SAN JOSE—The Santa Clara Valley Water District Board of Directors on Tuesday adopted a $478 million operating and capital budget for the fiscal year beginning July 1, 2015. The FY 2016 budget balances minimizing the impacts of drought costs on the community and future rate increases, makes sound investments in future infrastructure and human resources, and demonstrates fiscal accountability and value to water district customers.
“Holding costs down while ensuring we have the resources necessary to secure a sufficient water supply and maintain critical infrastructure is a challenge, but we have been able to meet that through this budget,” said board Chair Gary Kremen. “With extensive public input throughout the process and thorough examination by the board, the public can be confident that we are taking necessary steps to protect our resources today and into the future.”
Among the major infrastructure investments in the new budget are $16.5 million to accelerate purified water production to ensure the continued supply of safe, clean water, while averting the potential risk of subsidence (the sinking of land) if the drought continues.
Approximately 58 percent of the FY 2016 budget is for operations and debt services; the remaining 42 percent is for capital improvement.
“Putting together a budget of this size takes months of hard work and analysis,” said water district CEO Beau Goldie. “Now the work of implementing the projects begins and the work of combating the drought continues.”
The board’s adoption of the budget on Tuesday followed the approval of the FY 2016-20 Capital Improvement Program and the FY 2016 groundwater production charges. The water district began planning its FY 2016 budget last August.
As part of its annual budget development, water district staff and the board consider the 5-year CIP, which describes capital investment priorities, projects, and intended funding. The CIP covers water supply, flood protection, stream stewardship and information technology projects. The board also considers the groundwater production charge rates in establishing the budget. These rates pay for the protection of our region’s groundwater basins from pollutants, subsidence and salt water intrusion; as well as for drinking water supplies and the maintenance and modernization of infrastructure such as dams, pipelines, water purification and water quality testing facilities.
With the state entering a fourth year of drought, the combined drought-related costs and loss of revenue in FY 2016 are forecast to be $76.5 million. This amount includes:
- $27 million to secure additional water supplies
- $5 million to enhance water conservation programs incentives, such as the lawn replacement program
- $16.5 million to accelerate purified water supply; and additional $3 million to develop recycled/purified water supplies in North County
- $25 million in reduced revenues due to lower water use
The water district has reduced these impacts on the community by $55.4 million in savings and project delays such as pushing debt issuance to later in the year to reduce debt service costs, delaying certain non-critical small capital projects and selling two surplus properties.
As part of the FY 2016 budget, $178 million will help deliver Safe, Clean Water and Natural Flood Protection program projects, and implement other efforts including the stream maintenance program.
In total, the budget contains appropriations for 49 capital projects, including
- Anderson Dam Seismic Retrofit $3.0 million
- Penitencia Delivery/Force Main pipelines project $14.6 million
- Rinconada Water Treatment Plant Reliability Improvement $6.0 million
- Upper Llagas Creek Flood Protection Project $50.3 million
- Wolfe Road Recycled Water Pipeline Project $6.6 million
Revenues are approximately $377.5 million. The $100 million gap between revenues and expenditures is met by debt financing.