Revenue change unlikely, according to GM
Without much discussion on the status of the current-year budget, directors of the Idyllwild Water District set June 21 as the day for future budget issues.
The board unanimously approved public hearings to adopt its 2017-18 budget, as well as possible changes in its water-rate structure and annual standby charges on undeveloped lots.
Next year’s revenue estimates total about $1.6 million. This estimate does assume the new rate structure is approved. But General Manager Jack Hoagland told the board, “The new rate structure does not generate significantly different revenue; but it does do it in a different manner … it is a fairer allocation of cost to customers in order to pay their fair share.”
Estimated expenditures are nearly $1.2 million, about a 1-percent increase, resulting in net income of slightly less than $400,000. However, in addition to operating expenses, Hoagland is recommending a capital budget for the water program of $732,000. Grant funding will provide $155,000 of the capital budget.
The largest project is the pipeline replacement from Bicknell and Reed lanes, along Marian View Drive and also Cedar Street. A Riverside County Community Development Block grant of $155,000 will pay about one-third of the project’s costs.
Including capital projects and operating programs, total costs in 2017-18 will be about $190,000 greater than revenue. This difference will be funded from existing reserves and project costs, which were
planned but not started this year.
The sewer program is expected to produce $750,000 in revenue and cost $560,000 to operate. No changes to the sewer-rate structure are being proposed.
Hoagland’s capital program for the sewer district is estimated to cost $170,000, resulting in a total net income of $23,000 for this program.
The major sewer project ($135,000) will be to video portions of the internal pipeline system and start maintenance.
Although the board had little comment on the proposed budget, re-structuring of the water-rate charges generated a long discussion.
The proposed water-rate structure would provide every customer with 300 cubic feet (nearly 2,250 gallons) of pre-paid water. The next 2,250 gallons would be charged $18.93 and then $89.90 for the next 6,750 gallons. Usage beyond that level would be charged $.013 per gallon.
The current rate structure provides more prepaid water to meters larger than 5/8- inches, although only 21 of the 1,460 residential meters exceed that size. The current monthly base rate for the preponderance of customers is $28.70. This would be raised $1 to $29.70 with an additional 375 gallons.
For residences with a ¾-inch meter, the monthly base fee would be reduced from $43.04 to $40.35. But the prepaid water would be reduced from 2,805 gallons to 2,250 gallons. A customer with a 1-inch meter currently pays $83.19 per month and receives a base of 5,425 gallons prepaid. This monthly fee would be reduced $22 and the prepaid volume reduced 3,200 gallons to the 2,250-gallon amount granted to the other meter owners.
All customers pay the same per-gallon amount for any usage greater than 2,250 gallons per month.
A similar approach was applied to commercial customers, also. The monthly base rate would be reduced and the prepaid usage eliminated. Commercial customers will pay for every gallon consumed.
A higher rate for larger meters is justified because they impose a responsibility on the district to have more water available for the customers. Thus, greater storage, more wells and bigger pipes will impose capital costs on the district over time, according to Hoagland.
However, Director Vic Sirkin argued that these costs should be reflected in the cost of connecting to the water system; usage fees should not depend upon the size of the meter. Marge Muir, local real-estate broker in the audience, agreed with Sirkin.
In Sirkin’s opinion, the larger, especially the 1-inch meters, are becoming more common in order to comply with state law requiring sprinkler systems in newly constructed homes. However, these owners essentially use the same volume of water, (unless there is a fire); yet, their monthly base fee is twice the homeowner with a 5/8-inch meter.
“We’re penalizing in perpetuity a homeowner who has no intention to use more water. And the investments to guarantee the greater capacity demand can benefit their neighbor,” Sirkin opined.
Directors Peter Szabadi and Geoffrey Caine asked Hoagland to calculate what a single monthly fee would be in order to maintain the current revenue level.