Strategic Plan for 2016-2017 Fiscal Year

Emphasizes Fiscal Responsibility and Sustainable Water Supply Solutions

Categories: Winter 2016

The San Gabriel Valley Municipal Water District began the new fiscal year on July 1, 2016, with a clear focus on fiscal responsibility and developing a reliable water supply for our member cities. The ongoing, severe drought presents challenges to our water supply, and also to the District’s efficient operations and finances.

Operationally, when water deliveries to the District via the State Water Project are reduced to levels such as 5% in 2014, 20% in 2015 and 60% in 2016, there is less water to be moved through our pipeline and stored in local spreading grounds. Further, there is less water to drive our hydroelectric power generation, reducing our output of “green energy.” The District has responded by enhancing maintenance of its facilities, researching water supply solutions such as recycled water and stormwater capture, implementing a broad-based water conservation and education program, featuring H2Owl, and extending its thought leadership by sponsoring local Town Halls and the 2016 San Gabriel Valley Water Forum. Our conservation efforts have helped achieve a nearly 25% cutback in statewide water use over the past year.

The drought requires prudent financial management due to reduced water sales revenue and the increasing costs of water purchased through the State Water Project. The State Water Project costs are a combination of fixed charges we have to pay regardless of how much water we receive from the State, as well as variable costs (which have also been rising) per unit of water we receive. The fixed State Water Project costs have increased dramatically in recent years, from an average of $5.4 million per year from 2010-2014, to $6.8 million in 2015 (26% increase), requiring the District to utilize its financial reserves, to seek additional sources of revenue, such as more than $300,000 in grant funding, and to reduce discretionary expenses to keep our budget balanced.

Despite the dramatic rise in the cost of water over recent years, the District continues to maintain the lowest wholesale water rates in the region (about a quarter of some of our neighboring districts) because of our healthy financial reserves and efficient operations. But as costs have continued to rise, the District has set forth a responsible path towards long-term financial sustainability. We’ve made modest adjustments to our water and tax rates for the first time in a generation to ensure balanced budgets and the ability to make needed investments in our water supply infrastructure.

 As we witnessed in 2014 with the overwhelming passage of the $7.5 billion Water Bond, and the public’s positive response to mandatory water use restrictions in 2015-16, stakeholders and rate payers are supportive of prudent investments in water conservation, water infrastructure, water supply and water quality. The San Gabriel Valley Municipal Water District is wholly committed to taking necessary steps to ensure a safe, reliable and affordable water supply for generations to come.