Columbus City Utilities (CCU) board members discussed a draft budget for calendar year 2025 during a special meeting on Monday.
CCU Director Roger Kelso said the board may vote on whether to approve the draft budget totaling $27 million during the next regularly scheduled meeting on Oct. 17. However, an ordinance establishing the budget would still need to be approved over two readings by Columbus City Council members, which would occur sometime in November.
“Overall, we’ve kept what we’re estimating as increases to what we think is fairly moderate,” Kelso told board members. “Most of the changes amount to 4% to 5% based on what we’re seeing as far as spending trends and that sort of thing.”
The draft sewer budget totaled $18.9 million, while the draft water budget is $8.7 million. The sewer and water budgets in 2024 were $17.2 million and $8.4 million respectively.
Each budget aligns with those that accounting firm Baker Tilly recommended for rate increases that are being considered on second reading by Columbus City Council members tonight. The primary driver for the increases are planned capital projects over the next few years to critical CCU infrastructure.
“These documents and those (Baker Tilly’s recommendations) are meant to be parallel, as far as the amounts of money used and that sort of thing,” Kelso said of the draft budget.
If approved by council members, water rates will increased over two phases, beginning with 18% increase in 2026, followed by another 15% increase in 2027 for a typical residential user, assuming usage of 4,000 gallons per month.
Sewer rates would be increased over three phases, beginning with a 5% increase during phase 1 in 2025, a 9% increase during phase 2 in 2026 and another 5% increase in 2027 for a typical residential user, assuming usage of 4,000 gallons per month.
Sewer utility
The largest line-item in the sewer utility draft budget is $10.7 million in transfers out— Kelso said that money either goes out of the system as a bond payment or it goes into reserve accounts.
According to the draft budget, CCU intends to borrow $900,000 from its cash reserves to fund sewer utility operations. CCU officials said that is because their cash flows are seasonal and depend on the timing of expenses of revenues.
For example, more money is collected in the second half of the year because of how things like weather affect use of the utility, according to Kelso.
“We’ll see about a $900,000 deviation through the year, but that will be replaced by end of the year and we are essentially operating on a balanced budget,” Kelso said.
Wastewater reserves will start and end the year with enough money to fund 3.3 months-worth of operations. The general rule of thumb is that operating revenues remain plentiful enough to fund 2 months of operations, according to CCU officials.
Water utility
CCU plans to borrow $600,000 from their reserves to fund operations on the water utility side because there won’t be a water rate increase effective in 2025.
If approved by council members, the sewer rate increase would start next year, whereas the potential water rate increase wouldn’t go into effect until 2026 because it is subject to the Indiana Utility Regulatory Commission (IURC). The state agency will ultimately come back with an approved water rate schedule, which takes about a year. CCU officials said that $600,000 will be repaid by the end of next year.
CCU also plans to spend another $513,940 from reserves to fund water utility operating capital needs in 2025.
“Those will not be necessarily replaced, they’re just accumulated reserve funds that we save out to fund capital projects on our annual basis,” Kelso said.
The $1.1 million dip into reserves decreases water operating reserves from 2.7 months-worth to 2 months-worth.
There is an estimated $365,000 increase in the water operating budget, $200,000 of which is due to wages. It had been difficult for CCU to find new employees but Kelso said “we’re getting people coming now that are qualified, at the same token, the job market’s changed a lot.”
“As we get staffed up, that’s the one area where we’ve been behind,” according to Kelso. “That number is a fair number for what we’ll anticipate next year, we’ve been underemployed for probably at least three years.”
In addition, the water utility has a line-item for transfers out as well of $3.06 million.
Before the board votes on whether to approve the budget and send it off to city council, CCU board members asked that they receive more detail on how the cash reserves are replenished, along with minor additions to the budget sheets like percentage increases between 2024 and 2025.
