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CONSENT ITEM – 6D MEMORANDUM DATE: December 14, 2020 TO: Honorable Mayor and City Councilmembers Dave Perrault, City Administrator FROM: Gayle Bauman, Finance Director SUBJECT: Reduce 2020 Transfer Amount from Sanitary Sewer Fund Budgeted Amount: Actual Amount: Funding Source: N/A N/A N/A Council Should Consider Motion to reduce the 2020 budgeted transfer from the Sanitary Sewer Fund to the Capital Equipment & Building Replacement Fund from $126,000 to $63,000 and authorize the Finance Director to complete all corresponding budget adjustments. Background As discussed at the November 16, 2020 Work Session, revenues for water and sewer are down in 2020 because of COVID-19. An analysis shows that sewer revenue may come in about $150,000 under budget. The Sewer Fund had been working on building up a cash balance, but the hit it took from COVID-19 was quite a setback. Discussion Staff is recommending a 50% decrease to the amount of the transfer from the Sewer Fund to the Capital Equipment & Building Replacement Fund in 2020 ($63,000) to mitigate the deficit in the Sewer Fund. Staff has plans to create a long term Vehicle and Equipment Management Plan as there is currently no data supporting the transfers being made from the Utility Funds to the Capital Equipment & Building Replacement Fund. If this transfer reduction causes a deficit balance in the Capital Equipment & Building Replacement Fund, it could be made up in future years once the asset management plan is created, or the City could use savings from the 2020 General Fund, mainly due to the furloughed employee, to make up the difference. Budget Impact Decrease in transfers out of the Sanitary Sewer Fund and transfers in to the Capital Equipment & Building Replacement Fund.