5.3 ERMUSR 2-11-2020 - Laserfiche WebLink

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City of Elk River Local Option Sales Tax (LOST) The successful referendum to create a LOST has an operational and financial impact on ERMU because of our billing system. The LOST will apply to some, but not all sales through ERMU. To implement this, ERMU worked with NISC to create custom software updates that were successfully implemented October 1, 2019. Annual Business Plan and Budget Presentation Improvements Per the direction of the commission during the Strategic Plan and 2018 Annual Business Plan Results review in February 2019, staff had developed and implement a 20-year capital improvement plan to be incorporated with the budgeting process. Additionally, staff implemented formatting and presentation improvements so that the different sections of the budget were presented in a similar format for improved readability and so that the annual budget formatting was more similar to the formatting of the monthly reports. Review of the 2019 Annual Business Plan The purpose of reviewing the 2019 Annual Business Plan is to evaluate the budget as a tool in addition to performance. By evaluating the usefulness of the tool, staff will be better able to provide monthly information and reports to help the commission evaluate the organization health and direction. Understanding and exploring the areas of risk and sensitivity factors improved the governing set policy redirecting an organization toward the short term and long-term goals. The Annual Business Plan review should help the commission identify areas of higher risk, evaluate options to mitigate risk, establish their comfort level with risk, and help the commission clearly communicate expectation in handling the risk. Overall Electric Utility performance for 2019 was positive on a year where sales were down because of weather and the 5% rate decrease. Unaudited financials indicate that electric margins significantly outperformed budget ($1,593,658 budget, $2,870,619 actual). While revenue performance was 1% lower than budgeted due to weather and the 5% rate reduction, the annual expenses were 5% lower than budget. And net to reserve was higher than budgeted ($503,296 budget, $2,970,629 actual). This was our first full year purchasing power from Minnesota Municipal Power Association (MMPA). Overall Water Utility performance for 2019 was positive even when considering weather. Unaudited financials indicate that water margins outperformed budget (-$144,494 budget, $340,866 actual). Revenue was up 9% ($2,768,491 budget, $3,019,809 actual) while annual water expenses were down by 8% ($2,912,985 budget, $2,678,943 actual). And net to reserves was higher than budgeted ($522,399 budget, $1,157,062 actual). An overview of 2019 budget verses actual (unaudited) for both electric and water is provided in the attached summary. ______________________________________________________________________________ Page 8 of 9 91