EID 2014 - "6% Reduction in Previously Planned Water Rate Increases"
At its October 15 meeting, the El Dorado Irrigation District Board of Directors, during a 2013-2014 Mid-Cycle Budget Workshop, were presented with a proposed 2014 operating budget in the amount of $44.3 million.
In accordance with Board policy, the Board adopts a two-year budget and conducts a mid-cycle review to determine any changes that may be needed in the second year of the cycle. As the District approaches the mid-point in this two-year cycle, the economy within the District’s service area appears to be slowly recovering as reflected in the projected Facility Capacity Charge (FCC) revenues, otherwise known as hookup fees, for 2013.
Projected 2013 revenues are expected to be about $1 million higher than originally budgeted, while projected 2013 year-end expenditures are expected to be slightly lower than the adopted budget, approximately $575,000.
Mark Price, EID’s finance director, reported that the proposed 2014 operating budget is approximately $400,000 less than the previously adopted 2014 budget but is 1.1% higher than the 2013 adopted budget. The proposed budget also includes reducing a previously-adopted rate increase of 11% for water services down to a 5% increase, effective January 1, 2014. The previously-adopted rate increase for wastewater and recycled water services will remain at 5% effective January 1, 2014. “This proposed reduction in rate increases for water services is due to expense reductions related to the early implementation of the Public Employees Pension Reform Act (PEPRA), which the employees of the District agreed to over four years early; the delay of the forecasted bond sale for specific significant long-lived capital assets; and continued diligence by staff to contain costs,” said Price. The District will also continue to stay on course with the financial plan built within the 2012 Cost-of-Service Study.
The budget reflects an increase of approximately $498,000, or 2.9%, in salaries and benefits and a net decrease of about $30,000 in capitalized salaries, materials and supplies from the adopted 2013 budget.
Wastewater revenue is projected to be lower by about $2.5 million, significantly lower than projected in the 2012 Cost-of-Service Study. This is related to the actual commodity usage by ratepayers and also a one-time exception to the District’s regulations in the commodity usage calculation which was adopted by the Board in January 2012. The exception was to allow the usage of the lower of the last two years’ winter quarter average to establish a customer’s 2012 sewer commodity rate versus the District’s (and industry standard’s) practice of using the most recent winter quarter average. The exception was made due to the higher-than-normal usage of water for irrigation which occurred because of an unusually dry winter in 2011.
Price also reported that the District will again propose to make an approximate $3 million prepayment into an irrevocable trust on its 2004A Certificates of Participation by year end. This type of financial transaction was originally authorized by the EID board in 2011 specifically for the purpose of paying down debt, at which time EID made a $2 million prepayment. Another payment of $3 million was made in 2012.
The Board will vote on the proposed budget at their next Board meeting on October 28.
EID is a public agency dedicated to providing high quality water, wastewater treatment, recycled water, hydropower, and recreation services in an environmentally and fiscally responsible manner.