02 - Laserfiche WebLink

told that the increase was lower than needed because Zone 7 staff anticipated using $5 million of the Rate Stabilization reserves to offset a larger rate increase. In fact, revenues in FY2009 were higher and expenses were significantly lower than projected and none of the $5 million was used. This represented a significant gap between expectations and budget and it is possible that the current year (FY2010) will also produce positive income without use of reserves based upon past years' historical results. In addition to the $21 million in designated reserves reflected on the FYE 2008 audit (rate stabilization, emergency reserve, and designated reserves) Zone 7 also had $8.7 million in undesignated reserves as of June 30, 2008. We believe this level of reserves gives Zone 7 an opportunity to assist the community by drawing down reserves rather than imposing another significant rate increase during this difficult economic time. If ever there was to be an economic situation in the valley that justifies the use of reserves, this is the year. Finally, Zone 7's FY 2010 Budget is $8 million (or 30% higher) than the Zone 7's FY 2009 actual results even with $1 million in projected 'cost savings' in FY 2010. While we understand the complexities of setting rates over two fiscal years, we don't understand establishing the FY 2011 projections based on the FY 2010 Budget, when actual results from FY 2009 are significantly less. Staff met with Zone 7 staff and brought these issues to their attention; however, it did not result in them changing their approach to their budget and their projection of a need for a 9.25% water rate increase effective January 1, 2010. Submi ted by: Fiscal Review: Approv by: f UCti Daniel S h David P. Culver Nelson Fialho Director of Operations Services Director of Finance City Manager Attachment A: Letter to one 7 Board of Directors Page 3 of 3