The litany of amendments approved Monday with Independence's 2019-20 fiscal year budget included $5.45 million for Power & Light Department to account for the upcoming four percent across-the-board electric rate cut that a council majority approved last month.
That rate cut, which takes effect Aug. 1, is on top of the 2 percent approved months earlier, and the council approved it after the budget had essentially been put together.
The cuts include $1.3 million in salaries and benefits, $2.239 million in operating and maintenance efficiencies and nearly $1.878 million in capital improvements. The number of full-time equivalent positions in the IPL budget – 212 – did not change.
City Manager Zach Walker said the cuts, even if late in the budget game, weren't unexpected and in many cases would have been explored in the future anyway, as the city had been aiming for rate reductions. The council chose to go ahead with some rate reduction before the full cost of service and rate study was ready later in the summer.
IPL's initial proposed budget had been nearly $149 million – more than 60 percent of it mandatory spending items such as cost of energy, payment in lieu of taxes, debt service and allocated costs. That left less than $57.6 million to consider for cuts, and $5.45 million is about 9.5 percent of that.
“We knew our responsibility and directive from the council to look for efficiencies,” Walker said. “Adopting the rate reduction accelerated our work on that, and I mean that in a good way.”
The first category of cuts will come from a hiring freeze and winding down the personnel needed at the Blue Valley plant, which is slated to be closed next year after a council majority approved a power capacity contract with Oneta out of Oklahoma.
“We have a responsibility to scrutinize each and every position and see what value it brings – every filled and vacant position,” Walker said.
For the $2.23 million portion, IPL will look at extending out vehicle replacements, perhaps changing some of the new vehicles purchased and reducing some travel expenses. With capital improvements, some projects will be fully eliminated, others reduced and still others stretched out. The largest capital improvement cut dealt with above-ground fuel storage tanks ($608,200).
As for the $10 million from the reserve funds that had been earmarked for the now-dead smart meter project, Walker said that money is being left as is for a year simply for contingency, in case the project unexpectedly gets new life. The water and water pollution control reserve funds also earmarked for smart meters also will remain in place, Walker said.