FAIRHOPE – City officials plan to vote in October on a new budget that includes a $33.5 million general fund, up by about $3 million from the previous year.
The city is also preparing utility budgets for the gas, electric and water and sewer departments that include some major improvements in services.
The Fairhope City Council held two work sessions in September to go over the budgets for the fiscal year that began Friday, Oct. 1.
The General Fund includes estimated revenue of almost $33.54 million and expenses of almost $33.53 million, according to the draft document being considered by the council.
“I’m pretty happy that the General Fund, so far, is balanced,” Mayor Sherry Sullivan told City Council members. “We actually have a little bit of a surplus, so I’m excited about that and I really think this is a good budget and what we’re presenting to you is something that you’ll be happy with, and you’ll be proud of.”
One change in the new plan would be a longevity program to reward employees for their service to the city, Sullivan said. Under the proposal, employees who have served one to four years would receive $250. Those working five to 14 years would get $500. Employees who have been with Fairhope 15 or more years would receive $1,000.
The longevity program would add about $200,000 to the budget, Kim Creech, city treasurer, said.
Another item in the budget would be improvements to the Clock Corner area purchased by the city. The budget includes $75,000 for pavers, benches and shading at the site.
Council President Jack Burrell said some of the costs could be paid for through the sale of engraved pavers.
“I think the mayor and I are ready to bring that to you and see what you think about that,” Burrell told council members. “That’s not a lot of money and I think we could pay for a lot of that by selling pavers.”
Utility budgets include system upgrades that will exceed revenues in most departments.
In the Water and Sewer Department, estimated revenue of $16.08 million will exceed operating expenses of about $9.2 million. The budget, however, also includes $15 million for system upgrades, including new wells, lines and sewage treatment facilities.
After other expenses are included, the Water and Sewer Department has a projected deficit of $12.14 million for the 2022 fiscal year. Budget projections for 2023 and 2024 include another $11 million in upgrades.
Burrell said city officials are looking at a short-term loan or bond for five to seven years to get the money needed. He said the department’s revenue exceeds operating expenses and the city will be able to repay the debt to cover the cost of needed improvements.
“What Kim and I are going to set the table for is there will probably be a need in the next, and it may not be this year, it may be the next or the next year, for some short-term borrowing and when I say short-term, very short-term borrowing, because if you look at the revenue minus operating expenses, we do have a decent excess, but we don’t have enough if we were to be able to spend that much over, say three years, we don’t have that much excess to keep up,” Burrell said.
The Gas Department also has about $8.4 million in projected upgrades over the next three years. Creech said the department now has $10.09 million in cash reserves, however, which would cover the cost of the improvements.
Revenue for the Gas Department is also projected to exceed operating expenses by about $1.3 million a year, which would also cover some of the expenses, officials said.
The Electric Department also has system upgrades planned, but estimated revenue should be enough to pay for those costs over the next three years, according to budget estimates.
In 2022, the department will have $24.94 million in revenue and $18.22 million in operating expenses. System upgrades are budgeted at $4.26 million. Department revenue is expected to exceed operating expenses by $4.31 million in 2023 to cover upgrades estimated at $3 million. In 2024, the department will have $4.15 million after operating expenses are paid, enough to pay for $2 million in upgrades.