Water bills will be increasing for Idyllwild Water District customers, but the question is, by how much. The final 6-percent annual rate increase, approved in June 2010, will definitely be on the July bill.
But at the June meeting, the board considered recommendations from the Finance Committee for three other possible increases and the fiscal 2014-15 budget, which starts July 1. A public hearing on any of these revenue options, which the board may want, will be held within 45 days, according to General Manager Tom Lynch. The date has been set for Aug. 6.
“The problem is we’re spending more than we take in,” Lynch told the committee last week. The drought, whose effects are being felt throughout the state, is also contributing to IWD’s revenue troubles. “We’re asking people to use less water and they are. But our revenue is going down,” he said.
“It’s a big hit to the revenue,” acknowledged Director John Cook. “That’s the cost of the drought. You get less water and it costs more. At least you get it.”
Current and projected revenues are not and will not be sufficient to cover the district’s operating expenses and capital improvement program, Lynch stated. To pursue important capital work, the district needs an influx of additional revenue; otherwise its reserves will decline precipitously.
The first revenue option would reduce usage tiers or base levels in half. For example, residential customers do not pay for water usage of less than 500 cubic feet (3,740 gallons). This is commonly known as the base rate and for most residential customers it is $27.07 monthly. This proposal would apply usage rates to use of more than 1,870 gallons. Lynch said he estimates additional water revenue at $16,000.
The second option would increase sewer rates by $12 per month per customer and that would bring in another $15,000 each month.
And the third proposal would double the standby fee for vacant lots to $60 per acre from $30 and produce another $30,000 annually.
Besides more revenue, Lynch is reviewing operations for cost savings. For example, he has had Southern California Edison staff testing the efficiency of the district’s pumps and pumping procedures. Edison’s expected rate increases might raise IWD’s bill $100,000 so Lynch is determined to find ways to lower or eliminate that increase by, for example, moving pumping to off-peak hours.
“We’re doing all we can at our end,” he said.
For fiscal year 2014-15, water program expenses exceed water sales revenue by $240,000. However, with the district’s property taxes the water program is estimated to have a $43,000 surplus.
“The basic business is running OK if we don’t do any capital projects,” Chief Finance Officer Hosny Shouman told the committee. “Capital improvements are a separate story.”
However, this is a budget without any capital improvements. Lynch presented to the committee a capital program of nearly $600,000 for the water program. While not all the projects are needed immediately — many, including pipeline replacement and final costs for the Tollgate tank — are necessary.
The sewer budget is in poorer condition than the water program. Expenses are $220,000 less than sewer revenue, but after applying property taxes, the sewer program deficit is only reduced in half.
The projected sewer capital program includes about $500,000 for pipeline replacement. “The effluent line might need to be in one year rather than spread over several,” Lynch said. “All the pipe was installed in the 1960s and it has reached its normal life span.” Lynch is to begin inspecting pipelines later this year.
Without any rate increase, the reserves for the sewer program would fall from $1.2 million to about $450,000 in one year.
Lynch told the committee that he would look in the future at setting aside funds for maintenance and capital projects, such as vehicle and computer replacement.