2014-2015 Budget

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2014-2015 Budget

New two-year budget built on bedrock fiscal discipline

In June, the Water Authority’s Board of Directors adopted a $1.5 billion two-year budget that advances the agency’s goals of increased supply reliability and diversification while maintaining fiscal discipline. The budget for fiscal years 2014 and 2015 follows a two-year period in which the Water Authority made substantial cutbacks to staff and programs. It also had deferred $150 million in capital projects as it aggressively adapted to changing water-use trends and other conditions.

The budget for 2014 and 2015 is $74 million, or 5.2 percent, higher than the previous two-year budget. The biggest cost drivers were related to the purchase and treatment of imported water, which rose by $132.3 million over the prior budget. Several factors drove expenses higher, including slightly larger sales volumes, scheduled increases in the cost of water from the Imperial Irrigation District and a 5 percent increase in treated water rates by the Los Angeles-based Metropolitan Water District of Southern California.

Those increases were partially offset by a $64.7 million decrease in spending on the Water Authority’s Capital Improvement Program. After more than a decade of major infrastructure projects, the Water Authority is transitioning to an era of less building and greater focus on asset management, facilities optimization and operations and maintenance as construction winds down.

The Water Authority’s budget also was crafted to ensure debt-coverage ratios maintain the agency’s strong credit ratings and minimize the cost of borrowing money for vital water supply reliability projects.

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Credit ratings remain strong

Prudent financial planning means that the Water Authority continues to maintain long-term senior lien credit ratings of AA+, AA+ and Aa2 from Standard and Poor’s, Fitch, and Moody’s, respectively.  All three agencies re-affirmed the Water Authority’s ratings and stable outlook in February. The ratings are considered high-quality and are held by only a few water agencies in California, allowing the Water Authority to access competitive interest rates and save ratepayer money through lower borrowing costs.