
FY 2027 Budget
Operations
Sewer fees $ 17,925,000
Sewer treatment (9,000,000)
Operations (4,687,274)
Transfer to General Fund (895,000)
3,342,726
Capital
Impact fees and other revenue 996,981
Improvements (1,700,000)
SVWRF - Debt & improvements (2,848,713)
Debt (687,312)
(4,239,044)
Beginning reserve balance $ 10,421,417
Net change (896,318)
Ending reserve balance 9,525,099
Improvements
9%
Treatment
plant
14%
Debt
3%
Transfer to
General Fund
5%
Sewer
treatment
45%
Operations
24%
ITEM 6G: TRANSFER FROM ENTERPRISE FUNDS
ACCOUNTING DATA – STORMWATER FUND
FY 2027 Budget
Operations
Stormwater fees $ 6,000,000
Operations (4,586,973)
Transfer to General Fund (300,000)
1,113,027
Capital
Impact fees and other revenue 750,000
Improvements (6,620,000)
(5,870,000)
Beginning reserve balance $ 19,460,037
Net change (4,756,973)
Ending reserve balance 14,703,064
Improvements
57%
Operations
40%
Transfer to
General Fund
3%
ITEM 6G: TRANSFER FROM ENTERPRISE FUNDS
DIFFERENCE BETWEEN TRANSFERS &
ADMINISTRATIVE COSTS
TRANSFERS OUT ADMINISTRATIVE COST ALLOCATION
Calculation based on 5% of revenue of each
utility
Franchise or ‘use’ tax, other utilities that use
City-owned space to deliver services pay 6%
for the use of that space
Budget: $2.77 million
Contributes approximately 3.4% of the General
Fund revenue
Calculated based on a % of actual cost of
administration
Pay for centralized administrative and
professional services including but not limited to
legislative, legal, finance, IT, and human
resources
Estimated cost: $5.25 million
ITEM 6G: TRANSFER FROM ENTERPRISE FUNDS
ADMINISTRATIVE COST ALLOCATION
Legislation requires “a
cost accounting
breakdown of how
money in the enterprise
fund is being used to
cover administrative and
overhead costs of the
city attributable to the
operation of the
enterprise fund”
(USC §10-6-135.5)
Water
Fund
Sewer
Fund
Stormwater
Fund
Total
Allocation %
of cost
City Council 15.00% 3.75% 3.75% 22.50%
Mayor 10.00% 5.00% 5.00% 20.00%
City Recorder 30.00% 7.50% 7.50% 45.00%
Emergency Management 15.00% 3.75% 3.75% 22.50%
Administrative Services 17.50% 7.00% 7.00% 31.50%
Utility Billing 25.00% 25.00% 25.00% 75.00%
City Attorney 15.00% 3.75% 3.75% 22.50%
Human Resources 15.00% 3.75% 3.75% 22.50%
Public Affairs 15.00% 3.75% 3.75% 22.50%
Facilities 10.00% 3.00% 3.00% 16.00%
Public Works Administration 10.00% 10.00% 10.00% 30.00%
GIS 30.00% 15.00% 15.00% 60.00%
Public Utilities Administration 30.00% 20.00% 20.00% 70.00%
Non-Departmental (limited) 15.00% 3.75% 3.75% 22.50%
ITEM 6G: TRANSFER FROM ENTERPRISE FUNDS
ADMINISTRATIVE COST ALLOCATION
Total
administrative
costs
% of utility
budget
Water Fund $ 2,732,082 6.5%
Sewer Fund 1,258,347 6.3%
Stormwater Fund 1,258,336 10.9%
$ 5,248,765
ITEM 6G: TRANSFER FROM ENTERPRISE FUNDS
CONCLUDING INFORMATION
Staff recommends approval of Resolution No. 26-022 authorizing the
transfer of monies from the enterprise funds to other city funds in
FY2027
ITEM 6G: TRANSFER FROM ENTERPRISE FUNDS
QUESTIONS?
ITEM 6G: TRANSFER FROM ENTERPRISE FUNDS
