Page 18 - Kennedale Budget FY21

MANAGER’S MESSAGE

W A T E R A N D S E W E R F U N D
For various reasons addressed below, the Water and Sewer Fund is expected to end the current year with a
working capital balance of at least $2.07 million representing 44.3% of projected operating costs for FY19-
20. This balance is $716,360 greater than originally estimated in the adopted budget. Part of that increased
fund balance resulted from the delay of cash funding water and wastewater improvements for Linda Road,

which will not likely occur in the current fiscal year. The FY20-21 working capital balance of 44.8%
provides ample latitude to complete a number of ongoing projects.

Contracts for both the purchase of potable water from and the operation and maintenance (O&M) of the
Kennedale utility systems by the City of Arlington became effective on March 29, 2019. Although this
collaboration has been quite successful overall, various challenges relating to meter equipment and
customer data migration have elongated the transition timeline. System improvements necessary for the
City to begin purchasing water from Arlington are expected to be complete within the next few months,

which will permit further evaluation of the City’s rate structure and the potential to cash fund certain
capital improvements without incurring additional utility debt.

The FY20-21 Water Fund budget, therefore, anticipates the potential use of existing funds to pay for one-
time projects (e.g., Linda Road) at an estimated cost of $300,000 as well as any additional costs associated
with completing the transition to Arlington of billing and customer care. As proposed, the Water Fund will

– depending upon the ability to cash fund certain projects – result in up to a 44.8% working capital balance
of $2,018,912 for FY20-21. This budget proposes no change in water and sewer utility rates or
Stormwater Utility Fees.

S T R E E T I M P R O V E M E N T F U N D
The Street Fund budget includes a continued 7% franchise fee transfer from the Water Fund to the Street
Fund. This transfer percentage may well be temporary in recognition of additional street maintenance that
will likely be required as a result of more aggressive water and sewer line renewals that have been long
neglected. With minimal capital projects anticipated in FY20-21, the Street Fund ending balance is

expected to be $203,191, which represents 20.0% of planned expenditures.

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