The Modesto Irrigation District will reverse a three-year spending slide with a modest, 1.9 percent uptick, board members decided Tuesday in unanimously adopting a $444 million budget.
The MID has no plans to raise electricity rates, its main income source, in 2013, leaders have said.
Rising costs associated with a coal-fired energy plant in New Mexico, a solar plant between Modesto and Escalon and a natural-gas plant in Lodi account for much of the $8.5 million increase.
The district also saves money with a partial hiring freeze that will keep vacant 60 positions, or more than 10 percent of its work force. The board has not approved raises for employees, who have gone five years without a contract.
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Reserves are expected to top $164 million, the highest level in more than a decade and significantly more than a low-water mark of $106 million in 2008.
The district will spend about $65 million to repay loans in 2013, about the same level as each of the past three years. The MID has carried nearly $1 billion in debt for seven years to pay for major projects.
Last-minute action at Tuesday's special meeting amounted to comparative tweaks. Board members decided to:
Drop the district's usual $20,000 contribution to the Stanislaus Workforce Alliance, charged with economic development and job training, to $10,000.
Board members Tom Van Groningen and Glen Wild favored the higher amount, but Paul Warda, Larry Byrd and Nick Blom blocked that vote. Warda said keeping rates low does more to attract business than funding the alliance.
Put off buying new furniture for executive secretaries, saving $30,000. The deferral "has no direct impact to reliability or customer service," said Jimi Netniss, the district's budget and rates administrator.
Delay a decision on boosting the district's retirement fund. Van Groningen, citing a "favorable year-end balance," suggested that the time might be right, but Blom said that issue can be raised later.
Beard project questioned
The board took no action on a new substation for southeast Modesto's Beard Industrial District. Byrd last week questioned spending an estimated $1 million to buy three acres for the proposed station, but Tom Kimball, assistant general manager for transmission and distribution, on Tuesday said that's the cheapest of five options to augment power to the important business tract.
Kimball said companies such as Del Monte Foods, Frito-Lay, Graham Packaging, Bunge Food Corp. and Plastipak Packaging expect to consume more energy in coming years. Losing power for weeks to correct problems resulting from not adding capacity would be "ugly," Kimball said.
He said a property search has not gone well and the district eventually might need to consider forcing owners to sell land through eminent domain.
The issue could be debated in coming months if staff proposes a land deal.
Several cost-cutting ideas raised by Byrd last week were discussed but not acted on because they apply to the 2014 budget and can be debated next year. The board reviews two years of budgets, but adopts only one at a time.
For example, board members seemed willing to postpone replacing a 1999 Ford Crown Victoria available for them to share, a decision expected next year. Warda and Van Groningen said they've never driven a district car in the 18 years and 19 years they've respectively been on the board, and Wild hasn't in his three years.
Flap over job elimination
Also up next year are a second transmission line to Mountain House expected to cost $500,000, $184,000 for pneumatic breakers and new carpet on the second floor of the MID's downtown office.
Tuesday's talk turned testy when Van Groningen objected to Byrd's scrutiny of a management decision to eliminate the job of a 20-year employee, who could be eligible for another post.
"I want to take care of all employees, no matter where they are," Byrd said.
"In 19 years, we've never had this kind of discussion," Van Groningen said. "I get calls wanting me to run interference for someone to receive some kind of favorable consideration. My stock answer is that the board doesn't get involved in personnel matters, period."
Byrd also questioned whether the district needs a safety analyst to assist the district's safety officer, and whether jobs of three
middle managers could be consolidated into one.
Modesto resident Joan Rutschow urged the board to approve raises, which were negotiated with a union but blocked in September by a 2-2 vote.
She also said, "If there is anything left over, the surplus should be used to pay down MID's debt."
The district relies on long-term loans to balance its budget, issuing 16 bonds since 1998. A repayment schedule in the district's 2010 audited financial statement, the latest available, shows the district paying $1.4 billion to retire $837 million of debt, including interest, through 2040.
The MID's total budget ballooned by more than 52 percent in the six years before its 2009 apex, then slid by 12 percent over the next three years as capital spending decreased 70 percent.
Most of the district's expenses — $404 million, of the total $444 million — are tied to costs of producing power. Delivering irrigation will cost $11.4 million this year, although farmers pay about one-third of that; electricity customers subsidize the rest.
Power costs in 2013 are expected to go up $11 million for the plant in New Mexico, $4 million in Lodi and $2 million at the solar farm on McHenry Avenue.
On the Net: www.mid.org/about/budget/default.html.
Bee staff writer Garth Stapley can be reached at firstname.lastname@example.org or (209) 578-2390.