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.

That's what those transfers come that's the amounts of those transfers and they all come from transportation sales tax.

Okay.

Thank you.

Yeah done.

Does the when it comes to transit in the airport does the lodging tax come into that or how is that funnel through the lodging tax sorry uh does it does go to the airport for a portion that is just exclusively to pay back the debt we we took out to fund the terminal but yeah so there is a bit of um of the hotel money that goes to airport to fund the um payback of debt from the new terminal.

Okay.

Thank you.

Okay.

And so uh for utility enterprise funds uh where the revenue comes from is mostly service charges.

I mean, 90 95% of the total revenue uh for utilities comes from service charges.