Rancho Santa Fe, Solana Beach water board wrangles over $35.6 million budget for coming year
Santa Fe Irrigation District directors got their first look at proposed $35.6 million budget for the fiscal year that begins July 1, and the discussion reflected a split among board members that has carried over from an earlier contentious debate on proposed rate increases for the majority of district customers.
The discussion took place Thursday, April 21, at the board’s regular monthly meeting. The district provides drinking water for customers in Rancho Santa Fe, Solana Beach and Fairbanks Ranch.
Over the next two months, the board will hold public hearings on the rate plan and the budget, which is built on the assumption that rates will be raised in both June and January. The public hearing on the rate plan is set for May 19, when the board will decide whether to implement a new rate structure that would raise district revenues by up to 9 percent annually, with the first increase proposed for June 1.
Also at the May meeting, the board also could approve a maximum of 9 percent in rate hikes for 2017 and 2018, although separate votes would be needed before the subsequent rate hikes could take effect.
A public hearing on the budget is scheduled for June 16.
The board is split on the rate plan, with directors Marlene King and Greg Gruzdowich on the losing end of a series of votes related to the proposal.
King and Gruzdowich also raised objections to the budget, saying that it relies on assumptions from a rate study they contend was flawed.
According to a staff report prepared on the budget, the district’s expenditures next fiscal year would include operating costs of about $23 million, capital projects of $11.3 million and debt service of $1.3 million, for a total of $35.6 million.
Total revenues are projected at $28.3 million; the gap would be filled from reserves, with just under $1 million coming from the district’s rate stabilization fund, and $6.3 million taken from the capital improvement fund.
District general manager Michael Bardin cautioned the board that even with the proposed rate increases in June and January, the district will be unable to contribute to its reserve funds this fiscal year, and that total reserves will fall below the level required by board policy.
Among the factors cited in a staff report for the tight fiscal situation are that water sales — and therefore district revenue — are down due to state-mandated water-use cutbacks; less than normal availability of cheaper, local water due to the drought; and increases in imported water costs from the district’s suppliers.
The proposed new budget calls for $6.9 million in labor costs for a workforce of 46 full-time positions, up 7.1 percent from the current year. The additional labor costs of $460,000 include funding for one new position, three temporary positions and a 5 percent employee raise spread over the next three years, which was granted by the board in December.
Before the board considers approval of the budget, however, it will tackle the issue of the proposed rate increases.
Under state law, if the districts receives 3,253 written protests from customers — representing a simple majority from owners of parcels with water meters — the proposed rate increase would be blocked. As of Thursday, district spokeswoman Jessica Parks said approximately two dozen protests had been received.
The protests must be hand-written and signed, and delivered to the district office either by U.S. mail or in person. Emails, faxes or copies of protest letters will not be accepted, Parks said. The deadline for submittal of protests is the May 19 meeting.
At the board’s March meeting, the panel voted 3-2, with Gruzdowich and King dissenting, not to include a clip-out protest form with a mailer about the proposed rate increase sent to Santa Fe customers. A similar protest form was used by the city of San Diego when it was considering a proposed water rate increase.
The last in a series of district-sponsored community forums on the proposed rate plan is scheduled for 5:30 p.m. on Tuesday, April 26.
In other discussion on Thursday, operations manager of the district’s R.E. Badger Filtration Plant sought to reassure the board and district residents that they don’t need to worry about lead contamination in the local water supply, similar to what happened recently in Flint, Mich.
“We are not Flint, Michigan, there are a lot of differences between us and Flint,” Shaffer said at the beginning of a brief presentation.
The primary differences, he said, are that Flint’s water came from a more corrosive source, and that lead pipes were used to bring water into Flint homes. Neither of those factors are present in the Santa Fe district, and California law strictly limits the amount of lead that can be contained in water pipes and fixtures.
Water monitoring to detect lead and other contaminants is conducted both on a monthly and annual basis, said Shaffer.
“We’re very low risk of lead and copper in our system,” Shaffer said.