HomeMy WebLinkAbout7 Budget 2003 Agenda Item #
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Memorandum
To: Board of Directors
From: Peter Holzmeister
Date: November 27, 2002
Meeting: December 4, 2002
Subject: Presentation of the Budget for 2003
1 have prepared a revised budget for 2003. 1 am still revising the narrative portion of the
budget. It will be distributed to the Board on Wednesday evening and I will begin the
process of walking through it with the directors.
I still ask the Board to view it as an interim budget because there are still significant
unknowns with financial implications that will be resolved by the middle of 2003. Some
of those unknowns include preparation of the Finance Master Plan, securing a contract
for purchase of wholesale power for the period from April 2003 to the end of the year,
and finalizing a couple of debt instruments.
So, on Wednesday evening I will present a draft budget. I consider it an interim budget,
subject to revision some time around the middle of 2003. This interim budget is bare
bones, zero-based. It provides for us to continue to perform essential services, such as
maintenance and repair and meter reading and billing. It provides funds for us to
continue to replace leaking pipelines in Tahoe Donner. It allows us to continue to make
new connections to new homes and businesses requesting service. It retains our
employees and pays our insurance premiums. It pays our debt service. It has funding
to complete the Finance Master Plan
But it does not provide funding for any other new construction, nor does it provide
funding for any new programs. I suggest deal with those matters in the supplemental
budget to be prepared after the unknowns clear up.
This interim budget puts the District into a sort of maintenance mode while we catch our
breath, put our financial house in order, review our entire District program, make
important decisions, and then move forward again.
I am not suggesting that the Board consider adopting this budget at this time. I do
believe that adoption of an interim budget is better than not adopting any budget at all for
the first half of 2003. The interim budget will give direction to staff and will provide
needed boundaries.
This interim budget will require an electric rate increase in the range of 7%, and a water
rate increase that I am still working on.
RECOMMENDATION: I suggest that the Board consider calling for a public hearing to
consider the budget and possible electric and water rate increases.
PRESENTATION OF THE BUDGET FOR 2003
This is an interim budget
It anticipates a settlement to the wholesale power supply contract
during the first half of 2003
It recommends a 9.1% electric rate increase on January 1 .
The projected 9.1% electric rate increases adds to the water
operations pumping costs — requiring in turn a %.00 per month water
rate increase
The budget is bare bones — almost nothing for capital and greatly
restricted operations
When the wholesale power supply contract is settled we need to
prepare a revised budget for 2003
We may want to wait for completion of the Finance Master Plan
before we prepare that revised budget for 2003
1 still recommend that we hold public hearings for electric and water
rate increases in December
Let's slow down and be cautious
We are dealing with unknowns that have a large fiscal impact
Our cash position is reduced — We will sell Southside property
We will complete condemnation of Donner Lake water system
We need to arrange financing before we begin to dig (SRF, new well)
We need to secure debt to finance possible settlement of power
supply contract
We need to secure new power supply contract
Finance Master Plan
We need to revisit our water and electric facilities fees
We will make a decision regarding broadband
We have an opportunity to pay off the debt on construction of the
headquarters building by applying money currently on deposit in the
building fund and save $260,000 per year
Adopt an interim budget
It will provide guidance and direction for the first six months of 2003