Water Authority approves first multiyear budget

Short Title
Water Authority approves first multiyear budget
Budgets for FY 2004 and FY 2005 set at $439.5 million and $461.1 million
June 27, 2003

The San Diego County Water Authority board of directors yesterday approved a multiyear budget of $439.5 million and $461.1 million for fiscal years 2004 and 2005, respectively. The move to a multiyear budgeting process will give the Water Authority enhanced fiscal management of many multiyear projects and long-range planning. Revenue and other funding sources for the fiscal years are expected to total $441.8 million and $463.7 million, respectively. The Water Authority's fiscal year begins July 1.

The Water Authority's expenditures are broken into five primary categories:

 

FY 2004

FY 2005

Water purchases

$ 236.5 million

$225.6 million

Debt service

$ 70.4 million

$ 73.6 million

Operating budget

$ 29.3 million

$ 31.0 million

Capital improvement budget

$ 101.2 million

$128.8 million

Equipment Replacement

$ 2.0 million

$ 2.1 million

"The development of a two-year budget will not only aid in fiscal management, but will create cost savings and operational efficiencies that a single-year budget cannot," said Maureen Stapleton, Water Authority general manager. "The Water Authority considers water reliability and financial management to be top priorities."

The largest component of the Water Authority's operating expenditures is water purchases. The budget of $236.5 million in FY 2004 and $225.6 million in FY 2005 for water purchases are based on projected annual demands of 640,000 and 610,000 acre-feet of water for the region. One acre-foot of water is approximately 326,000 gallons, enough to supply the needs of two typical households in a year.

When compared to the Water Authority's FY 2003 adopted budget, in FY 2004 water purchases are projected to increase 4.1 percent in terms of dollar value and 4.6 percent in terms of acre-feet. Water purchases account for 53.8 percent of the budget. In FY 2005, water purchases decrease by 4.6 percent in terms of the dollar amount and 4.7 percent in terms of acre-feet. Water purchases account for 49 percent of the budget in that year.

The total Capital Improvement Program appropriation for fiscal years 2004 and 2005 is $101.2 million and $128.8 million, respectively, which makes up approximately 23 percent and 27.9 percent of the total budget annually. Overall, the CIP budget is $1.23 billion to enhance and increase the operational flexibility of the Water Authority's water delivery system. The appropriation is anticipated to cover the costs of planning, design, construction and implementation of 74 projects planned for this multiyear period. This represents an approximate decrease of 32.7 percent from the FY 2003 budget.

The second largest ongoing operating cost for the Water Authority is debt service. At approximately 16 percent of the Water Authority's total multiyear budget, the $70.4 million budgeted for the FY 2004 includes payment of principal and interest on the debt the Water Authority incurred to finance the Capital Improvement Program, and represents a 0.5 percent increase over FY 2003. In FY 2005, debt service is expected to rise to $73.6 million, an increase of 4.5 percent. Currently, it is anticipated that the long-term debt costs will likely decrease over the next five years as cash and short-term debt usage increases and the Capital Improvement Program continues to be executed and funded. Board approval of the Regional Water Facilities Master by in 2003 would however, result in the board increasing the Capital Improvement Program budget to fund the projects included in the plan.

The Water Authority's operating budget includes the combined total of all departments that maintain the Water Authority's core mission programs. At $29.3 million in FY 2004, it represents a 5 percent increase over FY 2003. In FY 2005, the operating budget increases by 5.8 percent to $31 million. The operating budget makes up approximately 6.7 percent for both years of the Water Authority's total multiyear budget. The increases are primarily attributable to staffing critical maintenance activities, including the Aqueduct Protection Program and new water reliability programs such as desalination.

The San Diego County Water Authority is a public agency serving the San Diego region as a wholesale supplier of water from the Colorado River and Northern California. The Water Authority works through its 23 member agencies to provide a safe, reliable water supply to support our region's $126 billion economy and the quality of life of nearly 3 million residents.

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