Review the Fiscal Year Adopted 2023 Budget
Review the most recent Audited Financial Statements
Budget Development – A budget prioritization process was utilized to create the requested budget. Each team manager works with staff and submits their budget requests and recommendations for new programs, equipment, and significant cost increases on items when compared to the prior year adopted budget. All requests are prioritized by each team, and then the priorities are compiled into an overall integrated priority list to best serve the District’s mission of delivering safe, reliable water to our customers.
The requested budget is presented to the Finance Oversight Committee (FOC) for review and discussions. The FOC makes a recommendation to move forward in the process to present the requested budget to the Board of Directors. The Board of Directors reviewed the requested budget with staff during a study session. If rate and fee changes are part of the requested budget, the Board recommends scheduling a rate hearing at this session. After the Board of Directors reviews and discusses the requested budget and proposed rate and fee changes, a public information meeting is held to present the proposed changes to all customers. A rate hearing was held on May 10, 2021, to approve rates and fees for both Fiscal Year 2022 and Fiscal Year 2023. This was the District’s first two-year rate approval. In accordance with budgeting best practices, after the revenue was secured/approved, the requested budget was officially presented to the Board of Directors for a final review and adoption at the June 13, 2022, Board meeting.
Budget – The Metro Water District Adopted Budget for Fiscal Year 2023, is $26 M with $3.9 million budgeted for depreciation and amortization. The budget includes the following plan:
Operating Budget – $18,33,682 higher by 8.79%
- Major operating expenses include salaries and benefits for employees including 60.38 full-time equivalent positions. Salaries and benefits are budgeted at $6,204,896 which is a 16.3% increase over the prior year Adopted Budget.
- Outside services are budgeted higher by 4% or $56,251 and general operating expenses are lower by 4% or $55,049.
- Electricity costs increased 2.3%, supply costs are higher by 16.86%, and Central Arizona Project water cost have increased 5% with a 3% cost mitigation by applying the 2021 capital rebate to the January 2023 rate increase resulting in a 2% budget increase.
- Principal and interest on outstanding debt service is higher at $3,862,054.
- The adopted budget includes a $500,000 contingency in case of an emergency.
Investments to Support the District – $102,050
Capital investments to support the District’s mission include a variable frequency drive replacement at the Diablo Village II Boosters, additional IT cyber security, a printer copier for the Utility crew room, a mini-split heat pump and software perpetual licenses for telemetry.
Capital Improvement Program – $3,626,143
The entire capital improvement program will be cash-funded again this fiscal year, however, two projects have been submitted for consideration for Bipartisan Infrastructure Law funding. The Northwest Recharge Recovery and Delivery System projects have been moved forward one year in the five-year CIP due to extraordinarily high inflation, labor shortages, and long lead times on pipe. This move was made so that District customers were not paying higher then necessary prices to construct this project. The CIP includes drilling two well, increasing the depth of another well, finishing the large vault replacement program, acquisition of land for a well replacement, and starting the galvanized pipe replacement program.
Non-Cash Expenses – $3,935,792
Depreciation and Amortization are non-cash funded expenses budgeted at $3,935,792 which is an increase of $227,698 with the implement GASB 87 and GASB 96. With these implementations, amortization, liabilities, and assets will be recorded for all leased vehicles, the solar panels, and all subscription based information technology agreements.
Revenue – Metered Water Sales (Water Availability Rate and Water Consumption Charges) make up 80% of the District’s revenue. The other revenue sources account for 20% of the revenue from operations and consist of various fees, interest earnings, water storage, compensated conservation, penalties/service charges, and the infrastructure rehabilitation fee.
The District has two Water Infrastructure Finance Authority loans one issued in 2007 for $12,625,000 with an outstanding balance of $3,181,976.17 with a 1.531% interest rate, and one issued in 2009 for $4,250,000 with a remaining outstanding balance of $2,365,405.95 with a 1.44% interest rate.
The third debt obligation occurred in October 2020, when the 2013 series subordinate obligation revenue bonds with a remaining par value of $7,937,000, and the Water Infrastructure Finance Authority Refinancing Series 2005/2009A loan with an outstanding balance of $5,785,881.28 were refunded. The outstanding balance at the time of the refunding was $13,722,881.28 and this was reduced to $9,265,000 of Series 2020 senior revenue obligations with a maturity date of January 1, 2026. The outstanding balance as of July 1, 2022, is $7,235,000.
The outstanding debt balance on three outstanding debt obligations as of July 1, 2022, was $12.8 million.
Bond Rating – On October 21, 2021, Moody’s Investment Service affirmed the District’s senior lien revenue bond credit rating at a strong Aa3 for a U.S. water system with a modest sized system, ample liquidity, a modest debt profile, and a strong debt service coverage.