Price
suggest the potential for more substantial rate increases to reduce reliance on development-dependent revenues.Mark Price, the El Dorado Irrigation District’s finance director, projected revenues and expenditures through 2018, with emphasis on the next two to three years, noting that his revised revenue projections are below those in the 2009-2010 budget prepared late last year. For 2009, Price’s new projections indicate a drop of more than $14 million in revenue from the levels anticipated during the budget preparation process last year, while the new 2010 revenue projections are also down about $14 million. On the plus side, Price now projects that EID’s debt service costs will be $14 million lower than expected in 2009, and $6.6 million lower in 2010.
“Even so, if these projections play out, we will fall short of the debt coverage we’ve promised our bondholders,” Price said. “We remain fully able to pay those debts, but we need to take action to improve our debt ratio, or else we’ll probably pay higher interest rates on money we borrow in the future for capital improvements.”
“There are two major reasons for the lower revenue projections,” he explained. “First, we lost eight percent, or about $800,000, of our local property tax revenue because the state is taking the money to help pay down its multi-billion-dollar debt. And our tax revenues will probably decrease even more because of the reduced property tax valuations in the county. Second, revenue from hook-ups to new homes is down significantly because of the continuing sluggish housing market. That is not likely to change soon.”Price also said that lower interest earned on the district’s investments and lower prices for the renewable energy EID produces through its hydropower system have dragged down revenues compared to last year.
Price told the board he believes the district needs to continue to adapt to new economic realities and take further actions “to keep the district on a secure, stable financial path.” For example, he presented scenarios that rely less on property tax revenue for daily operations, using that revenue instead to fund capital improvement projects. “Moving tax revenues to the capital budget would help shield our operating budget from the state government’s endless fiscal crisis and reduce our borrowing for capital projects,” he said. The scenarios include already approved cost-of-living rate increases of no more than four percent over each of the next four years, but also suggest the potential for more substantial rate increases to reduce reliance on development-dependent revenues.
