Title
Approval of the Calculation of Revenue Transfer from Electric & Gas Funds for Operations during Fiscal Year 2025 and Approval of Budget Revision 2026-48
Recommended Action
I move that the Board of Public Utilities recommend transferring 5% from the Electric and Gas funds to the General Fund during fiscal year 2026, and that these amounts be redirected for use within the Joint Utility Fund for the purposes designated by Council in accordance with Incorporated County of Los Alamos Ordinance 02-324.
I further move that the Board recommend Budget Revision 2026-48 as summarized in Attachment D, and that the attachment be made a part of the minutes of this meeting.
I further move that these actions be forwarded to Council with a recommendation for approval.
I further move that the Board of Public Utilities recommend Council extend the profit transfer redirection option per County Code Section 40-63(d) for an additional year to FY2031.
Utilities Manager's Recommendation
The Utilities Manager recommends that the Board approve the motion as presented.
Body
The purpose of this agenda item is to 1) approve the calculation of the FY2026 revenue transfer based on the FY2025 Annual Comprehensive Financial Report (ACFR); 2) approve the associated budget revision; 3) forward to Council with a recommendation for approval, and 4) recommend Council add another year to the redirection option.
In accordance with Charter Article V.509 and Chapter 40-63 (c)(12) b. of the County Code of ordinances, the attached calculation reflects five percent of gross sales of the electric and gas utilities, exclusive of sales to the County or the Schools, as the Revenue Transfer amounts. These transfer amounts are computed following completion of the County’s annual financial audit (ACFR). In January 2022, Council passed code ordinance 02-324, which continued the transfer-back or revenue, “For a five (5) year period…[which] may be extended by Council for one (1) additional year at the time of Council’s consideration of an annual redirection of a revenue transfer "formally profit transfer.” Ordinance 02-324 further specifies that “upon approval of the revenue transfer amounts by Council, the Council may, through formal action, redirect some or all of the revenue transfer amounts for use within the joint utility system fund for purposes designated by the Council. Those purposes may include, but are not limited to, accelerating investment in utility infrastructure, investing in utility infrastructure to facilitate coordination with roads projects, investing in utility infrastructure to facilitate economic development and housing projects, facilitating utility debt restructuring, and transferring funds between individual utility sub-funds.”
During the FY2026 budget hearings, the Utilities Department proposed, and Council approved, using the revenue transfer for the Trinity Drive Gas line Replacement and the Trinity Drive Waterline Replacement. This action is to review and approve the calculation of the Revenue Transfer Amounts, and forward to Council for consideration and approval, and also approve the associated budget revision.
The associated Budget Revision 2026-48 ensures the revised budget accurately reflects the approved revenue transfer amounts. The budget revision adjusts the FY2026 budget to incorporate the revenue transfer calculated from the FY2025 ACFR and retains these funds within the Joint Utility Fund rather than transferring them to the General Fund. This allows the funds to be used to partially fund the Council approved Trinity Drive Gas line Replacement and Trinity Drive Waterline Replacement budget option.
County Code Section 40-63(d) included in Attachment A, states that "the above five (5) year period may be extended by Council for one (1) additional year at the time of Council's consideration of an annual redirection of a revenue transfer so that every year Council considers an annual redirection, there is an option for Council to add an additional year to the original five (5) year period. Last year, Council extended it by one year to FY2030 and this will be the third request for an additional year to FY2031 for a total of nine years.
Alternatives
If the Board and Council do not approve the revenue transfers, the funds will remain with the Department of Public Utilities’ electric and gas funds, pending further negotiation between the parties or confirmation of the calculations in accordance with Ordinance 02-324.
Fiscal and Staff Impact
Revenue (profit) transfers computed for FY2025 retail sales total $702,838.13 for the electric fund and $294,910.60 for the gas utility, for a combined revenue transfer of $997,748.73. Attachment B provides the computation of the profit transfer based on the FY2025 ACFR.
Attachments
A - Incorporated County of Los Alamos Ordinance 02-324
B - Utilities Profit Transfer Schedule - FY2026 for FY2025 Sales
C - Budget Revision 2026-48
D - Revenue Transfer Presentation