With landscapes drying up in California’s drought conditions, local water districts are contending with something else drying up with them—revenues.
The districts generally rely heavily on revenue from selling water supplies in order to balance budgets from year to year. With the state requiring a 25 percent residential use cutback during the longstanding drought, districts are starting to absorb financial impacts from less usage.
It has created a situation where officials pegged with the task of convincing residents to drastically cut water use face the possibility of correlating decreases in revenue available for their own employees’ compensation.
At the Sunnyslope Water District, which serves the Ridgemark gated community and parts of southeastern Hollister, district officials are expecting a 25 percent cutback in revenue for the 2015-16 fiscal year as approved for the budget in June, said Don Ridenhour, district general manager.
If the numbers line up as expected—the district saw a 29 percent drop in May usage as word spread of the state’s coming mandates—the drop in water revenue from $5 million to $4 million would amount to that 25 percent cutback. Ridenhour indicated the district doesn’t expect the need to make coinciding cuts in expenses because officials have planned for such cycles by putting away reserves.
“We spend more money in drought times and, yet, collect less,” Ridenhour said. “It certainly goes into your long-term planning.”
Officials at the San Benito County Water District would rather not use reserves to cover drought-related shortfalls. The district instead implemented required furlough days—planned days off—amounting to 24 days and a cut in 10 percent of compensation for the 21 employees, said Jeff Cattaneo, district manager. The district has an employee compensation budget of about $2.5 million, according to records.
Cattaneo stressed how they are “soft furloughs” in that employees—who were given at least six months notice on the possibility of the mandate, he said—could choose to use their vacation time on those furlough days.
“And we all shared in those furloughs,” Cattaneo said. “What we agreed to was that it was based on the district’s allocation of water from the federal government. It’s not an arbitrary decision by the district.”
Cattaneo’s balancing act is a bit more complicated than some other water entities because San Benito County Water District uses a variety of sources, including the federally imported San Felipe Project supply. The manager said despite the 90 percent cutback in allocation this year, the district’s prior efforts to manage its varying supplies, such as from transfer agreements, will mean it has about the same amount to divvy as usual—2 million to 2.5 million gallons.
“While it has had an impact on our revenue and the bottom line for the district, it hasn’t been devastating,” he said.
Most Hollister residents, meanwhile, have their water managed by the city itself. Brett Miller, director of administrative services/assistant city manager, said the city is changing its billing to present usage details relevant to the drought and cutbacks. City officials will have a better gauge on related finances in a couple of months, he said.
“It’s way too early for us to tell,” Miller said.
