Water board approves budget, rate increase

Board OKs annual hike despite growing cash reserve

Water board approves budget, rate increaseBy BRIAN COSNER, News Review Staff Writer

The Indian Wells Valley Water District Board of Directors approved its 2019-2020 budget earlier this month. The budget includes a 3-percent rate increase that takes effect July 1.

The increase was the second of five annual rate increases approved after last year’s rate study, the first of which took effect in January (originally intended for July 2018, but the rate study was delayed).

IWVWD Boardmember Stan Rajtora, the lone dissenter in the vote for approval, questioned why the proposed budget was prepared assuming that the increase would take effect. Ratepayers have been told in the past that the board would discuss each scheduled increase individually to determine whether it was necessary.

“The rate study has been performed and accepted by the board,” said President Don Cortichiato. “It has already been implemented.” He added that in regard to postponing of this year’s increase, the board could “have that discussion in July.”

“The only thing we’re voting on tonight is the actual budget itself,” said Legal Counsel Jim Worth.

But IWVWD CFO Tyrell Staheli interjected that approval of the budget meant approval of the increase.

The bulk of the district’s anticipated $11,998,950 in revenue for the fiscal year is expected to come from water sales to the tune of $10.8 million. Rajtora asked why the proposed budget anticipated a roughly 2.3-percent increase in sales while expecting a 3-percent rate increase and 1-percent growth.

“If we’re going to raise the fees, then it seems to me we should raise the projected revenue,” said Rajtora.

Staheli said that his projections were conservative as he rarely anticipates the district to “hit 100 percent” of what it budgets.

While projected expenditures exceed revenues by almost $1 million, the district expects an unrestricted cash reserve of $5.7 million compared to its $3.2 million target.

“The numbers that were used to justify the 3-percent increase were based upon us losing $1.5 million in fiscal year 2019, so that our reserve balance went down to basically $1,000 more than what we needed to meet our target,” said Rajtora. But he continued that with the currently anticipated reserve as high as it is, the rate increase isn’t warranted.

He added that debt service coverage was another impetus for the rate increase, but the district’s debt service coverage ratio of 2.32 was also much higher than the target of 1.5.

“So now the debt service coverage is well above what is needed in terms of available funds,” said Rajtora. “What would happen if we didn’t increase the fee? If we don’t need the fee increase, we don’t have to implement it. I have seen nothing that would indicate somebody looked to see what would happen if we didn’t increase the fee.”

“Do you believe with the information you have in front of you that we need the rate increase?” asked Cortichiato.

“I do,” said Staheli.

Boardmember David Saint-Amand cautioned Rajtora against basing his opposition on one fiscal year of information. The board should be looking “five, 10, 20 years” into the future, he said.

“This budget scares me a little bit because we are already almost negative a million dollars,” said Boardmember Ron Kicinski, referring to the $932,583 in expected expenses over expected revenues. “The fact is — the budget is healthy and needs to remain healthy because we have some things coming down the pipeline. We have to look out for that.”

Member of the public Mike Neel agreed with Rajtora that the rate increase is not justified.

“People are really tired of paying more taxes and paying for more stuff than they need to pay for,” said Neel, saying that the city council would throw “the biggest party you would ever see” if it had a reserve comparable to the district’s.

But boardmembers and staff emphasized the importance of a reserve capable of recovering from failed wells.

“If we have two wells go down, you’re looking at a few million bucks to replace them,” said Boardmember Chuck Cordell. “If Ty says we need it, we need it.”

Cordell said the district has deferred increases in the past since his time on the board, but said it would be good to look at the budget earlier on in the year. “We shouldn’t let it go this long so close to the date that we need to vote on it,” he said.

“I’d rather have more wells than we need than not have enough wells for redundancy reasons,” said General Manager Don Zdeba.

Rajtora said he understood the concerns, but still didn’t feel comfortable approving a budget with such a large unrestricted cash balance. The board passed the budget 4-1. For information, see iwvwd.com/board-of-directors.

Pictured: IWV?Water District Board-member Stan Rajtora (center) questions the necessity of a rate increase — Photo by Laura Austin

Story First Published: 2019-06-21