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Budget chiefs still see financial picture as rosy

Friday, January 29, 2016 by Jo Clifton

A trio of city financial managers told the Austin Monitor this week that Austin is still doing well financially, and, due to conservative fiscal planning at the city, Austin Energy and Austin Water both closed out 2015 with greater than projected surpluses.

Deputy Chief Financial Officer Ed Van Eenoo said that the city’s general fund ended the year with a surplus of $5.1 million, which is smaller than the $10 million to $12 million surplus the city has had in years past.

“That’s no indication that the economy is slowing down,” he said, but it reflects that budget writers were “a little bit more conservative” in projecting how much money would come in than they have been in the past. Though Van Eenoo did not say so, it should be noted that City Council spent more money than the city’s budget writers requested, so that could account for the lower surplus.

“We like to budget in a fiscally conservative manner so we have a good news story to tell Council when we close out our books,” Van Eenoo said, adding that this is the third or fourth consecutive year that has ended with a general fund surplus.

Van Eenoo attended Wednesday’s Audit and Finance Committee meeting along with David Kutach, budget director at Austin Energy, and Austin Water Assistant Director David Anders. However, because of the crowded agenda, the committee did not have time to hear from them. All three provided hard copies of their PowerPoint presentations, however.

Anders explained that the water utility’s revenues were more than $15 million below expectations. With rainfall about 45 percent above normal, water customers simply used less water. But the utility was able to reduce operating costs by between $5 million to $5.5 million, he said. Because the public was using less water, the utility was able to save money by using less electricity for pumping, and fewer chemicals were needed for water treatment. He said the utility ended up with about $4 million more than it had projected last September.

Over at Austin Energy, Kutach said, “We had some significant savings this year in our power supply adjustment cost, because of the (Electric Reliability Council of Texas) market. The wholesale prices have been generally lower,” especially natural gas. Overall revenues were about $64 million less than what Austin Energy had anticipated, he said, but expenses were also about $64 million less than expected – that was also a result of lower fuel prices.

But the big news was that there was a huge reduction in bad debt. That number fell from $21 million in Fiscal Year 2013-14 to $8.5 million last year, he said. Kutach attributed that to policy changes enacted by Council last year.

“Our base revenue was slightly less than what we had estimated,” he said, “even though we did have the high peak demand during the summer of 2,735 megawatts.” Kutach attributed that result generally to more energy efficiency. So, “even though we have growth in customers, people are using less electricity, so it’s starting to show up a little bit in our revenues,” he said. “Total expenditures were about $92 million less than anticipated.”

Austin Energy also had some savings in nonfuel operating and maintenance costs. Overall, Kutach said, revenue was about $24 million more than expenses.

Photo by Ken Teegardin made available through a Creative Commons license.

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