At last week’s special meeting, Idyllwild Water District directors listened to new General Manager Tom Lynch and Chief Financial Officer Hosny Shouman discuss preliminary reasons for a potential rate increase, particularly for the sewer district.
Lynch explained that the presentation was just an initial discussion, and more information and a recommendation would be ready when the board reviewed the fiscal 2014-15 budget in May.
Board President Jim Billman stressed that IWD’s customers needed an explanation and he did not want to surprise them.
The first point the staff made was that neither water nor sewer revenue is sufficient to cover the operational costs for either program. Without a share of property taxes, the water program would have a $120,000 deficit and the sewer program revenues are nearly $100,000 less than costs.
“Without the property taxes, if we depend on ourselves, we lose money,” Lynch stated.
However, property taxes turn the water deficit into a $130,000 surplus. Unfortunately, because the sewer district’s property taxes are substantially less than the water district’s, the sewer still has a deficit. Property taxes do reduce that deficit to $30,000.
Nevertheless, Shoumann expects the sewer program to continue to drain reserves without another rate increase in the future.
So this spring, IWD is expected to approve the fifth-consecutive, 6-percent rate increase. This series of rate increases originally was approved in June 2010.
“The sewer program needs a rate increase after the 6 percent in June,” Shouman said. “Water can wait. But sewer, we need an immediate rate increase.”
But Lynch stressed that he was not asking for any action at this meeting. “We’re preparing the budget and generally it’s in good shape with water. Sewer we’ll look at in the future.”
“This is a preliminary idea. Put together a notice and letter to bring the users online with what is needed,” Billman said to Lynch.
In other business, the board unanimously approved a consulting contract with former General Manager Terry Lyons. The consulting arranged will be through June 30, according to Lyons.