Title
Approval of the Calculation of Revenue Transfer from Electric & Gas Funds for Operations during Fiscal Year 2024 and Approval of Budget Revision 2025-37
Recommended Action
I move that the Council approve the transfer of revenues of 5% from the electric and gas funds during fiscal year 2025 to the general fund, and re-direct these amounts to be used within the joint utility system fund for purposes designated by Council in accordance with Incorporated County of Los Alamos Ordinance 02-324.
I further move that Council approve Budget Revision 2025-37 as summarized on Attachment C and that the attachment be made a part of the minutes of this meeting.
I further move that Council approve extending the profit transfer redirection option per County Code Section 40-63(d) for an additional year to FY2030.
Utilities Manager's Recommendation
The Utilities Manager recommends that Council approve the motion as presented.
Board, Commission or Committee Recommendation
The Board of Public Utilities approved this request at their regular meeting on February 19, 2025 and recommends that Council approve the motion as presented.
Body
The purpose of this agenda item is to 1) approve the calculation of the FY2025 revenue transfer based on FY2024 Annual Comprehensive Financial Report (ACFR); 2) approve the associated budget revision; and 3) add an additional year to the redirection option.
In accordance with charter article V.509 and code of ordinances chapter 40-63 (c)(12) b., attached is the calculation of the five percent of gross sales of the gas and electric utilities, exclusive of sales to the County or the Schools, as Revenue Transfer amounts. Transfer amounts are to be computed after completion of the County’s annual financial audit (ACFR). In January 2022, Council passed code ordinance 02-324 to continue the transfer back of revenue transfer amounts, “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 profit transfer.” Ordinance 02-324 further specifies that “upon approval of the profit transfer amounts by Council, the Council may through formal action redirect some or all of the profit 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 FY2025 budget hearings, the Utilities Department proposed and Council approved using the revenue transfer for the Bathtub Row/Nectar/Peach Water Distribution project. 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 2025-37 is to ensure the revised budget reflects the approved revenue transfer amounts. The budget revision adjusts the FY2025 budget to reflect the calculated revenue transfer based on the FY2024 ACFR. The revision retains the funds in the Joint Utilities Fund in lieu of transferring to the General Fund to partially fund the County Council approved Bathtub Row/Nectar/Peach Water Distribution project 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 profit 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 FY29 and this will be the third request for an additional year to FY30 for a total of eight years.
Alternatives
If Council does 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/Planned Item
Revenue (profit) transfers computed for fiscal year 2024 retail sales are $615,308.64 and $362,813.99 for the electric and gas utilities respectively for a total revenue transfer of $978,122.62. Attachment B shows the computation of the profit transfer based on the FY2024 ACFR
Attachments
A - Incorporated County of Los Alamos Ordinance 02-324
B - Utilities Profit Transfer Schedule - FY2025 for FY2024 Sales
C - Budget Revision 2025-37
D - Revenue Transfer Presentation