SILOAM SPRINGS — Siloam Springs Board of Directors tackled a $42 million balanced budget for 2010 in about four hours Tuesday evening.

City staff and directors spent the most time discussing an electric rate increase likely to be almost 20 percent. Directors Danny Wasson, James Fuller and John Turner were absent for the budget meeting.

The rate increase from the city’s electricityprovider, Grand River Dam Authority, might be negotiable but not by much, said Art Farine, director of Siloam Springs Electric Department.

“We’ll do our due diligence to determine what that number will be,” Farine said.

The rate increase would go into effect Jan. 1.

“We will be looking at a pretty large increase to our customers,” Farine said. “I don’t see any way around it.”

Directors will soon decide how much of the rate increase will be passed on to customers.

The exact rate increase from GRDA should be known in about two weeks, Farine said.

A rate increase is not shown on the Nov. 3 agenda of the Board of Directors.

The city would lose $2 million next year if it absorbed the rate increase without passing it on to the customers, City Administrator David Cameron said.

“GRDA is still the low cost provider,” Cameron said.

The electric company previously increased its rates 6 percent on April 1, 2006. That increase raised average household electric bills by $4 monthly.

Staff and directors also spent time discussing the shortfalls in electric sales and the high cost ofmedical insurance claims for 2009.

“Health care claims and utility revenue were the storms that hit the budget the hardest ”Cameron said.

The 2010 budget shows a surplus of $1.1 million.

No increase in sales tax revenue is projected for 2010.

“Everything is extremely flat,” Cameron said.

Electric sales is projected to be $19.3 million in 2010, a $1.5 million increase compared to this year. However, the cost to buy the electricity is expected to be $13.3 million, a $1.4 million increase from this year.

Net revenue from electric sales is expected to be $6.1 million in 2010. This would represent a nearly $100,000 increase in net from this year.

Electric sales will be used to offset the city’s $4.4 million deficit that’s budgeted in the general fund for 2010.

City departments that make up the general fund include all departments except for streets, maintenance, water, wastewater, electric, solid waste and airport.

Departments cut about $734,000 from their operating budgets for 2009, Cameron said. The deficit in the 2009 operating budget is projected at $4.9 million.

Major cuts included a hiring freeze and not filling positions where employees hadleft.

These cuts will continue through 2010.

“It’s been a team effort to balance this budget,” Cameron said.

Directors discussed each city department with its department head during the budget meeting.

Departments discussed included:

◊Court

◊ Cemetery

◊Library

◊Administration

◊Animal control

◊Airport

◊Parks and recreation

◊Police

◊Fire

◊Community development

◊Engineering

◊Street and maintenance

◊Solid waste

◊ Electric

◊Water and wastewater

Engineer Adam Roark was absent, so Cameron spoke in his place for engineering.

Major projects in 2010 include:

◊Wastewater treatment plant

◊Electric infrastructure

◊Tahlequah Street

◊Drainage improvements and drainage master plan.

News, Pages 1 on 11/01/2009

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