The Turlock Irrigation District Board of Directors began planning for their 2011 budget – which preliminarily calls for a net of three fewer employees – in a workshop Tuesday morning.
The proposal would drop three budgeted positions from customer services, four from financial services, two from civil engineering and water resources, and two from electrical engineering and operations, while adding eight new positions in power supply. None of the positions up for deletion are currently filled.
Two of the new positions, posts for schedulers in the power supply department, have already been filled in anticipation of the district taking on the task of schedule coordination in-house. The work is currently farmed out to a third party, resulting in slower response times.
Four of the other new positions would be employees for TID’s planned expansion of the Almond Power Plant, located near Ceres. The expansion, a 174-megawatt natural gas-powered peaking plant currently under review by state authorities, would be used to provide additional protection against power outages for TID customers
In planning the 2011 budget, TID hopes to have no operating and maintenance cost increase over the 2010 budget, with the exception of pension, medical, legal, and a labor negotiation costs. Those labor costs are expected to be approximately $820,000 higher than a year ago, due to a 3.75 percent cost of living raise and negotiated step increases.
Other anticipated costs include legal claims – particularly associated to an incident last month where a TID truck collided with a Union Pacific Railroad train – and a ballooning overtime budget. For this fiscal year, the overtime budget is already $170,000 over the total allotted for the entire fiscal year, while the double time budget is $126,000 over the entire amount allocated. Despite the overtime costs, TID is below budget on employee costs, however.
The district faces a challenge when it comes to time to construct a budget, as all TID departments are mandated to increase operating and maintenance costs by no more than 3 percent each year, not including costs related to capital expenditures.
“What it does is make the budget process fairly useless,” said TID CFO and Assistant General Manager of Financial Services Joe Malaski. “… As long as we play with that 3 percent cap, we all have to do whatever we have to do to make that right.”
In Malaski’s own department, he revealed, funds have been shifted from unfilled positions to pay for increasing postage costs, which he has not been able to include in his budget due to the 3 percent cap. That news dismayed TID directors, but was part of the reason Acting General Manager Casey Hashimoto called for Tuesday’s budget workshop, he said.
“I think the whole objective here is to have an open and honest discussion, because that hasn’t happened in the past,” Hashimoto said.
When the 3 percent cap was first implemented in the 1990s, departments’ budgets were admittedly a bit “fat,” according to Hashimoto. But all the easy – and necessary – cuts were made long ago, he said, leaving the district struggling to meet costs with the cap in place.
“What we’re doing is a horrible way to budget,” Malaski said. “But it’s a way the board can keep a cap on things.”
District directors are considering removing the arbitrary 3 percent cap, but cautioned staff that they still intend to run a tight budget if the cap is removed. Hashimoto said he would work with assistant general managers to ensure there is no unnecessary spending. He suggested that some departments, such as Customer Service, may even see decreased spending, due to cost savings related to new technology initiatives such as SmartMeters.
Hashimoto warned that all discussions at this point are preliminary, and are meant to show that the district is actively looking to reduce its budget. Hashimoto is still in the process of meeting with assistant general managers to hammer out a final budget.
The first presentation of that final budget will come at the TID Board of Directors’ regularly scheduled Oct. 19 meeting, and will likely continue on to the Oct. 26 meeting.
The Board of Directors also received an update on the current fiscal year budget on Tuesday.
August was the first month of the fiscal year in which the district posted a positive net income, of $168,000. The results place TID $1.3 million ahead of budget.
Revenues came mainly from increasing wholesale sales of electricity, up drastically to $60.7 million this year from $32.3 million this time last year. At the same time, retail revenues were down compared to this time a year ago, primarily due to declining consumption, from $160.7 million last year to $152 million this year.
The net usage of energy in the district is down to 2008 levels, in terms of megawatt-hours, but TID staff attributed the decline to the moderate weather experienced in the Valley this year.
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