In monthly meeting last Tuesday, the Newport Utilities board of directors approved the budget for fiscal year 2010. All board members, with the exception of Dennis Thornton, were in attendance.

Sherry Frisbee, of the accounting department, explained there are no rate increases expected during the upcoming fiscal year, but if Tennessee Valley Authority (TVA) has any increases those will be passed through to the customers.

She explained the net income for the wastewater department is projected to be in the negative amounts throughout 2014. For the 2010 fiscal year, the net income is expected to be -$597,048 with a cash balance of $2,773,950. She explained with net income in the negative amounts throughout the next five years, the cash balance will be depleted.

Discussing the budget, board member Jane Myers questioned pay raises.

"It's sad that there are no pay raises. Could there be a one-time bonus or something?"

General Manager Ron Fugatt explained the same methodology used last year was used this year. He explained the methodology resulted in a three-and-a-half percent pay raise for employees last year but no raises this year. Looking at the five-year plan, raises have been included in all of the upcoming years.

Board member Bill Lewis added, "We have fantastic employees all across the utility."

"I completely agree. It was hard for management to recommend a budget without any pay raises, but the decision is at the pleasure of the board, " Fugatt said.

There was then discussion about six months into the fiscal year looking at the budget again to see if there is the possibility of providing bonuses to employees. Frisbee noted a rate increase should be considered for fiscal year 2011 considering the net income for the department is negative.

"Yes, we have good employees who work hard. We could look again at the budget in a few months and update at the end of the fiscal year if funds are available," said Frisbee.

After that discussion, Myers changed from abstaining from the wastewater budget vote to a "yes" vote making the budget pass unanimously.

The expected net income for the water department for fiscal year 2010 is also negative, expected to be -$326,932. The cash balance is expected to be $2,102,631. Like the wastewater department, the water department is expected to have negative income for the next five years, which will deplete the cash balance.

She suggested looking at the water rates for fiscal year 2012. The budget passed unanimously.

The electric department is the only one of the three departments that is expected to have a positive net income. For the upcoming fiscal year, the expected net income is $2,065,273 with a cash balance of $11,111,475. Frisbee noted the department is expected to have positive income through 2014, which is the entire five-year plan.

The electric department budget passed unanimously.

Board Chair Dan Lindsey asked if it would benefit the department to pay down debt early since funds were available. Fugatt explained the bonds were issued for a set amount of time and the way the bonds were written the utility's payments will gradually increase over time.

Frisbee confirmed the bonds will be paid off in 2018 with payments eventually getting up to $900,000, where they are currently $300,000.

"The amount of payments will increase considerably over time," she said. "I would have to do a lot of research to see how those could be paid early because of the way they were written."

In other business, upon the recommendation of Electric Department Manager Jimmy Robertson, the board accepted the lowest bid for the tree-trimming contract from Wolf Tree.

Board member Brad Davidson commented, "It is nice to see the bids from the two companies so close, they obviously bid on the same thing.

Sometimes we see major differences in bids, such as a 30, 40, or even 50 percent spread."

Also on Robertson's recommendation, the board approved accepting the low bid from TAPP for $53,000 for transmission line steel poles to replace about 30 wood poles needing attention around the county.

On another note, Robertson said the anticipated completion of the Highway 411 project is set for next week.

On behalf of the wastewater department, Carrol Proffit said ConAgra hired River Bend Labs to perform a odor study at the wastewater plant.

He said the recommendation is to begin feeding bleach and a chemical at ConAgra. He explained additional equipment will be installed at both ConAgra and the wastewater treatment plant to read oxidation-reduction potential (ORP).

"Hopefully, some of the odor will be eliminated," said Proffitt." Right now, they are losing pH balance in the two-and-a-half hour flow from ConAgra to the wastewater plant."

"ConAgra has done all of this on their own, at no expense to the utility," he added. "Hopefully we'll have a significant reduction in odor during the next two to three weeks. And if this works, they will have lower pH coming out of their plant and that will end up reducing their costs."

The next board meeting is set for Tuesday, July 21, at 10:30 a.m. in the utility's conference room.