Oak Creek enterprise fund transfer plan done in other towns
October 3, 2012
Steamboat Springs — Marsha Willhite, town administrator for Holly, said the town of about 800 people four miles from the state's southeast border with Kansas always struggles with its general fund.
"We only have a 1 percent sales tax," Willhite said, adding that money from Prowers County is scarce and that there is a question on the November ballot to bump the town's sales tax to 3 percent.
Similar to Oak Creek in Northwest Colorado, Holly manages its water, sewer and electric utilities through a proprietary fund. And like Holly, Oak Creek plans to move funds from its utilities to its general fund.
When Holly's general fund struggles, Willhite said, the water and electric utilities contribute to a transfer from the proprietary fund to the general fund.
Willhite said the transfer is budgeted for annually at about 10 percent of the utilities' revenue but is done in monthly installments. If the general fund doesn't need all of what is budgeted, not as much is transferred, she said.
The town of Oak Creek has decided to charge its enterprise funds, which are a form of proprietary funds, management fees that are paid into the town's general fund.
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Because the enterprise funds are supported by utility fees, the funds are exempt from TABOR.
In a 2008 ruling Barber v. Ritter, the Colorado Supreme Court held that enterprise transfers did not constitute a tax increase.
The city of Steamboat Springs charges its enterprise funds overhead, which is transferred back to the general fund. The 2012 city budget summary lists the waste water fund's overhead at $374,109 of $4,475,849 in total expenditures. The water fund's overhead is listed at $168,507 of $7,912,739 in total expenditures.
Oak Creek Town Administrator Mary Alice Page-Allen said the town's funds being assessed a management fee is like paying the profit from the utilities back to the shareholders of the town: its residents.
The proposed 2013 budget lists the electric utility's fee at $106,155 of $748,069 total expenditures. The electric fund is projected to have a total revenue of $763,695.
The water fund's management fee is listed as $17,900. The proposed budget estimates $773,100 in revenue and $781,335 in expenditures for the fund.
The sewer fund's management fee is listed as $50,250. The proposed budget estimates $336,870 in revenue and $293,234 in expenditures.
Nancy Stahoviak — who has served as a Town Board member, mayor and town treasurer — said transfers from utility funds to the general fund have occurred in the past, mainly from the electric fund.
The transfers were not assessed as a fee and were budgeted annually as a lump sum, Stahoviak said.
Stahoviak said the premise of the fees was that there were certain expenses that were not always recognized in the utility budgets.
To reach Michael Schrantz, call 970-871-4206 or email mschrantz@SteamboatToday.com