Item 2C - MWMC Budget/CIP - Laserfiche WebLink

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Metropolitan Wastewater Management Commission Budget and Pro~ram Summar~ 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 32. Between FY 97 and FY 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 has progressively 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 residential bill went down to about $8.13 per month. 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 increase was to be the first of two annual increases in that amount. The combination of increased operating costs and decreased revenues would have required .a much higher increase, but the Commission chose to moderate the impact through a one-time reduction in the contribution to the Capital Reserve. The annual contribution was increased to $3,000,000 in FY 04-05. At 5,000 gallons typical usage, the average residential bill during FY 03-04 was $9.09 per month. 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. A 20-Year Project list was developed to provide cost estimates and projected timing of the various projects. Over $100 million in projects are scheduled in the FY 04-05 through FY 08-09, 5-Year CI?. Several of the projects identified in the Facilities Plan are scheduled for design, or design and construction in FY 04-05. While reserves are sufficient for FY 04-05 needs, the Commission is considering the financing needs of future years. In doing so, MWMC examined several user rate scenarios. They narrowed the scope of their consideration to three scenarios. Scenario one would have increased rates 12% for FY 04-05, and 12% each year for the next several years. Scenario two would have increased rates 38% for FY 04-05, and 4.5% each year for the next four years. Scenario three increases rates 24% in FY 04-05 and 6% each year for several years. At 5,000 gallons typical usage, the average residential bill under scenario one would be about $10.18 per month. Under scenario two it would be about $12.54. Under scenario three it would be about $11.28. April, 2004 DRAFT Page 21 FY 04-05 BUDGET AND CIP