By Joe Tash
The Santa Fe Irrigation District board of directors approved a $37.47 million budget for the fiscal year that begins July 1 at its meeting on Thursday, June 19, a spending plan that contains no rate increase for customers in 2015, and also includes $13 million for capital improvement projects.
The board, which has been discussing the proposed budget for the past several months, approved the document on a 3-2 vote, with directors Greg Gruzdowich and John Ingalls in opposition. Board members made little comment on the budget before voting, and only two people spoke during a public hearing held earlier in the meeting.
Although the budget contains no rate increase, the district will soon launch a “cost of services” study to determine its revenue needs over the next five to 10 years. District officials have said there could be a proposal for a rate increase depending on the results of that study. Customer notification and a public hearing would be required before the board could increase rates.
The split vote reflects a contention by Ingalls and Gruzdowich that district staff should have done more to trim expenses in light of a projected increase of $805,000 in operating costs next year.
Ingalls said after the meeting that he opposed pay raises for the general manager and staff, and also expenses for outreach, a category that he said includes attendance at conferences by staff and board members, public relations and water conservation efforts. Overall, he said, he would have liked to see about $290,000 in savings by cutting administrative costs and sharing labor expenses with neighboring water districts.
Gruzdowich reiterated his concern that the board had failed to stick to its resolve to put half of the money generated by a 6 percent rate hike imposed last year into its capital project fund. At a budget discussion in April, Gruzdowich had challenged general manager Michael Bardin and his staff to “sharpen their pencils” and look for additional cuts.
“He came back and really didn’t sharpen it very much,” Gruzdowich said after the June 19 meeting.
Bardin discussed the decision to forego this year’s contribution to the capital reserve fund in a message contained in the budget document.
“Without a rate increase operating revenues will not generate enough in operating gains to contribute an additional $1.0 million as intended by the board. This amount was meant to reimburse the Capital Reserve Fund for the pre-payment of the CalPERS Side Fund at $400,000 per year, and another $600,000 represented a portion of the January 2013 rate increase,” Bardin wrote.
During the board’s budget deliberations, Bardin noted that the district did make an additional contribution to the capital fund last year, and that expenses have been cut deeply in recent years.
The largest share of the increased operating costs for the fiscal year 2014-15 is due to imported water costs, according to a presentation by administrative services manager Jeanne Deaver. That is the money the district spends to buy water from outside suppliers.
Those costs are projected to rise 4 percent in January, or $340,000, according to Deaver’s report. A dry winter means that the district will need to buy about 70 percent of the water it supplies to its 22,000 customers in Rancho Santa Fe, Solana Beach and Fairbanks Ranch. The other 30 percent will come from local water supplies in Lake Hodges and the district’s reservoir.
Deaver said the district pays $829 per acre foot for imported water, which will go up to $865 in January, compared to $50 per acre foot for local water. In wetter years, the district obtains close to half of its water from local sources. An acre-foot contains 325,000 gallons, roughly the amount used by an average family in a year.
At the June 19 meeting, Gruzdowich suggested that future budget hearings should be held in the evening so that district residents would not have to miss work to attend. “I’d like to see more people maybe pressure us to make more frugal decisions,” he said.
Board president Michael Hogan agreed with the suggestion, and asked that the topic be placed on a future board agenda.