By Joe Tash
The Santa Fe Irrigation District got some good news this month, as it learned that its wholesale water supplier plans to raise its prices 2.2 percent next year, as opposed to the increase of up to 12.2 percent that had been projected.
The change means the district won’t face a steep hike in its own costs for supplying water to its customers in Rancho Santa Fe, Solana Beach and Fairbanks Ranch, thus reducing the pressure for water rate increases.
The district is currently finalizing its budget for the fiscal year that begins July 1.
“The budget right now doesn’t include any rate increase for either recycled water or potable (drinking) water,” district General Manager Michael Bardin told the board at its meeting on Thursday, May 16.
If that situation holds, 2014 would mark the first time in at least seven years that district ratepayers won’t be greeted with a water rate increase in the new year. The district has imposed a total of 74 percent in rate increases over the past six years, including a 6 percent hike for this year. Other water agencies in San Diego County have imposed similar rate hikes.
The district’s board of directors reviewed the proposed $22.3 million operating budget for next year on Thursday. The budget is available for review on the district’s website, sfidwater.org, and will be discussed at a public hearing on June 20, when the board will considering adopting the final spending plan.
The operating budget will increase by $1.2 million, mostly due to increased costs for purchasing “imported” water. Over the past two years, the district has supplied about half of its customers’ needs with local water from Lake Hodges. But a dry winter means the district will only be able to pull about 30 percent of its water from the lake this year — and possibly as little as 15 percent — meaning that it will have to purchase more expensive water from the San Diego County Water Authority, its wholesale water supplier.
“We’ve had an extremely dry winter this year,” said Jeanne Deaver, administrative services manager. The amount of available local water during the new fiscal year will also depend on next winter’s rainfall totals, she said.
Rather than raise rates to cover the cost of buying more imported water, the district plans to use $1 million from its rate stabilization reserve fund, according to the draft budget.
On Thursday, the board also considered the district’s proposed $7.6 million capital improvement budget, which includes such projects as replacing pressure reducing stations, pumping stations and pipelines. One project on the list, purchasing new financial software to replace software originally installed in 1992, at a cost of $450,000, drew opposition from at least one board member.
Director John Ingalls said that unless the item is removed from the budget, he will vote against the spending plan next month.
Rather than purchasing its own software, Ingalls said, the district should be looking at ways to share such software with neighboring water districts, or outsourcing to reduce costs.
Deaver said the software in question is used for human resources, utility billing, customer service and other functions.
However, Ingalls said that if the district installs its own individual software, that could acts at a “stumbling block” in the future if the district seeks to consolidate some or all of its functions with other neighboring water agencies.
The question of consolidation came up earlier in the meeting when Brian Brady, general manager of the Fallbrook and Rainbow water agencies, gave a presentation about his agencies’ experience with consolidation. The two agencies recently formed a joint powers authority that shares many administrative functions, a move Brady said is saving about $500,000 in the first year, and will save $1 million annually by year three, primarily by reducing the number of employees.
Director Greg Gruzdowich, who was elected last year, campaigned on a promise to push for a consolidation with neighboring water agencies.
Gruzdowich said Thursday he shares Ingalls’ concerns, but that the board doesn’t have to decide immediately whether it will purchase its own software. Instead, he said, the money can be kept in the current budget, and the board will revisit the issue when staff comes forward with a formal proposal to buy and install the new software.
The board also will have to consider whether its wants to push for full or partial consolidation with its neighboring agencies, Gruzdowich said.
General Manager Bardin spoke against removing the software upgrade from the budget.
“We’re getting down to tools that staff needs to do their job,” Bardin said. “We’re budgeting to be the best water district we can be.”
The district is not making its budget decisions based on how they will affect potential future consolidations, he said. “For us that’s not at the top of the list of what we’re doing.”
Ingalls was the only board member to call for removing the software project from next year’s budget, and no vote was taken in the issue.