The city of Newberry reviewed enterprise funding for the coming year at its fourth budget workshop of the year on Wednesday.
Staff reported on State Road 26, plans for an elevated storage tank, wastewater treatment facility expansion, staffing plans, expansion of utility systems and the possibility of a utilities and public works operations center.
The fourth in a series of Newberry’s budget workshops for fiscal year 2024 (FY24), Wednesday’s meeting focused on enterprise funds. These funds come from municipal enterprises such as utility services, and they are put back into the city’s budget to maintain and improve those services.
Staff recommended a 3% increase for electric rates, a 7% increase for water rates and a 10% increase for wastewater rates. City Manager Mike New said the multiple capital improvement projects will be major expenses and, as costs rise in everything from operations to insurance, the city will have to raise its rates.
New said department heads have worked with their teams to reduce their budgets by 5%, but the high costs for the city remain. Newberry’s rates remain below the area average.
Even with the rate hikes, wastewater is expected to lose money next year because of new state permit requirements that apply stricter staffing, sampling and biosolids disposal requirements.
“Over three years that’s a half a million dollars, close to, that we could put into our wastewater plant... and we're not, we're gonna light a match to it every year," New said.
The FY24 projected budget is underfunded for depreciations, a fund the city sets aside to help pay for infrastructure as it gets older. The wastewater depreciation fund will be underfunded by about $80,000 and the water fund will be short $20,000. These numbers will not have an immediate effect on water and wastewater facilities, but when those facilities need improvement there will be shortages in funds unless the city makes up for the lack in coming years.
Staff told commissioners on Wednesday that Newberry is one of few cities that set funding aside for depreciation, and that funding has increased. Seven or eight years ago, depreciation funding was around 25% of capacity, now depreciation is 80-100% funded, even as the requirement for funds grows.
The more infrastructure the city invests in, the more there is to depreciate, and every year that depreciation is not 100% funded there is more to make up for.
The first of Newberry's planned improvements for 2024 is linked to the Florida Department of Transportation’s (FDOT) improvements of SR 26. FDOT will fund the replacement of existing electric, water and wastewater infrastructure that is exposed during roadwork, but Newberry must pay for any betterments.
Construction on SR 26 is expected to begin in 2027. The total project cost will be about $10 million, of which Newberry will pay $4 million.
“It is a complicated world, but they work hard to help us,” New told the commission.
A new 500,000-gallon elevated water storage tank, estimated to cost $6.3 million, is also on the new budget. New said the budget proposes funding the tank through a State Revolving Fund loan, grants and American Rescue Plan funding. New said Newberry has already received a $1 million grant from the state legislature for the project.
New also mentioned the ongoing expansion of Newberry’s wastewater treatment facility, planned to have additional capacity by 2026. On paper, the facility already has more subscriptions than it can handle, though only about 50% of its capacity is actually being used. The paper capacity reflects developments which have obtained permits and will soon be using their subscriptions.
The further expansion is projected to cost $44 million, and the city is still about $31.5 million short of that mark using loans and grants.
New also presented to the commission the potential for a utilities and public works operation center, which is still projected to be three to six years away. After several years of discussion, the project has still not reached the planning phase other than looking into where on the wastewater facility site to place the operations center.
New said the operations center is preliminarily estimated to be 5,000 to 7,000 square feet and cost $1.8 to $2.6 million but is a much lower priority than the wastewater facility expansion.