With the current fiscal year at an end, the Utilities Board of Tuskegee (UBT) passed a new budget for fiscal year 2018 at a special called budget hearing on Monday, October 16, 2017. The operating budget for 2018 is $21,738,216 compared to $21,749,172 in 2017.
UBT General Manager, Gerald Long told board members the 2018 budget anticipates unusually high legal expenses.
Long also said that rates for electricity, water and sewer services provided by the UBT are expected to remain as previously approved by the board. He further informed board members that back in 2011 when the board went to the bond market to solicit funding for the $21 million sewer project, that as part of the commitment to potential investors, the board indicated it would increase the sewer customer charge by $3.50 in 2012, 2013, 2014, and 2015. The board failed to implement the $3.50 increase in 2015 in violation of the bond agreement and this could have negative consequences on the financial condition of the organization and with bondholders. The board needs to reconsider this decision not to comply with the promises made to investors and the bond trustee.
Though health insurance costs for employees will increase by $63,000 employees can rest easy. The board agreed with Long’s recommendation to have UBT absorb the increase. He also said 3% merit raises for UBT employees were put on hold and will be reviewed later in the year, after an assessment of UBT finances.
Also during the budget report, Exit 38 was discussed. In the effort to grow jobs and develop new utility system customers, UBT is heavily involved in this project. The city of Tuskegee recently was awarded a $280,000 grant from the State of Alabama on behalf of UBT for electrical work at the site.
“This budget is based on assumptions that weather throughout 2018 will mirror weather in 2017 and we will not see spikes in hot or cold temperatures. It also assumes that the population will remain the same and that power rates from electricity providers will not rise.” Long said. He also discussed UBT department heads “wish lists” citing the electric department’s request for $4.5 million. This request includes $2.5 million for a new substation to accommodate the T-100 manufacturing plant that would be located at Moton Field. The departments will have to wait until UBT identifies new revenues before their “wish lists” can be considered.
Long cautioned the board that expenses must be managed closely in 2018 and said this may be a challenge considering pressures associated with bond indenture covenants along with the franchise fee settlement and possible legal issues.