Meeting Date:

May 17, 2004



Staff Contact:

Rick Dickhaut

Program/Line Item No.:N/A



Cost Estimate:N/A


General Counsel Approval:N/A

Committee Recommendation:N/A

CEQA Compliance:N/A


SUMMARY:The first two pages of Exhibit 9-A show the current draft of the 2004-2005 budgeted revenues and expenditures.Included on these pages are comparisons to the actual revenues and expenditures for fiscal year 2002-2003 as well as comparisons to the 2003-2004 budgeted amounts. The other pages provide additional information on projected revenues and expenditures including detailed listings of proposed capital asset purchases and project expenditures.The current draft budget is based on the requests as submitted by District staff and the expenditure reductions requested by the Administrative Committee at its April meeting.††† ††


RECOMMENDATION:The Administrative Committee reviewed the draft 2004-2005 Budget on April 13, 2004, and requested that the original expenditure requests submitted by staff be reduced by 15%, and that the consequences of the reductions be stated.The Administrative Committee did not meet on May 11, 2004 due to the lack of a quorum.District staff recommends that the Board review the amended draft budget and consider alternatives for balancing revenues and expenditures including increasing the user fee, which has not changed since 1992.




Expenditures: The Administrative Committee reviewed the initial draft of the 2004-2005 budget at its April 13, 2004 meeting.After discussion, the Committee requested that staffís initial expenditure request of $5,981,700 be reduced by 15%, or $897,300, before further review at the May 11, 2004 Administrative Committee meeting.The Committee also requested that staff include statements regarding the consequences of each reduction.After numerous adjustments to various budget categories, the proposed expenditure budget has been reduced by $921,400, to $5,060,300.Exhibit 9-B is a listing of the adjustments that have been made to the proposed budget subsequent to the April Administrative Committee meeting including the consequences for each adjustment.Exhibit 9-C is the Districtís organization chart, which has been modified to show the two new positions requested in the proposed budget.The two additional positions, Senior Conservation Representative and Conservation Representative I, are bordered by dots instead of the solid line that borders currently authorized positions.Since the April Committee meeting, staff has also been asked to provide the costs of a second well for the Districtís Aquifer Storage and Recovery (ASR) Project.Those costs are detailed on Exhibit 9-D.


Revenues:The user fee, which is currently 7.125% of water sales within the District, is the Districtís largest source of income.Of the 7.125%, 6.015% is currently allocated to the Mitigation Fund and 1.110% is currently allocated to the Conservation Fund.No portion of the user fee has ever been directly allocated to the Capital Projects Fund.The user fee, which can be adjusted by Board ordinance, has not been increased since July of 1992. Exhibit 9-E details the current user fee revenue, as well as additional revenue that can be generated by various user fee percentage increases.Exhibit 9-F shows the impact of various user fee increases on current bills of $25, $50 and $100.Exhibit 9-G is the proposed timeline for implementing a user fee increase, should the Board decide to do so.Property taxes are the Districtís second largest revenue source.††† However, since the 1991-1992 fiscal year, the District has lost over $4,850,000 in tax revenues that were shifted by the State of California to the Educational Revenue Augmentation Fund (ERAF).This includes just under $600,000 lost during the current fiscal year, and the State is proposing shifting even a larger percentage of funds to ERAF during fiscal year 2004-2005.Exhibit 9-H details the amount of taxes that have been lost due to the ERAF shift.

Reserve Use:In recent years the budget has been balanced by utilizing large amounts of reserved funds for operational and project expenditures.The budget for 2004-2005, as revised on January 29, 2004, anticipated the use of District reserves in the amount of $1,760,800.While it is expected that actual use of reserve funds will be somewhat less than that amount, the Capital Project Fund will still have virtually no general reserves available for use in the 2004-2005 budget.The amended draft of the 2004-2005 budget currently reflects the use of $1,005,599 of general reserves.This would result in the Capital Projects Fund and the Conservation Fund being in deficit positions at the end of the fiscal year 2004-2005.


Discussion:The Board should discuss items such as: 1) potential revenue increases, e.g. user fee, 2) proposed expenditure reductions, 3) possible construction of a second well for the aquifer storage and recovery project, 4) other potential ways of balancing the budget without the use of reserves and 5) replenishment of reserves.The Board may also have other issues it wishes to address during the preparation of the 2004-2005 Budget.The final 2004-2005 budget will be presented for adoption at the regular Board meeting of June 21, 2004.