At Monday night’s special called meeting, the Jellico Utility Board passed the 2009-10 budget.
The budget proposed to the board by Jellico Utility General Manager Mike Bethurem was based mostly on last year’s budget, with only slight changes being made in various departments.
Changes to the budget for the water department include additional funding allotted for chemicals.
“The chemical costs have been increasing,” said Bethurem.
Last budget year, Bethurem budgeted $90,000 for chemical costs, and ended up spending $140,000 on the water treatment chemicals. Taking this into consideration, Bethurem budgeted $140,00 for this year’s chemical costs, but said he is still looking at ways to cut these costs.
Currently, Jellico Utilities buys its chemicals in small shipments on a weekly basis. Bethurem said he is looking at other vendors to buy in bulk from as a way of cutting costs.
Outside service costs were also cut down from last year’s budget by $10,000. Last year, $30,000 was budgeted and this year only $20,000 was allotted for possible consulting service needs.
“I don’t expect to be spending as much on consulting services this year, since we have already had so much engineering consulting done already,” Bethurem said. Salaries in the water department remained the same as last year, with no increases scheduled.
According to the proposed budget and based upon the net income, the water department is budgeted to lose $115,000. Compared to the $150,000 loss the water department experienced last year, the 2009-10 budget shows improvement in trimming the deficit.
“After the rate increase in January, it should turn around and become a positive number,” Bethurem informed the board.
The 2009-10 rate increase is part of a five-year package deal, which incorporates a 20-percent increase for the first two years and then a five-percent increase for three years after that. January 2010 will begin the second increase of around 20-percent. It will equal out to five-percent on the sewage and 15-percent on the water. This would be a total of about a $3 increase on a $20 water/sewage bill, according to Bethurem.
The wastewater department budget follows the trend of the water department, showing a slight expected increase in chemical costs, but basically remaining the same. The expected net income for sewage is $162,000. After the utility services its wastewater debt and figures in capitol improvements, this will equal out to $40,000 left on the bottom line, according to Bethurem.
On the electric side, Bethurem based projected revenues upon the existing Tennessee Valley Authority (TVA) wholesale rate structure.
Bethurem informed the board that the new rate structure being proposed by TVA would not go into effect until April 1, 2010 and would therefore not affect much of this year’s fiscal budget.
Over 75-percent of the electric department’s budget is for the purchase of power from TVA. This equals out to over $6 million in purchase power costs.
Bethurem budgeted $50,000 for uncollected expenses on bad debts. The utility currently has around $200,000 in uncollected expenses, with $50,000 of that coming directly from the Taylor Machine building due to bankruptcy.
“Are we getting these bad debts off the books over a period of time?” asked board member Eddie Barton.
“Yes, they’re decreasing slowly,” answered Bethurem.
The utility has been slowly writing off around $50,000 in old debt each year in order to get it off the books, according to Bethurem.
“We have since then signed with a debt collection agency as well and we are working with them on collecting our bad debt,” Bethurem said.
The utility has also modified its disconnect policy procedures so customers who do not pay have their power cut off sooner, providing the utility with a better chance of bill collection.
No raises were allotted in this year’s fiscal budget, but a salary increase was provided for in the operations department in order to add two positions to the electric department.
“We’ve got a lot of employees getting older and line work is hard and grueling on the body,” said Bethurem as he proposed the hiring of two apprentice linemen.
“It’s a four year apprentice program, so I don’t want to wait until we need them; I would like to go ahead and get them on board,” Bethurem said, explaining the added salary costs to the budget.
Bethurem said he felt that things were improving, but the utility system was not “out of the woods” yet.
“With the increases we’ve got planned, the water budget should basically just break even, but with next year’s increases, it should be in better shape,” Bethurem said.
He also said the capitol investment projects the utility was expected to undertake and complete this year would improve revenue losses as well and help budgeting problems in the future.
The sewage project will reduce the amount of ground water infiltration and will ultimately result in a large saving on water treatment costs as the water department will not be treating large amounts of ground water. This project has an expected cost of $500,000 and will be funded by a CDBG grant, with a cost of only $37,000 in matching funds to be provided by the utility.
The other project is the refurbishing of the old city and Oswego water tanks, as well as the drilling of a new well. This project will be funded by a state revolving loan with 40-percent provided by stimulus money which doesn’t have to be paid back.
“Hopefully getting these projects done will help us get our revenue back in perspective,” Bethurem said.
He expects the projects to be under way by November in order to meet the federal deadline and receive the stimulus funding.
“Things are improving, but we’re still on a tight budget. We’re just trying to maintain this system and keep it working until revenues improve,” Bethurem said.
“We knew it wouldn’t be an overnight deal, but we’re headed in the right direction,” said Barton.
The board voted and unanimously agreed to approve the proposed budget for 2009-10.
The board also briefly discussed utility board officers and voted to reappoint
George Deuel as the chairman of the board.