Page 294 - Watauga FY21 Budget

FIVE YEAR FINANCIAL FORECAST

The operating budget includes funding for the outstanding water and wastewater
debt issuances and funding to continue the annual water and wastewater
infrastructure improvements. In FY2015-16, the water system acquisition debt
was fully paid and other infrastructure projects are in progress with a debt
issuance in 2017 and 2019. The water and sewer fund has been in recovery
mode for several years due to inflow and infiltration costs in FY2014-15, FY2015-
16, and FY2018-19 that brought the fund balance below required levels. This
caused a delay in capital projects until future years. A water and sewer rate
study was conducted in FY2018-19 and rate increases were implemented to
ensure future revenues will be sufficient to cover costs. A continuation of this
rate study is planned for FY2020-21.

Water and Wastewater Debt Service Fund

Debt service transfers are based on current debt outstanding and projected debt
for the continuation of the waterline and wastewater line infrastructure
improvements. Certificates of Obligation were issued in FY2016-17 in the
amount of $7.325 million to fund various water and sewer projects in the coming
years. Additional debt was issued in the amount of $8.0 million in FY2018-19 for
water and wastewater projects. Another issuance is planned for FY2022-2023,
and will be proposed if reserve levels allow. Debt payments related to these
issuances will be paid from system revenue.

Drainage Fund

The Drainage Utility fund provides for salary plan adjustments, health insurance
increases, and drainage improvement projects. User fees are expected to remain
flat, and projects will be paid from user fees when possible. Funding for Whitley
Road drainage projects continue through FY2021-22. There are two other major
projects scheduled to be paid from drainage rates in the next few years to include
Bunker Hill and Astor Heights.

Equipment Replacement Fund

Due to operating revenue constraints, funding for equipment may shift to debt to
relieve the General Fund operating fund. This is currently being evaluated for
future years, thus is The Equipment Replacement Fund is not included in this
year’s 5-year plan.

CLOSING COMMENTS
This document is a plan for the future. Many things will certainly change and this
document will need to be adjusted accordingly. Future capital projects and the

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