Chelan PUD budget has new holes
Tuesday, December 1, 2009
WENATCHEE — Mother Nature and the recession have taken an additional $5.6 million bite out of the Chelan County PUD’s proposed 2010 budget.
Commissioners learned Monday that next year’s river flows, prices for surplus electricity and revenues from interest income and the fiber-optics network are expected to be even lower than projected late last month.
The new numbers are based on more complete calculations of this year’s costs and revenues, used to estimate next year’s, and the latest national riverflow projections, officials said.
“There’s no doubt it’s going to be another difficult year,” Kelly Boyd, director of strategic financial planning, told commissioners.
New anticipated losses in the $308 millon budget for 2010 would drive the shortfall to $13.5 million, up from an original estimate of $7.9 million.
Utility officials said they’d dip into cash reserves to cover the deficit.
Cash reserves are expected to end next year at $216 million.
New projected declines take into account:
• $4.4 million less in revenue from surplus electricity sold on the regional wholesale market. This latest estimate reduces next year’s most-expected revenue outcome for surplus power to $45 million.
• A decrease of about $1 million in interest income on investments — from $6.3 million originally budgeted to $5 million.
• A $1 million increase in debt-service costs at the dams.
• An estimated decrease of $400,000 in revenue from fiber-optics hook ups.
• Local companies pay to use the PUD’s fiber network to deliver Internet, television and telephone services to county residents over the PUD’s fiber network.
The fiber network’s budget of about $3.1 million is about even with this year’s budget and leaves little room to expand the service to new areas, commissioners learned.
Additional hookups could be added to areas where the system is already mostly in place, or to areas where customers are willing to pay the costs.
The utility is already coming off a 2009 budget, which PUD officials say already cuts to the bone.
The newly reduced revenue projections launched another series of cost cuts that managed to close the 2010 budget gap by only about $1.7 million, Boyd said.
Cuts include the decision to leave 2.5 additional full-time-equivalent positions vacant for a total reduction from this year’s adjusted budget of 12 full-time equivalent positions — $1.3 million savings in salaries and benefits, Boyd said.
The change is expected to reduce staff size next year to 709 full-time equivalent employees.
Most of the rest of the savings came from more precisely estimating budgeted costs for operations and maintenance of the transmission system, Boyd’s report to commissioners shows.
The $308 million budget for 2010 includes $131.2 million in operations and maintenance expenses and $65.3 million in capital spending.
Commissioners will vote on the 2010 budget next Monday.
Christine Pratt: 665-1173
pratt@wenatcheeworld.com
Comments
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Webfoot (Dennis Webb) says...
OK--after reading this editorial, I can no longer sit back and listen to this rubish. Only "Mother Nature" and the heavens above can "Predict" what's going to happen with the river flow. Additionally.the 12 positions that are to be left vacant at a cost of $1.3 million equate to over $108 thousand dollars per position--now I don't think that the PUD pays these folks that well, so who's trying to "cook" the books?? Or, are we being set up for ANOTHER increase??
December 1, 2009 at 12:45 p.m. ( permalink | suggest removal )
Annsboy (Jerald Sargent) says...
At 108k per, no wonder the PUD is consistently voted the best place to work. Time for a gut check on wages at our beloved PUD..
Some months ago I wrote a letter to the editor about bringing Yahoo to town and the net loss in revenue it would cause and the coming increases in power, well here we are folks, get used to increases.
December 1, 2009 at 3:26 p.m. ( permalink | suggest removal )
TryCommonSense (John Smith) says...
It's called overhead. Employees receive vacation, sick leave and other benefits, plus there are state and federal taxes and requirements the employer (even a private employer) must pay.
The budget figure is what it costs the PUD to have those employees on staff with all of those costs included, *not* what those employees get paid.
December 2, 2009 at 10:28 a.m. ( permalink | suggest removal )
Webfoot (Dennis Webb) says...
John--I'm not just throwing out these comments to see myself in print, I have a real concern about the intent of the management of OUR PUD throwing out numbers that are at best, a guess--I'm the owner and employer of a "UNION" commercial Electrical contracting firm in Seattle, and yes, I agree there are other taxes and benefits that are required by the state, city, county, union agreement and any other agency that can bleed you, BUT, you're way off base. "Overhead" is a combination of mostly "fixed" costs such as rent, power, water, phone, internet, garbage, etc.the same as you have at your home and these costs would be there regardless of how many people are in the office (assumming these are office positions). There might be a miniscule increase to the overhead costs if any at all. That being said, $108K-give me a break!
Being in the "Electrical" Construction industry gives me a little more insight to this situation (Union agreements, taxes, overhead, etc.) and I stand by my "original" statement.
December 2, 2009 at 2:49 p.m. ( permalink | suggest removal )
Annsboy (Jerald Sargent) says...
Employer payroll taxes are as I recall 15.8% so deduct that amount from the 108k and that is payroll and employee benefits, health insurance, vacation and other real employee costs.
Like I said, sign me up!
December 2, 2009 at 4:32 p.m. ( permalink | suggest removal )
mavulous (mav ulous) says...
FICA taxes = 15.3%
L&I premiums = 5% ballpark
Employment Security = 6% ballpark
Health care plan? Retirement plan? Golden drag chute?
An annual stated salary of around $70,000 might require a budget of over a hundred thousand. It certainly all adds up in ways that most employees never even consider...unless or until they become employers themselves.
December 2, 2009 at 5:43 p.m. ( permalink | suggest removal )
BeenThere (John Smith) says...
Jerald,
Have you applied for a job there? Do you have a skill they need?
I wonder what jobs they are not filling?
Oh, and you can just call me "Smith" :-)
December 2, 2009 at 6:27 p.m. ( permalink | suggest removal )