Budget Message - Neskowin Regional Water District



NESKOWIN REGIONAL WATER DISTRICTPO Box 823, 47880 South Beach RoadNeskowin, OR 97149503-392-3966tnt@BUDGET MESSAGEFISCAL YEAR 2019-2020The proposed budget of the Neskowin Regional Water District for the 2019-20120 fiscal year, beginning July 1, 2019, is divided into five funds:1) General Operating Fund2) Debt Service Fund3) System Development Fund4) Truck and Equipment Fund 5) Capital Improvement FundThe following is a review of the five funds that make up the 2019-2020 budget. These numbers can and will change by small amounts before the final budget is adopted.1) GENERAL OPERATING FUNDRESOURCESIncome for this fund comes from our monthly commercial and quarterly residential water billings. We also receive income from service installations, interest, and small miscellaneous sources. Beginning Fund Balance the District’s available cash on hand in the General Fund increases $52,288 from $73,330 to $125,618 as per the 2018-2019 Revenue and Expense.xlsx document. This is due to the District finishing the 18/19 fiscal year under budget on expenses and over budget on income.Previously levied tax is estimated to decrease $600 from $1,800 to $1,200, due to more efficient tax collection by the County. Interest income is estimated to decrease $500 from $4,500 to $4,000. We are receiving higher monthly interest revenue from our Local Government Investment Pool account. This is counteracted by the expected decrease in our investment in the LGIP. We will be spending money from our LGIP on several large projects in the 19/20 fiscal year. The District will be contracting for Capital Improvement Plan identified projects D/9 & D/12.The District will be purchasing new meters for the distribution system.The District will be purchasing new Hypo-Chlorite generating equipment.The District will be contracting for appraisals of the NRWD water shed property.Therefore, we will receive less interest from our investments in the LGIP. The LGIP is an account managed by the State of Oregon Treasury Department; this account is the District’s primary savings account.Water Sales are estimated to increase from $8,000 from $400,000 to $408,000 due to a slight increase in water usage. Miscellaneous Income remains the same as last year $2,300, due to no expected difference in miscellaneous income. Service Installations income remains the same as last year $2,000, due to no expected difference in Service Installation income. Tax Income from the District’s permanent tax rate decreases $46,581 from $66,551 to $19,970, due to less need for tax revenue in the General Fund from a higher beginning balance in the fund. All of the permanent tax rate revenue not dedicated to the General Fund is put into the Capital Improvement Fund for use on Capital Improvement Plan identified projects. In 2019/20 the General Fund will receive 15.7513% of the total permanent tax rate income and the Capital Improvement Fund will receive the remaining 84.2487%. In the 2018/19 budget this ratio was the General Fund received 40.8428% and Capital Improvement Fund received 59.1572%.General Fund Total Resources are up $32,135 from $540,151 in 18/19 to $563,088 in 19/20. REQUIREMENTSExpenditures for the General Fund come from personal services, material and services, transfers to other funds and a $25,000 contingency fund. Personal Services include: Gross Wages increase $5,656. Gross wages include a 1.9% COLA on July 1st 2019, possible merit raises for the employees of the District and comp/vacation time payoffs. Social Security and Medicare costs increase $691 from $17,546 to $18,237 (7.65% of gross wages).Workers Compensation and Accident Insurance costs remain the same as last year $5,000.Public Employees Retirement System (PERS) costs increases $11,946 from $32,064 to $44,010, due to an increased employer contribution rate from OPERS, per the PERS SLGRP Neskowin Water District.pdf document. Health Insurance costs increase $6,106 from $69,257 to $75,363. The increase of $6,106 this year is due to an increase in health insurance rates per the SDIS Insurance Rates As Of July 1st 2019.pdf document.Unemployment Insurance costs remain the same as last year $280.Personal Services expenses increase this year due to higher costs for gross wages, PERS and health insurance.Materials and Services include:Administrative expenses are incurred for office supplies and expenses, telephone service, office rent, insurance, legal and auditing expenses, memberships and dues, bank charges and refunds to customers. Administrative expenses increase $918 from $48,710 to $49,628, due to increases in costs associated with office supplies and expenses, telephone service, office rent and bank charges.Operations and Maintenance expenses are incurred for vehicle maintenance, miscellaneous expenses, repairs and maintenance of the water system, workshops and seminars, plant supplies and tools, chlorine and chemical expenses, electricity, water testing and waste water charges. Operations and Maintenance expenses decrease $2,400 from $85,200 to $82,800, due to a decrease in costs associated with electricity and waste water charges. Materials and Services expenses decrease $1,482 from $133,910 to $132,428.Transfers to Other Funds – we make one monthly transfer from the General Fund to the Truck and Equipment Fund. This transfer is the principle source of revenue for the Truck and Equipment Fund. The transfer remains the same as 18/19, $12,000 ($1,000 per month).General Operating Contingency – funds included to provide for any unexpected expenses. Contingency remains at $25,000. 2) DEBT SERVICE FUNDThis fund is used exclusively for the payment of interest and principal on bonded debt the District’s voters have approved. This bond is used to pay for the District’s Water Treatment Plant Upgrade Project. The Water Treatment Plant Upgrade Project bond is scheduled to be paid off in December 2026. Revenue for this fund is kept in our LGIP (Local Government Investment Pool) account. RESOURCES Property tax revenues are the only resource for this fund, and can only be used for the payment of the District's bonded debt. The District has one General Obligation (G.O) Bond. This G.O Bond was approved by the voters on the March 9, 2004 election.Beginning Fund Balance the District’s available cash on hand in the Debt Service Fund decreases $1,344 from $121,282 to $119,938.Taxes Necessary to Balance this fund increase $1,345 from $56,375 to $57,720.REQUIREMENTSExpenditures for this fund include one payment to Business Oregon – (Oregon Business Development) in December of each year.The District has one payment due in December of 2019 of $59,969The District keeps two payments held in reserve to pay off this bond equal to $119,9383) SYSTEM DEVELOPMENT FUNDThis fund was created in 1986 to provide for improvements to the water system. The District’s Capital Improvement Plan identifies projects that the District needs to complete to provide proper fire flows and water pressure to the community. Projects that are needed because of growth can be paid for from this fund. Revenue for this fund is kept in our LGIP (Local Government Investment Pool) account.RESOURCES Income for this fund is generated when a new customer connects to the water system. New customers are required to pay a system development charge (SDC). The amount of the SDC is based upon the total number of residential equivalent units (REUs) the customer’s home has. All SDC payments will be placed in the System Development Fund. In January 2019, the District Board enacted a new SDC rate of $10,555 per REU. Revenue for this fund is kept in our LGIP (Local Government Investment Pool) account. Beginning Fund Balance the District’s available cash on hand in the System Development Fund decreases $342,194 from $364,782 to $22,588, due to the District’s Capital Improvement Plan Projects D/1, D/2 and M/1 being funded by the System Development Fund in the 18/19 fiscal year. Project D1 solved the issue of, chlorine contact (CT) values required by EPA and the State are currently met with the plant running at 300 gpm however problems will result in the future as flow needs increase (plant capability is 380 gpm). Further, connection to the transmission piping cannot be allowed since any new user closer to the plant will result in CT problems. By constructing a second pipe up the hill to the Main Storage Tank to provide a dedicated fill pipe for the tank, and constructing a new distribution pipe to connect to the existing piping along the south side of the old golf course, the tank can function to provide chlorine contact time prior to any customers receiving water. All water leaving the WTP will then travel through the Main Storage Tank prior to any customer usage. Improvements in CT, mixing, and a stabilized chlorine residual leaving the tank will result. Project D/2 was a new 8-inch water main along Fairway Road to replace the existing 2-inch piping, eliminate a dead-end pipe, allow abandonment of some of the deteriorated 6-inch AC pipe along the old golf course, and provide better flow to the Hawk Hills BPS from the WTP. Project M/1 was to install a passive mixing system in the Main Reservoir alleviating stratification in the reservoir making the water more homogenous in its taste, smell, look and chemical makeup.System Development Charges are expected to increase from $22,605 to $42,220, due to more construction of new homes in 19/20. REQUIREMENTS Expenditures for this fund are only used to pay the SDC eligible share of identified projects in the approved current Capital Improvement Plan. The next fiscal year 2018/2019 will see expenses from this fund to pay for the District’s Capital Improvement projects D/9 and D/12. Project D9 was recommended in the 2015 NRWD Water Capital Improvement Plan to provide a second feed from Zone 2 to Hills of Neskowin (HON), Viking Estates (VE), and other residences on the east side of Highway 101. This second feed line under Highway 101 is recommended to extend the gravity Pressure Zone 2 system piping to HON and VE. This will allow further development of lots on the east side of Highway 101 near Butte Creek, allow for the eventual piping extensions south if needed, and provide the redundant Highway crossing to HON and VE.Project D12 VE/HON Connection will extend an 8-inch line north on Tibbets Road about 1,800 feet from the HON western loop to the VE subdivision. Project D/12 will alleviate a lack of pressure and flow supplying the Viking Estates subdivision.4) TRUCK AND EQUIPMENT FUNDThis fund allows the District to accumulate money for the purchase of equipment, such as a truck, backhoe, computer, etc.RESOURCESOur main resource for this fund is a transfer from the General Fund which in 2019/20 would remain the same as 18/19, $12,000.Beginning Fund Balance the District’s available cash on hand in the Truck and Equipment Fund decreases $11,546 from $50,552 to $39,006, due to the purchase of a new vehicle for the District in 18/19.Transfers From Other Funds remains the same $12,000.REQUIREMENTSWe continue to budget all available monies in this fund to pay for any and all purchases eligible to be funded by the Truck and Equipment Fund. 5) CAPITAL IMPROVEMENT FUNDThis reserve fund has three purposes:To accumulate revenue to pay the non SDC eligible share of the projects identified in the approved capital improvement plan.To pay for necessary unanticipated and/or emergency repairs and additions to the water system.To make bond payments if insufficient tax revenue is collected.RESOURCESOur main resource for this fund comes from the District’s permanent property tax rate of 38.31 cents per $1,000 of assessed value. Revenue for this fund is kept in our LGIP (Local Government Investment Pool) account.Beginning Fund Balance the District’s available cash on hand decreases $134,977 from $446,703 to $311,726, due to the Capital Improvement Fund’s share of the previously mentioned D1/D2/M1 projects completed in 18/19. These projects are detailed in the system development fund section of this document under the heading, resources, subsection 1.1 thru 1.3.Previously levied taxes remain the same as 18/19, $3,000, due to better tax collection by the County. Tax Income increases $5,753 from $67,211 to $72,964, due to the district dedicating more tax revenue to the Capital Improvement Fund. REQUIREMENTSWe continue to budget all available monies in this fund to pay for any and all projects eligible to be funded by the Capital Improvement Fund. Possible projects to be funded in 19/20 include:The District will be contracting for Capital Improvement Plan identified projects D/9 & D/12.The District will be purchasing new meters for the distribution system.The District will be purchasing new Hypo-Chlorite generating equipment.The District will be contracting for appraisals of the NRWD water shed property.Troy N. TruteBudget OfficerMay 2nd, 2019 ................
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