While most local jurisdictions have struggled through a sinking
economy, the San Benito County Water District is safely buoyed by
reserves totaling more than $24 million, including $11.5 million
not earmarked for future use.
The district is expected to approve its 2003-04 budget at its
board meeting Aug. 27, and the projected operating budget for the
current year is $8.4 million
– nearly three times smaller than its reserves.
While most local jurisdictions have struggled through a sinking economy, the San Benito County Water District is safely buoyed by reserves totaling more than $24 million, including $11.5 million not earmarked for future use.
The district is expected to approve its 2003-04 budget at its board meeting Aug. 27, and the projected operating budget for the current year is $8.4 million – nearly three times smaller than its reserves.
“A good deal of that money (in reserves) is there for specific purposes, and there are those in the community who like to play games on that,” said John Gregg, executive director of the district. “Our reserves are not materially different, on a percentage basis (than other jurisdictions).”
A Free Lance analysis of local jurisdictions, however, revealed the San Benito County Water District not only has the highest dollar value in its reserve funds, but it also maintains the largest proportion of reserves in comparison to its annual budget.
Others include the City of Hollister, which has a General Fund reserve of about $9 million and an operating budget of $35 million; the County of San Benito, with a reserve fund of about $1 million and a budget of $64 million; and the Sunnyslope Water District, with a reserve fund of $2.7 million and a budget of $2.7 million.
The San Benito Water District, according to Gregg, routinely functions with an annual surplus. And those reserves have gradually increased through the years. If the budget is approved as projected, there will be a “slight” surplus again this year, Gregg said.
Also, another $1.5 million will be saved for 2003-04 because, he said, “We’re required by contracts to deposit certain funds in reserves.”
Gregg said more than half of the money in the district’s reserves has already been designated for specific projects or debts. He said the district currently owes about $8 million to the federal government for a low-interest loan that financed the $60 million San Felipe Project.
Still, according to the district’s latest financial statement, $11.5 million is labeled as “undesignated.” That is set aside as a backup reserve, or for emergencies and unexpected circumstances. It is similar to Hollister’s General Fund reserve.
“I think the bottom line is, the water district has about $24 million in investments, in the bank,” Gregg said. “And of that, $11.5 is undesignated. The other reserves are required to meet current or future contractual obligations.”
Yet, that $11.5 million is still more than any other jurisdiction’s reserves, and is 137 percent of this year’s projected budget.
Gregg said the district has “dipped (into the reserve) a few times in the past.”
Hollister City Manager Dale Shaddox has said local governments generally prefer to operate with reserve funds that are 10 percent to 30 percent of their annual budget. Thirty percent of the water district’s budget would be $2.5 million.
“I’ve never worked for those special municipalities, but that’s been a long-standing rule of thumb,” Shaddox said.
Several local officials have questioned why the district maintains such a substantial reserve fund. Supervisor Ruth Kesler, the water authority on the county Board of Supervisors, was surprised to hear about the San Benito Water District’s reserves.
“Oh my goodness,” she said. “How did they get that? I would not think it would be a very good idea when money is so needed in the county.”
Brian Yamaoka, general manager of the Sunnyslope Water District, had previously been aware of the San Benito Water District reserves.
Yamaoka said it was fair to question the San Benito County Water District’s reserve fund.
“The issue’s always there,” he said. “It comes to light when people pay property tax twice a year.”
San Benito Water District Board member Ken Perry said they are “willing to assist and help” with projects – but only those that benefit “all people in the community.”
He mentioned the district’s attempts in recent years to finance a water treatment plant to serve the Hollister, Sunnyslope and San Juan Bautista districts. But officials said those negotiations among agencies failed.
“Our communication of that offer was rejected by Sunnyslope and Hollister,” Gregg said. “Since, we’ve been working to remove obstacles to that.”
The San Benito Water District generates revenues each year from several taxes – general taxes, property taxes and water charges, Gregg said. Its share of property tax assessments, according to Yamaoka, is among the highest of local jurisdictions.
Gregg said he had not recently compared property tax allocations received throughout the county.
The water district’s largest projected expenditures include $4 million for operating expenses, $2 million for the cost of water, $1.5 million for capital projects and $650,000 for debt service. It serves 300 large agricultural customers and about 600 small agricultural accounts.
The district reviews its water rates and tax allocations every year, and Gregg said it would do so again in the coming months. It is the obligation of the San Benito Water District, and other local jurisdictions, he said, to minimize those charges to the community.
“And the public should hold us accountable for doing that.”
