Hist and Proj Operating Receipts FY 2011 2 17 2010 - DC Water

A Challenging Budget Framework
Last year, the Board approved a FY 2010 Operating budget of $393.6 million, which reflected an increase of $30.4 million or g.4
percent over the FY 2009 budget. Half of this budget increase or $14.0 million was for debt service to finance the on-going and
increasing cost of our Capital lmprovement Program. The other half was to pay for íncreased cost of operations, including þersonnel
cost increases primarily driven by previously negotiated wage increases; chemical and electricity cost increases, primarily at the
Washington Aqueduct Water Treatment Plant and the Blue Plains Wastewater Treatment Plant; contractual services cost inðreases,
primarily to support several major lnformation Technology initiatives anticipated to go live; DC WASA's share of increased cost of
the District of Columbia's (District) stormwater management program (reimbursed from the District's stormwater fee); and, increased
cost of the Payment ln Lieu of Taxes, a fee assessed on the Authority by the District government.
The revised FY 2010 and proposed FY 2011 Operating and Capital lmprovement Budgets were developed in a challenging fiscal
environment. Faced with total department requests, including debt service for FY 2011 totaling $415.0 million; a precipitous ãedine
in consumption; a fast depleting Rate Stabilization Fund; an economic recession; and the Board's desire to keep rate increases to a
minimum, we had to make some difficult choices. Approving the FY 2011 requests, while also proceeding with the approved level of
spending for FY 2010 would have necessitated a retail rate increase of about 21 percent over the FY 2010 rates or an increase of
approximately $13.13/month or $157.56lyearîor the average customer. These requests all have merit and would ensure that we
continue to pay for the infrastructure improvements needed to meet regulatory requirements, sustain our aging infrastructure, and
continue to provide excellent customer service. However, to meet the Board's goal of ensuring gradual and predictable retail rate
increases, difficult choices and tradeoffs were required to balance this year's budget.
These tradeoffs included elimination or deferral of several initiatives, prioritization and placing a cap on hiring, deferral of certain
capital projects and a change in practice from Pay-Go financíng of capital equipment and Washington Aqueduct costs. To reduce
rate impacts, the FY 2010 budget was reduced as shown in the graph, which follows.
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