Major Factors to the FY08 Budget: #1. A 5% Revenue Increase based on - PDF document

FY08 Water & Sewer Fund Summary $25 $20 $20,780,800 $18,466,600 Millions $15 $10 $5 Expenses Revenues Revenues Prgm-Enh Baseline Exp. Budget is out of balance by $2.3 Million. A rate increase of 14.4% would balance the budget. Major Factors to the FY08 Budget: #1. A 5% Revenue Increase based on existing rates. #2. A 6% Labor increase. #3. Meter Replacement Lease; FY 08 cost: $434,200. #4. Moderate growth in O & M to keep pace with inflationary prices, especially electric, chemicals, equipment repairs & maint. and insurance. #5. Program enhancements of $715,400. Includes 4 new positions and Salary Market Adjustment . #6. The use of Fund Balance (accumulated savings) as a rate stabilizer is not recommended. 03/28/2007 Page 1

Fund Balance Appropriation 800 700 600 Thousands 500 400 300 200 100 0 FY04 FY05 FY06 FY07 FY08 The use of Fund Balance (accumulated savings) as a rate stabilizer is not recommended for FY 08. It is estimated by the end of fiscal year 2007, the unrestricted cash will be $843,600 or 4.7% of operating revenues. Water &Sewer Operating Fund Balance $20.0 $15.0 $10.0 $5.0 26% 21% 14% 11% 4% 4% $0.0 FY03 FY04 FY05 FY06 FY07 FY08 Est. Est. Liquid Fund Balance Operating Budget Fund Balance has been budgeted as a rate stabilizer in recent years due to it's strong relationship to operating revenues. The % represents the est. cash reserves to operating revenues. 03/28/2007 Page 2

FY 08 Baseline Operating Budget Other Debt Service 0.9% 13.4% Labor 48.8% Operating Costs 37.0% Budget Comparison by Classification $12 5% $10 13% $8 Millions $6 $4 29% $2 -20% $0 Labor Operating Debt Other FY07 Budget FY08 Proposed The percentage over FY 08 Proposed reflects the percent increase for FY 08 compared to FY 07 Budget. 03/26/2007 Page 3

Breakdown of FY 08 Operating Budget Contract Services 3% Other Fuel 8% 5% Indirect Cost 5% Supplies Utilities 7% 34% Insurance 4% Sludge 13% Repairs & Maint. Chemicals 10% 13% Operating Budget Comparision $3 0 0 0 4 0 , 7 2 8 , 0 0 6 , 0 2 9 0 $ , 2 1 , $ 3 5 $2 5 , 2 Millions 0 $ 0 8 0 , 2 0 0 7 0 5 9 0 , 0 , 7 , 1 0 5 9 $ 3 0 8 , 8 $ 8 $1 $ 4 6 $ 0 0 0 0 0 0 0 0 4 , 0 0 , 6 , 0 8 0 3 6 5 5 0 3 1 9 , 9 , 6 $ 3 $ $ 4 6 7 2 $ $ $0 Utilities Chemicals Insurance Repairs & Maint. Sludge Other FY07 Budget FY08 Budget 03/28/2007 Page 4

History of Debt Budget 3,000 $2,679,300 2,500 $2,082,800 $1,937,100 $1,812,000 $1,789,800 2,000 Thousands 1,500 1,000 500 0 FY04 FY05 FY06 FY07 FY08 Meter Replacement BNR Loan Leases Bonds The Meter Replacement Lease was implemented mid-year FY07. FY 07 Bonds will increase Bond Principal & Interest by $200,900 03/28/2007 Page 5

Breakdown of Rate Increase Starting Rate Sewer: Increase $4.10 Personal Services $143,850 $0.061 Fringe Benefits 140,150 0.059 Utilties 238,500 0.101 Equipment Repairs & Maint. 108,200 0.046 Sludge 35,900 0.015 Chemicals 85,000 0.036 Insurance 63,600 0.027 (5,800) (0.002) Other Operating 247,900 0.105 Debt Capital (22,900) (0.010) Baseline Expenditures $1,034,400 0.438 Elimination of Fund Balance (545,700) 0.231 523,700 (0.222) Increase in Revenues: Baseline Revenues ($22,000) 0.009 Total Baseline $1,056,400 0.448 New Rate: $4.55 Percent Inc.: 10.9% 473,700 0.201 Program Enhancements Proposed Increase $1,530,100 $0.65 New Rate: $4.75 Percent Inc.: 15.8% 03/28/2007 Page 6

Breakdown of Rate Increase Starting Rate Water Increase $2.30 Personal Services $72,350 $0.031 Fringe Benefits 61,850 0.026 Utilties 227,300 0.096 Insurance 33,200 0.014 Chemicals 38,000 0.016 Other Operating (7,100) (0.003) Debt 198,500 0.084 (14,800) (0.006) Capital Baseline Expenditures $609,300 0.258 Elimination of Fund Balance (140,700) 0.060 Increase in Revenues 308,600 (0.131) Baseline Revenues $167,900 (0.071) Total Baseline $441,400 0.187 New Rate: $2.49 Percent Inc.: 8.1% Program Enhancements 172,200 0.073 Proposed Increase: $613,600 $0.26 New Rate: $2.56 Percent Inc.: 11.3% 03/28/2007 Page 7

Growth in System Growth in System 28,000 0 3.6% 3.6% 27,000 0 3.8% 3.8% # of customers 26,000 0 2.3% 2.3% 2.1% 25,000 0 2.3% 2.4% 2.4% 3.3% 24,000 0 3.4% 4.3% 23,000 0 4.2% WATER SEWER 22,000 0 FY02 FY03 FY04 FY05 FY06 FY07 est. FY08 est. The # of customers added to the system is estimated to grow by 14.8% between FY02 and FY07. It is estim mated that 970 accounts will be added in FY08, a 3.6% increase. WATER CUSTOMERS SEWER CUSTOMERS # of # of New % # of # of New % Customers Accounts Increase Customers Accounts Increase FY00 21,532 774 3.7% 21,538 808 3.9% FY01 22,287 755 3.5% 22,309 772 3.6% FY02 23,215 928 4.2% 23,267 958 4.3% FY03 24,002 787 3.4% 24,040 773 3.3% FY04 24,570 568 2.4% 24,612 572 2.4% FY05 25,129 559 2.3% 25,130 518 2.1% FY06 25,695 566 2.3% 25,720 590 2.3% FY07 est. 26,665 970 3.8% 26,688 968 3.8% FY08 est. 27,635 970 3.6% 27,658 970 3.6% 02/14/2007 WSFlowest.123 Page 8

FY08 Water & Sewer Fund Summary FY06 FY07 FY07 Jan. FY08 Change from Budget Actual Budget Yr. End Est. Proposed in: $ % TOTAL OPERATIONS Revenues $15,932,268 $18,235,900 $18,207,600 $18,466,600 $230,700 1.3% Expenditures 16,360,958 18,235,900 18,429,100 20,780,700 2,544,800 14.0% Surplus/(Deficit) ($428,690) $0 ($221,500) ($2,314,100) ($2,314,100) Proposed Rate Increases to balance budget: Sewer Rate Increase per 1,000 gallons $0.65 Water Rate Increase per 1,000 gallons $0.26 Total Water & Sewer Rate Increase $0.91 $1.52 Change in Customer Account Fee per Quarterly Bill: Proposed Rate Adj: $0.91 One Cent Rate Adjustment = $23,600 Increase over existing rate: 14.2% Charles County Water & Sewer Rate History $8 $7.31 $7 $6.40 $5.82 $6 $5.33 $5.13 $5.17 Rate $4.75 $5 $4.10 $3.73 $4 $3.34 $3.37 $3.33 $3 $2.56 $2.30 $2.09 $1.96 $1.84 $1.79 $2 $1 FY03 FY05 FY07 FY04 FY06 FY08 requested Total Water Sewer A $.91 Water & Sewer rate increase in FY08 would increase the rate $2.18 cents over the last five years; an average of 8.3% per year. 03/28/2007 Page 9

WATER AND SEWER USER CHARGES WATER AND SEWER USER CHARGES Average Residential Quarterly Bill (based on 17,000 gallons) 200 $190.18 $180.03 $175.86 $171.50 180 Proposed: $130.79 160 $144.40 $141.64 140 in $ $117.20 $115.55 $114.46 $113.80 $109.00 $106.95 120 $97.65 100 80 60 l d d a t . ) e s e k C d l r n g o g c a r t i ' r e S w y a u n r i e o o r v r l S r r r o f i o f H P a a e f l A t r a W e s B C d a M a G n a C i t e H e x S L f a n . r e o t g F i n S d ( n y A s n i t K I e i C l r a h C Note: Rates for other Counties/Jurisdictions are as of January 2007. Proposed Charles County rate includes a $1.52 increase in the quarterly billing fee and a 26 cent/65 cent per thousand gallons increase for Water and Sewer respectively. WATER ONLY CUSTOMER SEWER ONLY CUSTOMER Existing Proposed Existing Proposed Rate Rate Variance Rate Rate Variance Quarterly Bill $44.10 $50.04 $5.94 $74.70 $87.27 $12.57 (based on 17,000 gallons) FY07 est. FY07 est. Total # of customers 1,088 1,115 03/28/2007, 08:34:19 AM Ws5yr.123 Page 10

OPERATING REVENUE DETAIL FY06 FY07 FY07 Jan. FY08 Change from Budget Actual Budget Yr. End Est. Proposed in: $ % SEWER Revenues * User Charges $8,388,040 $9,430,600 $9,306,800 $9,873,600 $443,000 4.7% Other 1,857,622 1,857,300 1,806,300 1,938,000 80,700 4.3% Total Operating $10,245,662 $11,287,900 $11,113,100 $11,811,600 $523,700 4.6% Fund Balance Approp. 247,300 545,700 545,700 0 (545,700) -100.0% Total Revenues $10,492,962 $11,833,600 $11,658,800 $11,811,600 ($22,000) -0.2% WATER Revenues * User Charges $4,653,316 $5,288,600 $5,202,300 $5,534,200 $245,600 4.6% Other 179,761 231,700 417,100 294,700 63,000 27.2% Total Operating $4,833,077 $5,520,300 $5,619,400 $5,828,900 $308,600 5.6% Fund Balance Approp. 247,300 140,700 140,700 0 (140,700) -100.0% Total Revenues $5,080,377 $5,661,000 $5,760,100 $5,828,900 $167,900 3.0% BILLING Revenues User Charges $493,716 $557,500 $553,200 $571,200 $13,700 2.5% Other 209,813 183,800 235,500 254,900 71,100 38.7% Total Operating $703,529 $741,300 $788,700 $826,100 $84,800 11.4% *Calculated based on 3 year average of flows and an estimated growth of 970 new customers. Total Revenues $20.0 0 0 6 0 0 , 1 0 0 3 9 6 4 , , 5 7 , 8 3 0 1 $15.0 2 2 $ , , 8 8 1 1 $ $ Fund Balance Millions Other User Charges $10.0 $5.0 FY07 Budget FY07 Est. FY08 Requested 03/28/2007 Page 11

Total Expenditures FY07 Budget $18,235,900 FY07 Est. $18,429,100 FY08 Requested $20,780,700 $5.0 $10.0 $15.0 $20.0 $25.0 Millions Labor Operating New Personnel Costs New Operating 03/28/2007 Page 12