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Chesapeake Beach Mayor Bruce Wahl handed out a worksheet illustrating the need for a new proposed total revenue target, and how he came up with the changes, to the original projected fiscal 2014 utility fund budget during a Monday night work session.

In the original proposed fiscal ’14 utility fund budget document, total projected revenues for water and sewer was $753,500 — similar to total projected revenues in the fiscal 2013 budget. However, Wahl said he discovered a “shocking revelation,” that the projected carryover from fiscal ’13 was significantly less than anticipated. The worksheet shows changes of projected total water and sewer revenues of $1.5 million.

To make up the difference, Wahl said, the water and sewer rates need to be adjusted and the difference will have to be collected from ratepayers.

“Right now, what we collect from the ratepayers is about half of that [$1.5 million],” Wahl said. “Effectively, it became clear and obvious [Monday] night that without additional housing starts … the ratepayers are going to have to pay a lot more money.”

The current fiscal year’s budget anticipates 48 water and sewer capital connection, or tap, fees being sold for a total of $960,000 in revenue, Wahl said, which would leave $474,140 in revenue in excess of expenditures at the end of fiscal ’13.

“That ain’t gonna happen,” Wahl said, because with just a few months left until the end of the fiscal year, the town has only sold 18 taps.

“I just realized there’s going to be a shortfall, so instead of having [$474,140] in reserves, we’re going to be in the hole,” Wahl said.

The expenditures of the town were figured out, he said, and from there, he needed to calculate how much revenue needed to be collected from the ratepayers to cover expenses and what reserve fund balance the council wanted “to aim for” for fiscal ’14.

The worksheet, which is strictly for budgeting purposes for fiscal ’14 and is not an official adjustment, Wahl said, shows an adjustment of the town selling a total of 24 taps, which would result in a $480,000 loss of projected revenue — leaving the town with a balance of negative $5,860 in revenue in excess of expenditures for fiscal ’13.

“It poses us a significant issue going into the next fiscal year, not having that fund balance,” Wahl said.

Wahl calculated the total revenues of $1.5 million by adding together negative $1.2 million in sewer expenses, negative $477,750 in water expenses and $700,000 in tap fees from the original budget document.

Also added to that was net funding required for capital projects, which in the worksheet was adjusted to negative $240,500 from negative $400,500 in the original budget document due to the deferment of two capital projects; the projected carryover of negative $5,860; and the Government Finance Officer Association recommended reserve fund balance of $282,166.

The GFOA recommended balance, Wahl said, should be two months of the town’s yearly operating expenses. Wahl said to get the GFOA balance, he added the total sewer and water expenses together for a total of $1.68 million. Two months of the $1.68 million, he said, is $282,166.

Between the original budget document projections of $753,500 and the worksheet projections of $1.5 million, there is a shortfall of $771,027, Wahl said.

“Very simply, what we’re saying is … currently, the users bring in $754,000 [in revenues],” said council member Pat “Irish” Mahoney. “What these numbers are telling us is that in this coming year, the users need to bring in that $754,000, plus another $771,000.”

The “good news,” Wahl said, was that the council was in agreement about the target for the revenues.

“I don’t believe there’s any member of the council that doesn’t understand we need to raise $1.5 million in user fees,” Wahl said during a phone conversation Tuesday. “The politically charged element of this is the rate structure. … At least I think we’ve got consensus that we’ve got the appropriate target.”

The work session, which the public can attend, to discuss the rate structure for the fiscal ’14 utility fund budget will be held at 7:30 p.m. Monday, April 8, at the town hall.