Date                May 7, 2004

To:                  Honorable Mayor, Members of the City Commission and City Manager

From: Roger Coffey, Utilities Director          

Subject:          Department of Utilities Recommended Budget FY 2005

I am pleased to submit the Fiscal Year 2005 recommended budget for the City of Lawrence Department of Utilities.  The information reflects a proposed 2005 Operations and Maintenance Budget totaling $ 15,764,525 of which $1,440,657 is budgeted for Utility Billing and program improvement packages totaling $158,449.  The preliminary revenue information from Black & Veatch has projected 2005 total revenue to be $25,021,900 (estimated) with rate increases. These increases are recommended to support operations, maintenance and the Capital Improvement Plan.  A summary table of the budget information is provided below:

2005 Projected Fund Balance Forward                                                          $10,621,300

2005 Projected Revenues (B&V information):                                               $25,021,900 

2005 Total Available Revenue                                                                        $35,643,200

2005 Operations & Maintenance (O&M) Budget Request     $14,323,868

2005 Utility Billing Budget Request (Finance)                        $1,440,657

2005 Debt Service Payments*                                               $6,522,300

2005 Cash Financing of Construction *                                 $6,000,000

2005 Program Improvement Package                                   $158,449

2005 Total Expenditure                                                                                   $28,445,274

Difference in Revenues +Reserves / Budget Request                                  $7,197,926

*Subject to change by the Finance Director

The Department of Utilities staff is working very hard to provide excellent water and wastewater services to the Lawrence community.  We have faced many challenges over the years and typically categorize our efforts into the three areas of Growth, Reliability and Regulatory issues.  Homeland Security continues to be an area of focused attention.  As you know, there are many subcategories and overlapping of these areas in the Capital Improvement Plan (CIP) and the O&M budget.  The priority issues for 2005 will include the following items:

• Department wide physical system security will continue to be a concern as Homeland Security/EPA promulgates new standards for the industry.
• Staffing: staff engineer to coordinate projects for water and wastewater
• Overtime related to security
• Growth of installed infrastructure including expanded plants, water distribution, the lime residual project and wastewater collection systems.

• Implementation of the Master Plan in 2005. The new rate study will provide rate information for the new Master Plan.  Currently, we are on hold on several large wastewater projects until completion of the Rate Study.
• Completion of the Kaw Lime Residuals project in 2004, we will require an annual O&M expense for lime disposal which has been added to the 2005 Budget Request.

The priority issues listed above provide a glimpse of the overall requirements for the Department.  The basic tasks and services include the day-to-day operation and maintenance of the infrastructure.  City Commission goals include specific environmental issues (such as the Water/ Wastewater Master Plan), as well as general categories of Growth, Neighborhood Planning and Downtown Development.  The Utilities Department has completed many projects and tasks that provide a positive outreach to meet the Goal Statement.   Items such as the current Master Plan, waterline rehabilitation to reduce rusty water calls, improvements to the collection system to reduce backups and expansion of the Wastewater and Water Plants, Chemical Cost Reduction Program, Preventative Maintenance, and the Electric Load Control Program at the WWTP to address conservation and cost are a few of the specific tasks.

On behalf of our Department, I would like to thank Chris Stewart, Dave Wagner, Michael Tubbs and other staff members for their input in the development of the 2005 Budget Request.   The 2005 Budget Request includes operations and maintenance expenditures that will enable the department to continue delivering essential City services to the Lawrence community and surrounding areas. The expenditures are responsive to complying with current and emerging water and wastewater quality standards.

Thank you for your consideration of the department’s 2005 Budget Request.  Please let me know if you have questions or need additional information.