FY26 Budget Work Session: Enterprise Funds Review - July 16, 2025
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FY26 Budget Work Session: Enterprise Funds Review
The Columbia City Council held a budget work session on July 16, 2025, focusing on enterprise funds for Fiscal Year 2026. Finance Director Matthew Lue and staff reviewed the financial outlook for transportation and utility enterprise funds, including airport, parking, transit, railroad, solid waste, stormwater, water, and electric. The session highlighted proposed rate adjustments for water (12% revenue increase) and electric (2% CPI-based increase) to maintain cash reserves and fund capital projects. Council discussed fee studies, multi-year rate planning, and the need for transparent communication with residents.
Consent Calendar
- None.
Public Comments & Testimony
- No public testimony was taken during this work session.
Discussion Items
- Enterprise Fund Overview: Matthew Lue defined enterprise funds as self-sustaining services funded by user charges, distinct from general government functions. Council clarified that revenue can fund security at own facilities but not general services like police or parks.
- Airport: Mike Parks reported a forthcoming business plan to evaluate fees (last updated in 2012), including landing, rent, and rideshare charges. Projected FY26 revenue increase is largely due to one-time grants for a terminal loop road and marketing. Council requested a regular fee review schedule.
- Parking: Deep Debnath and James Faup proposed raising downtown parking rates to $1.00/hour (from $0.60 coin/$0.55+ app fee), which would absorb the app fee and generate ~$300,000 additional revenue. The Parking Commission had not yet reviewed this due to lack of quorum. Council noted the rate has not been adjusted since 2011 and requested information on user counts.
- Transit & Railroad: Jim McDonald noted transit relies on FTA grants and Transportation Sales Tax transfers. The railroad fund requires subsidies from water, electric, sewer, and solid waste utilities to maintain cash reserves. Council discussed the railroad's role in supporting local industry and asked for a detailed breakdown of transfer amounts and fee-setting mechanisms.
- Sewer: Revenue in FY23-24 was inflated by donated sewer lines. Available cash is declining due to capital projects (e.g., $2.7M annual rehabilitation, $2M for digester addition). Council noted the utility maintains cash above the 20% target but reserves are decreasing.
- Solid Waste & Stormwater: Solid Waste expenditures are rising due to recycling carts, trucks, and marketing. Stormwater remains healthy with $5M+ earmarked for projects in FY25-26.
- Water: Sarah Talbert proposed a 12% revenue increase (~$3.6M) to cover increased O&M costs, maintain cash reserves, and support debt coverage from treatment plant upgrades. The rate structure would shift to year-round tiers based on 100% of winter quarter average usage, with 65% of customers expected to see lower bills. Base fees and connection fees would align with cost-of-service. The Water & Light Advisory Board recommended full implementation.
- Electric: Staff proposed a 2% revenue increase (based on CPI 2.4%) to offset ~1.5% compensation increases and rising power costs (average day-ahead price up $8/MWh from FY24, a $7.8M increase). Without any increase, the utility would fall below the 20% cash reserve target by FY29; with 2%, by FY30; with 2.4%, remains above through FY30. The Water & Light Advisory Board recommended the full 2.4%. Council discussed multi-year incremental increases and requested sample bills and forecast overlays for comparison.
- Fee Study: Council emphasized the need for a systematic, citywide fee review (e.g., airport, parking, business licenses) to avoid large, infrequent increases. Staff indicated a study may be done in-house or with a consultant, with a goal of annual cadence.
Key Outcomes
- Council directed staff to bring a communications plan for proposed rate changes, similar to prior years, including model bills and a bill calculator for electric (water calculator already online).
- Staff will provide updated forecasts showing impacts of no increase, 2%, and 2.4% electric rate scenarios for the Saturday FY26 budget work session.
- Council will vote on water and electric rate increases as part of the FY26 budget, with public hearings scheduled in August 2025.
- A citywide fee study will be launched after the budget process; an RFP may be issued if outside assistance is needed.
- Staff will report back on railroad fee-setting and transfer details.
- No formal votes were taken at this work session; decisions are anticipated at subsequent council meetings.
Meeting Transcript
For our uh f the second of three fiscal year 26 budget work sessions. Today's topic is enterprise funds. So I'll go ahead and kick this over to Matthew Liu. Good afternoon. And so uh we wanted to continue our our uh budget work sessions and this this today we're gonna speak about the uh enterprise funds within the city. And so we'll do a few definitions, we'll go through some numbers, and then if any questions, if you all have any questions, just please interrupt us, let us know, and we'll try to answer those as best we can. So what are enterprise funds? So enterprise funds are basically uh funds that provide services to the public on a user uh charge basis. Revenue generated within these funds are to are to be used to cover capital improvements, maintenance, operation and upkeep. Uh the way we have our enterprise set funds set up and how most enterprise funds within a municipality are set up is they are not designed to make a profit. They are just designed to basically take care of the needs within that fund. Um even though they may make a profit, usually those profits will go back in to pay for things like capital, uh things that may be outside of the budget for that year. So what can the revenue be spent on? So enterprise fund revenue is used to support the operations, like I said uh earlier. Um they are similar to a private business, or they are a private business in uh the way we look at them and the way they're looked at within a municipality. The revenues generated by enterprise funds uh must be spent on activities directly related to that enterprise fundamental. So some prohibited uses of funds within enterprise funds. Um the funds are designated to be self-sustaining, so revenues have to be tied closely to the delivery of service. Uh so any any use of the funds within the funds outside of that intended purpose can have issues uh like when we have our uh yearly audit. Uh there could be violations to uh GASB standards. Um then also enterprise fund revenues cannot be used for uh general government functions like police, fire, or parks. Can I ask a clarifying question on that last one? Um we've had conversations about like additional, sometimes like not police needs, but like security at certain can can enterprise funds go towards security at their own facilities? Yes. Okay. Yeah, the that would be a part of their uh self-sustaining activities. Okay, thank you. Oh yeah, Valerie, sorry. Um yeah, given that they're self-sustaining, I'm wondering if there's any um regulations governing um how we um how enterprise funds pay for um like the administrative costs. Is there any anything legislating how we apply that reimbursement? No. So we're allowed to decide internally. Most general most enterprise funds that are ran by municipalities have some sort of uh operation guidelines that they they uh use. And I believe ours is within our code of ordinances or it may be in the charter. Uh it has a few things that can and can be done. I know one of the things that could happen is that the the council, if if they saw it fit, could uh appropriate money from at the end of the year if there's a uh revenue over expenses could appropriate that money uh to different departments or whether is it only the general fund? It's only the general fund, but I I don't want to say that for sure. Yeah, but and so there's different things like that that you may have in ordinance or in your code that would spell out uh what can and can't be done done with those revenues. Yeah but and so there's different things like that that you may have an ordinance or in your code that would spell out uh what can and can't be done done with those revenues thanks so with our enterprise funds we have two types we have transportation enterprise funds and then we have utility enterprise funds and we break them out in this way because uh there is sort of a difference uh and you'll see that as we uh begin to talk about the revenues that they generate so our transportation enterprise funds include airport parking transit railroad and transload and our utilities include sewers solid waste stormwater uh water and electrical so uh where the revenue comes from uh for our our transportation enterprise funds uh there there's basically a sort of a three-way split uh between transfers uh service charges and revenues from other governmental units or grants um both airport and transit funds are highly subsidized by grants by and and mostly uh federal grants although transit does have uh quite a bit of uh countywide money as well or statewide I'm sorry not county additionally those are also funded airport and transit by transportation sales tax as well so that's uh that's a big part of your transfers you had a question Valerie Yeah do we have um I guess line item um what these other grants are or revenues from other governmental um units and do we are the money that's represented in this budget as grants is that are those grants that are already firm or like even already received the largest one is our uh FTA grant for transit it usually is about two to three million dollars annually and it is there to help up help fund the operations of our transit system that's a pretty common grant that almost all transit systems receive uh nationwide so that's what the majority of that 28.6 percent of that revenue from other government units is uh airport gets money for from the FAA largely that is for capital projects like runways and things of that sort of is that I guess laid out in the full budget document. Yes it should be yes. Okay thanks. And Valerie was your um question more towards like if those are funds that are potentially at risk for Federal funding cuts? Yeah I mean I had two questions. One was are they potentially at risk and it sounds like these are already funds that were received and firm on the funding for and then it's also useful to know which programs are funded by grants understanding where that money comes from helps us because it's usually specific tied to a purpose. Yeah. For for today's topic on enterprise funds it's transit and airport almost exclusively and with transit it helps funds operations and with airport it helps with capital projects. So that's what we're looking for as of today it's different for the general fund and some of the other governmental funds which we talked about on Monday. But yeah Thank you. Nick has a question if you can go back if you can just delineate the different places that transfers come from you said the transportation sales tax goes there what else? That's pretty much exclusively where that all those transfers are it's largely about three to four million for transit and then about two million for airport.
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