ITEM: PUBLIC HEARINGS
15.	CONSIDER ADOPTION OF PROPOSED FY 2005-06 MPWMD BUDGET
Meeting Date:		June 20, 2005	Budgeted:	N/A
From:		David A. Berger,	Program/	N/A
		General Manager	Line Item No.:
Prepared By:		Rick Dickhaut	Cost Estimate:	N/A
General Counsel Approval: N/A
Committee Recommendation: N/A
CEQA Compliance: N/A

SUMMARY: After receiving staff’s presentation regarding the 2005-06 proposed budget at the May 26, 2005 budget workshop, the Board requested several adjustments to the proposed budget. Subsequent to the May 26, 2005 workshop, the proposed budget was also adjusted by staff to reflect the carryover of funds for upgrading the conference room to accommodate televised Board meetings and to purchase a documents camera which is also for use at Board meetings to be held in the conference room. At the May 26, 2005 workshop, the Board also asked for additional information on different funding scenarios to cover complete Phase I Aquifer Storage & Recovery Project (ASR) costs; as well as additional information regarding various user fee increase increments. The latest version of the 2005-06 proposed budget is attached as Exhibit 15-A. Included as Page 1 of the budget document is Resolution No. 2005-05, A Resolution of the Board of Directors of the Monterey Peninsula Water Management District Adopting the Budget for Fiscal Year 2005-06.

Adjustments to the Proposed Budget Subsequent to the May 26, 2005 Budget Workshop:

As requested by the Board at the May 26, 2005 budget workshop, the proposed budget has been adjusted by adding $9,200 to the proposed budget for preparation & distribution of the District’s 2005 Annual Report. This brings the total amount budgeted for that purpose to $13,200. The proposed budget was also increased to include $10,000 for advertising an expanded rebate program for conservation as requested by the Board. Lastly, the proposed budget has also been adjusted to reflect the carryover of funds in the amount of $20,000 for upgrading the conference room to accommodate televised Board meetings, and $2,000 for the purchase of a documents camera which is also for use at Board meetings to be held in the conference room. At the time the proposed budget was prepared by staff, it was anticipated that the purchase and installation of these items would be completed during the current budget year, however, due to time constraints and conflicting priorities that cannot be accomplished. As this adjustment increases the amount of general operating reserve to be carried over to fiscal year 2005-06, it will have no effect on the projected ending balance for that fiscal year.

Funding Scenarios for FY 2006-07 ASR Costs:

Exhibit 15-B compares financing scenarios for terms of 10, 15 and 20 years. As the calculation of the present value of the payments for each scenario shows, financing is a very attractive alternative given current extremely low long-term interest rates. Exhibit 15-C presents user fee increases that would be required to fund all remaining Phase I ASR costs over periods of one, two or three years. The footnotes to the exhibit also indicate the maximum amount of reserves that would temporarily be used under the three alternatives. Both of the above exhibits were prepared under the assumption that labor costs for ASR in fiscal years 2006-07 and 2007-08 would be similar to the amount budgeted for fiscal year 2005-06. Although District staff is in the process of applying for Proposition 50 grant funds for planning and implementation of the Phase I ASR project, the application process is extremely competitive and staff recommends that no grant funding be anticipated in the budget at this time.

Information Regarding Various User Fee Increase Increments:

The amounts of additional revenues that could be generated by various user fee increment increases are shown in Exhibit 15-D. The effects the increases would have on a range of water bills are presented in Exhibit 15-E.

RECOMMENDATION: District Staff recommends that the Board adopt Resolution No. 2005-05, A Resolution of the Board of Directors of the Monterey Peninsula Water Management District Adopting the Budget for Fiscal Year 2005-06. Staff also recommends that the Board direct legal counsel and staff to begin the ordinance process to implement a user fee increase of 1.2%, or an alternative rate structure if the Board wishes to begin fully funding Phase I ASR Project costs during fiscal year 2005-06.

BACKGROUND: District budgets have been balanced in recent years by using large amounts of previously accumulated reserves. At the District’s strategic planning session on September 29, 2004, staff recommended that a balanced budget be prepared for fiscal year 2005-06 using a combination of revenue and expenditure adjustments and a diminishing use of reserve funds. Staff also recommended changing to a program and performance-based budget and implementing necessary changes to balance the budget for fiscal year 2005-06. At that time the Board concurred with this course of action. At the January 19, 2005 budget workshop the Board adopted an eight part strategy for balancing the 2005-06 budget. At the May 3, 2005 Board workshop, staff presented a proposed budget that is consistent with that strategy. After presentation of that proposed budget the Board asked for additional information that was presented at the May 26, 2005 Board Workshop. After receiving the information, the Board requested several adjustments to the 2005-06 proposed budget. The Board also asked for additional information on different funding scenarios for the fiscal year 2006-07 ASR costs; as well as additional information regarding various user fee increase increments.

EXHIBITS

15-A Fiscal Year 2005-06 Budget

15-B ASR Funding Scenarios – Financing Pool

15-C ASR Funding Scenarios – Short-Term Pay-As-You-Go

15-D User Fee Revenues Generated by Various % Increases

15-E User Fee Increase Impacts

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