Item B: MWMC Budget and CIP - Laserfiche WebLink

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Metropolitan Wastewater Management Commission Budget and Program Summar7 OPERATING BUDGET AND RATE HISTORY The graphs on the following page show a five-year Regional Operating Budget comparison, and Regional Residential Sanitary Sewer costs over a fifteen-year period. Because the Equipment Replacement and Major Infrastructure Rehabilitation programs are managed in the Eugene Operating Budget, these programs are incorporated into both the five-year Regional Operating Budget comparison graph (on the following page) and the Five-Year Capital Programs comparison graph on page 37. Between FY 96-97 and FY 00-01, the Commission was able to maintain the same rate of $8.78 (monthly regional sewer cost) for the typical residential user, based on 5,800 gallons. This was achieved through the implementation of a competitiveness work plan which resulted in improved effectiveness and cost reduction. It should be noted that during the same timeframe, average residential water usage dropped to about 5,000 gallons per month due to the effects of building code changes and conservation measures. At 5,000 gallons typical usage, the average regional component of wastewater residential bills went down to' about $8.13 per month. This trend resulted in a steady decline of revenues on a per household basis. For FY 01-02, MWMC adopted a rate increase of 5%. The increase was intended to provide sufficient funding for several years. However, the fiscal year saw the beginning of an economic downturn, unexpected increases in power costs, billing and collection costs, and employee benefit costs. At the same time, reduced usage due to aggressive conservation efforts on the part of the water utilities resulted in a significant shortfall in revenue. The 5% increase in user rates resulted in less than a 1% increase in revenue in FY 01-02. The FY 02-03 budget was balanced Without the need for a rate adjustment. At 5,000 gallons typical usage, the average residential bill during this two-year period was about $8.53 per month. For the FY 03-04 budget, the Commission adopted a rate increase of 6.5%. The combination of increased operating costs and decreased revenues would have required a much higher increase, but the Commission chose to moderate the rate impact through a one-time reduction in the contribution to the Capital Reserve and a commitment to raise rates in the following year by at least the same percentage to restore adequate funding for capital programs. At 5,000 gallons typical usage, the average residential bill during FY 03-04 was $9.09 per month. Long-range capital financing needs dominated MWMC rate considerations in FY 04-05. The 2004 MWMC Facilities Plan, completed in FY 03-04, identified performance improvements and capacity increases necessary to meet the needs of present and future users through the year 2025. The cost of these improvements is estimated at $144,000,000 (in 2004 dollars). MWMC considered a number of user rate scenarios in which rates would have increased from 12% to 38%. Ultimately, the Commission chose a scenario which increased rates 24% initially and 6% for several years after. At 5,000 gallons typical usage, the average residential bill during FY 04- 05 is $11.28. The rate scenario chosen by MWMC in FY 04-05 included a 24% initial increase followed by several years with 6% increases. This scenario is projected to adequately fund capital programs assuming implementation of the Commission's debt-financing strategy, along with modest increases in Operations to staff and maintain new facilities. At 5,000 gallons typical usage, the Review Draft April 21, 2005 Page 23 FY 05-06 BUDGET AND