Rancho Santa Fe water district approves fiscal year 2013-14 budget
By Joe Tash
Customers of the Santa Fe Irrigation District will not see a rate increase on their water bills next January for the first time in more than a decade under a $33.2 million budget approved by the district’s board of directors at its meeting on Thursday, June 20.
The board unanimously approved the spending plan for the fiscal year that begins July 1. The budget includes operating expenses of $22.3 million, a 5.8 percent increase from the current year, along with $7.3 million for capital improvements such as pipeline replacements, pressure reducing stations and other projects.
The budget also includes $736,000 for new equipment, $1.3 million for debt service, and $1.5 million for the capital improvement reserve fund.
In order to avoid a rate increase, the district will take $1 million from a “rate stabilization” reserve fund, and maintain lower staffing levels. A staff report said the district currently has 44 employees, a 10 percent reduction from its workforce in 2009.
“We’ve tightened the belt and it’s still tight,” said General Manager Mike Bardin. “We’re still in the ‘circle the wagons’ mode.”
Director Greg Gruzdowich, who was elected to the board in November, said the budget shows the district is moving in the right direction, but he would like to see more emphasis on cutting operating costs, particularly employee salaries and benefits.
At Thursday’s meeting, Gruzdowich handed out a chart he prepared, which he said shows the district’s salary and benefit costs grew by about 30 percent between 2008 and 2013, during a period when the board imposed rate hikes totaling 74 percent. When compounded annually, he said, the rate hikes have effectively doubled customers’ water bills over that six-year period.
“My concern is salaries and benefits per FTE (full-time employee) have been rising while we’ve been raising rates dramatically,” Gruzdowich said.
While district officials have said that the rising cost of water from the district’s suppliers has fueled recent rate increases, Gruzdowich said his analysis showed that rising water costs have only added about 25 percent to the district’s wholesale water costs.
The district can’t keep taking money from reserves, and should instead seek to pare back expenses wherever possible, he said.
“I’d like philosophically to look at everything we’re doing and make sure it’s worth doing,” he said.
Bardin said the district has done everything it could to keep expenses in check and rates down. A new labor agreement with employees gradually reduces the district’s contribution to employee pensions, and created a new tier of lower retirement benefits for new hires. However, the district’s personnel costs under the new budget increased by 1.5 percent to $6.1 million.
Rate increases from the San Diego County Water Authority, the district’s wholesale supplier, will cost the district 2.2 percent more for buying “imported” water in 2014, according to a staff report. The district projects it will need to buy more imported water in the coming year because a dry winter has reduced the availability of less expensive water from local reservoirs.
Director John Ingalls said money generated by rate increases has been used to maintain and improve the district’s network of pipes and pumping stations.
“We’re spending the money on construction,” Ingalls said.
Along with the $7.3 million planned for capital projects next year, the district spent about $1.5 million this year, and $7.2 million the year before, according to budget documents.
After a discussion of the budget in May, district officials removed a planned expenditure of $360,000 for a financial software upgrade. Ingalls objected to the expense, because he said the district should work with neighboring water districts on a shared system, an approach that might make it easier to consolidate functions in the future.
The district has raised its rates annually since 2004, according to Jeanne Deaver, administrative services manager. No rate increases were imposed from 1997 to 2003. After that, rates went up each year from a minimum of 6 percent to a maximum of 20 percent, including a 6 percent increase that took effect Jan. 1.
If the district did seek a rate increase for 2014, it would have to notify customers and hold a public hearing under state law before the increase could be imposed, Deaver said.
The district serves 22,000 customers in Rancho Santa Fe, Solana Beach and Fairbanks Ranch.
For more information on the fiscal year 2014 district budget or to obtain a copy of the budget document, please visit the District’s website at www.sfidwater.org.