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Home My WebLink About10 Budget Cuts ---66 Agenda Item # /45 IMMMEW Workshop To: Board of Directors From: Peter Holzmeister Date: November 29, 2005 Subject: Possible budget cuts Why this matter is before the Board: The Board asked staff to make budget cut suggestions that could, if adopted by the Board, reduce or eliminate the rate increase that is proposed in the draft budget. These suggestions were to be presented at this workshop. History: The District department heads and I prepared a draft budget for 2006 and presented it to the Board for review and consideration. The draft budget recommended a five percent increase in water and electric rates to cover the increased cost of operations and capital projects, and a two percent increase in water and electric rates to set aside funds in reserve. So the total rate increase for electric and water would be seven percent each. Two workshops were conducted to review the draft budget and the directors asked staff to prepare an analysis of what items could be cut from the budget to reduce or eliminate the rate increases. New information: Attached is an analysis that shows possible budget cuts that would reduce or eliminate the proposed rate increases. The analysis is organized into a series of five different groups of budgetary cuts, each group being the equivalent of a one percent cut. So if the Board wished to eliminate one percent of the proposed rate increase you could cut the expenses listed in the priority one group. If the Board wished to eliminate two percent of the five percent rate increase you could cut the expenses set forth in the priority one and two groups, and so on. It was difficult for us to develop these groups of possible budget cuts. We began by realizing that certain budget expenses cannot be cut, such as the cost of purchasing wholesale power and current committed debt service. We also made the decision not to cut fundamental necessities, such as reading meters and sending out monthly utility bills. Since our daily work tasks require our crews to travel throughout the District service territory we were reluctant to cut investment in new vehicles, maintenance of vehicles, and operation of vehicles such as fuel costs. With thoughts such as these in mind we proceeded to try to identify possible cuts. The cuts set forth on the attached analysis scare us. A few of them can be managed well enough. Others cut into the bone and muscle of the District organization, such as not filling some current employee vacancies. Others postpone needed investment into next year, such as replacing vehicles. Some of the cuts postpone employee training or purchase of safety equipment. I suggest the Board review these issues carefully with the long-term view in mind. —a.,,1,—..,,.�. �� , , , Priority 1=first 1%to Cut Proposed Budget Cuts for 2006 5=last 1'/,to Cut -- Each 1%for Electric is approximately$186,339, Each 1%forWater is approximately$77,000 Existing.... Existing Proposed New Priorit !.Cost Center Description Existing Elec% Water% Budget Amount Cut Cut Comments Board of Directors '... 1 1_ Meeting Expenses Board Meetings 2,500 1,250 1,250 1,250 625 625 Reduce snacks at Board meetings,cut by half 1 1- _Off ice Supplies/Misc Expenses 750 375 375 500 125 125 Cut to$250 -__-_--Genera l Manager ..___ ......... ..... _ .---_. - .. 2 Communication/Cell-Phone "" 2,000�. 1,000:. 1,000 1,000 "_ 500 � 500 Reduce use of cell phone 1 2 Meetin-Expense-(Industry)___ -" 1,0010 ,_ 0 500 - 500 Do not attend Industry_Meetings 1 2 Plant Company___ -" ._-___ 1,000. 500.." 500 - 0 ______ 500 500 Mamtainplants in-house --- -- - - --- --- --- -- ---- - - ..-- - --- _- - - 1 2 ICMA Dues 200 100 106 0 100 100 Eliminate ICMA memberwhip Administrative Services '. __ ---_--_-- -- _ __--- -- 1 3 Bank-Charges -- 10,000 6,000 4,000 6,000 1 2 400 _1,600 Reduce by$4 000 Will result in lower interest earnings at LAIF _ 1 3 Special Meeting(1 general mailing to customers) - 5,000'1_ 3,000__ 2,000 _ 0 3,000 2,000 Reduce communications with customers -- 1 3 Broadband Related Expenses "_ 5,000 2,500 2,500 0 "2,500 2,500 Eliminate from Cost center#3 1-__ 3- Contract Services-DOT Training _ -- 2,000_ 1,000 1,000 1,000 -- 500 _ _ 500 Reduce mandated drug and alcohol training - __ - -- 0 900 f 600 Put message on monthly bill and use newsletter 1 3 -Employee ex enses,clothm -- 1,200 900: 300 _ -._ - _- _ _-1 terra ai etters --- 1,500'. g00, 300 1,100 _-__ 75 _ 25 Reduce by$100 P 9_. 1 3"" ':Fed Ex/UPS/USPO '.. 1,000 600" 400'. -500-': _ _ _ 300 i 200'.Reduce and hope mail expenses stay low 1 3 Dues and Memberships:AMRA 250 I 188�, 63� �� 0 188 63,Eliminate membership in American Meter Reading Association 1__.__'.... 3 Meeting Expenses-Misc in house 200 120', 80 i 0 120 80 Eliminate-Reduce in house meeting PlammngServrces 1 4 Marketing,not project related 25,000'.... 5,000 20,000 j Reduce marketing of projects such as Public Benefits,Water conservation,etc. _ ___ 24,500 _ Do not fund these new programs 1 4 Conservation Biomass Fuel Cell 24,500 0 1 4 Community Relations.Home Show "" 7,000 - 0 7,000 Services Acct Pa_able Home Show S ecial Activit Costs - -- r Y - -- -- -- - Y..----- p------ Y .._... - --- P 9 Y - - -- `- --- ------ --. - __.. _- 4,000 700, _ 300 Reduced 1 4 oca rou enc Activities,mist costs 5,000' 3,500- 1,500' _t__ 4 Employee Expenses-Meals(OT&Other)- ,-___- 1,000__ 800 200 500. 400 100!Reduced 1 4 Communications" 100 70: 30 -- 70 30 Eliminate use of a pager and just use cell hone Support Services _ ......_ 1,_ 5_ Safet E ui ment _-- --- 2500 1,250 1 250 -_ _-- --- _---_- .. _... y q p 1,500 _- --_ 500_ 500 Reduced-Safety - _ 1 5 W_e_lln_ess Progfr_am_ Expenses-_ _ _ 2,500 1,250 1,250 _ __0 _1,250 __ 1,250,Eliminate-partially funded m cost center#2 g - _1 300. _ Reduce shirts for employees 1 5 Clothing Allowance i 1 300� 1,300: 0 _ _ 1 5 Fire Protection-computer room 1,000 1'000 0 1 000 - Eliminate-partally"funded m cost center#3 .Electnc Operations 1 6 "Trade in Unit#17 80,000: 0 14,331 Delay replacement of Unit 17 until next year r- -�- -------- ------ Waterpoerations ---__-- _ -- ---_-�_-- 1_ "7_" Value Box Raising Town Paving Project__ _--_ 30,000_; _ 3Q,000 _ 3,000 _T 27,000 TReduced paving project by Town 1 - 7 Contract Leak Repair - 15,000 15,000 __-- 0 15,000 All repairs in-house 1 7 ':Outside Services Employed 10,000 10,000 0 T 10,000 If needed no funds __ r - - -0 _ __- _-___ _ .._ --1-2-5-00 1 7 aPostage Water Quality letters_ !....___ 7,500: -� 7,500'�.._ 4,_8.75 -I 2 625 Reduce by$2625 12500 0.39-Mandated program 1-" 7 Equipm_ent Rental/lease 5-Po0 5,000 0 5 000 If needed no funds 1 7 .Public Education 2,000 - 2,000 0 - -2,000 Eliminate Public Education from cost center#7 - -- ._.__._._ ..._._._. -_ ---- - - -- - -- --_ T �- - -- '-----. .._ .. ----------- -- 1 9_ UAMPS 214,000 154,000 y 60,000 -Updated IPP3 2006 Costs at UAMPS __. ---- -- -- - `_ - --- -- - ---- -- re ----- --- --- 1 9� FERC-Legal Expense � 70,000 I4 40,000 30,000 ____ No lawsuits pending currently Sued we're screwed - 1 9 ISCADA System-Misc Expense 8,000! 0. "" 8,000 Eliminate SCADA Misc supplies from cost center#9 !... S...Subtotal---- `--$180,759 73,723 Priority i Cuts Board of Directors 2 1 CSDA Conference 1,500 750'... 750 750'... 375: $375 Do not attend CSDA conference Priority 1=first 1%to Cut Proposed Budget Cuts for 2006 =--last 1%to Cut Each 1%for Electric is approximately$180,339, Each 1%forWater is approximately$77,000 Total--Existing ExIistir41ProposecfNel Electric MaterAmount Priority Cost Center Description Existing Ell% Water% Budget Amount Cut Cut Comments General Manager 2 2 Telecom Aggregate Networks 131,500 ------30,000 _2Aggregate Networks Electric portion cut-Look-at when Telecom goes forward 2 2 -Telecom Aggregate Networks 101,500 88,500 13,000 Do not fund any Petit Gilwee advertising 2 7 2 Broadband Related Expense 4,000 2,000- 2,�-----0 2,00121--$2�00-)Cut Etroadband related expenses 2 2 NWPPA Dues 9,500 0 9,&00----------Donot-ren ew NW P-PA-du-as---will increase training costs as non member I I -11 2 4 Conservation Cash Rebate Program 50,000 1 40,000 10,000 8,000 33,600 $8,400 Customers don't get cash rebates of solar i appliances 2 5 Parts Washer 2,500 0 2,500 ___qarVt replace Leased Parts Washer-continue to lease 2 5 Replace Unit It 40 28,000 0 5,016 Use Unit 40 for one more year,increased maintenance costs - Electric Operations ---------- 2 1 6 Replace Unit if 28 38,000 0 6,807 replacement of older truck,increased maintenance costs 2 6 Digital Transformer Radiometer 2,650 0 2,650 Unable to Test New Transformers 2 6 Replace Substation Insulating Barrier 20,000 0---- 20,000 Unable to repair breaking down red rock insulation --- Power SupglyLGIS ---------------------- ------ 2 9 Liclar&Aerial Photography ��000 0 45,000 Unable to have Elevation and Photography for Designing ---------------- 2 7 Romac tapping toot w/motor&12- 14,700 14,700 0: 14,700-�,F�e-pfa-c--el-2-y-e-a-r old_tool,-tap-li-n--e-s-l2-inch--an-d-u-p-____ ----2-- j Milk.diamond concrete si 8 1 11 8,000 _0 $8 1 1 0 1 00 R-eplace smaller saw that is old 7 iSchonstedt GA-72CD magnetic locator 6,000 l 0 $6,000 Helps find cans and lids under snow dirt_and asphalt 2 7 Trackless vehicle w/snowblower&equip 13101-- --------------- 13,000 0 $13,000 snow storage ------------------ -- gearel we_must blow, plow snow -UtiltyTrailer 10,000 It,GVW(encl leak trail ...... .........14,000 i 1-4,000 0 $14,000 Current trailer too small to carry leak equipment 2 7 Handheld GPS unit 12,666 --12,001 6 $12,000_Aflowii us to locate lines,boxes and meters in field ------------------------------------------------------------------------------- Subtotal $170,448 i $78,475 Priority 2 Cuts Priority 1=first 1%to cut Proposed Budget Cuts for 2006 5=last 1%to Cut Each 1%for Electric is approximately$180,339, Each 1%forWater is approximately$77,000 ------ - - -- -- Existing-Proposed - -- - - Total Existing - New Electric -Water Amounf� Priorit Cost Center Description Existing Elec% Water% Budget Amount Cut Cut !..Comments Administrative Services ,- 3 _-_3- Personal Computers.Service/Hardware - - _ 30,000 _ ,, __ - 30,000-___-_ Delay Replacement of Old Computers,New Employee won't get new computer _. 3 3 Replace Phone System 60,000 10,748 Delay Phone System Replacement 3 -3-_- - Answerig Service _ 36,000'', i 6,000 30,000 __ Continue to use current after hours call service, reduced customer response 3- 3 Replace Unit#36 24,000 4,299 - :Delay replacement of older truck,increased maintenance costs __-_- __. __- 3 6 ',.Apprentice Expenses _ 10,000 8,000 - 2,000 Reduce Training of Apprentices,Staff not well trained i 1 - _____ r _ 'No Replacement Meters(Rates Only)on Hand for Damaged Meters,Lost Revenue 3 6 Purchase New Meters for Replacement_ 25,500 25,500 3 _ 6 Materials&Supplies(Non-Inventory) 90,000: 70,000 20,000 __-_ Underfunded material-for line extension&upgrades hope within budget- __ ..__ -__ _-- Power Suoaly/GIS -- --- -- - -. -- - 3 9 UAMPS 150,000 112,000 38,000 IPP unit 3 Development costs reduced,Hopefully-Future Power Supply Implications 3 9 GIS Professional Services - - 40,000 '', 20,000 20,000, CRC Integration&One Call Development Cut Water Operations .. -_- 3 7 No Fill Vacant Service Teck.Position 620,318 78,000 543,318 - - 78,000 Reduced Service--Longer time to repair leaks -- - - Subtotal $180,547 1 $78,000 Priority 3 Cuts - Planning Services 4 4 ;Conservation Schools Ener�ion 8,000 - _ 8,000 No energy education will be avaialble to schools Electric Operations __ ..-- --- --- ---- ----- -.__ - -'- 1--------- ..._.----- ---- --_i . ._-- ---- - -- _........------ _4_ ,6 OMR Commercial Meter Replacement 36,000 '., 6,000 -30 000 __ __-__ Increas_e_d_Labor Cost for meter_reading due_t_o_need to manual reads -- _-_ _._ ._ ____- ___ _-_-- --,- _ _ _ 4 6 :Cutout Re lacement Program 34 973 - g - - q_-- p g T _ _ __ -, 34,973 -;Increased Outages due to squirrels and birds 4 6 !PCB Transformer Replacement Program-- 73,296 '.. - 73,296 ,Risk of PCB Oilspill near Donner Lake -- - - --- _- _._. _ ____. _.._---_--_-- _-....-..__-___- _-- 4 __6 .Add New Pole Trailer 12 o00 - _ - 2,150 Continue to use 60-year old pole trailer - -- --- - -_.-__ - °---- -'- - -- --- -- 4 6 .Right of Way Tree Clearing 150,000 �_ 118,000 j 32,000_ __ Risk of Forest Fire and Major Fines Increased Outages-to-Customers Water O erations - - - -- - - - -- -- -- --- -- 7_ Reduce the Bond for- Pipeline- Replacement---- -154,000 77,000 77,000 Decrease the Pipeline Replacement Project-More leaks ---- --- --- Subtotal -- - ._ $180,419' 77,000 Priority 4 Cuts Administrative Services __ ----- - ----- ---- ------ ---__. ----- r - - ----.. .. .----- 5 3 ',Accounting Audit Services 60,000 F -': 45,231 14,769 No expenses for audit Electric Operations _ j ,__ 5 6 Unfilled Lineman Position - - 122,357! - 122 357 _-_.- Reduction m productivity,possible_increase in overtime ..._ _.--. .._._ __. „.. __ - _ ___ _...._.._. _-___._. ..---- .._._...._ 5 6 Right of Way Pole Clearing__- -___- r--- 50,000 _ 25,000 25 000 __-- __- Risk of ForestFire and Major Fines - -_.. - __--- - ----- --------- 5--- ----- - --------.__ _ 6 Ric,�ht of Way Tree Clearing 118,000 100,000.- 18 000 Risk of Forest Fire and Major Fines increased Outages to Customers ---- WaterOperations -- uc --- -ine - ._-- --- `-- `-- � ------- .._- ---- - 7,--. ...e--a -- --iem leOf------ ---- 5 7 .Reduce the Bond for Pipeline-Replacement 77,000� -; 77,000, 77,000 E6mmate the Pipeline-Replacement Project-,A lot More Leaks -------- ---____ - ! .-..------ - ----- Subtotal $180,126 77,000 Priority 5 Cuts 'Total of all Cuts(priority 1 thru 5) T $892,299: $384,198 Total of All priority Cuts