Page 142 - City of Watauga FY22 Adopted Budget

BUDGET-OVERVIEW

FY2021-2022 and two positions are slated to be filled in FY2022-2023. Transfers
to the Debt Service Fund are included to cover debt service payments.

The Water and Sewer fund is still in a reserve recovery mode due to increased
wastewater treatment costs attributed to inflow and infiltration issues in recent
years. The ending Fund Balance is expected to be $1,980,314 which is a 21%
reserve level at the end of FY2021-2022. Although still below the reserve level
policy of 25%, the reserve level has increased over prior years. The City Council
reviewed a long-term rate model in August 2021 to ensure fiscal sustainability of
the fund and projected rate increases are anticipated over the next several years
ranging from 4% to 6% annually, depending on the issuance of additional debt to
fund planned capital projects.

Water service revenues fluctuate seasonally and can be drastically affected by an
extended period of drought or rainfall. The charts below show how drastically
monthly water consumption and revenues can vary by month and from year to
year.

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