Budget Message / Highlights - Metropolitan Water Reclamation ...

METROPOLITAN WATER RECLAMATION DISTRICT OF GREATER CHICAGO
2009 BUDGET
CORPORATE FUND
The Corporate Fund is the general fund of the District. It is used to account for the general operations and expenditures of the
District. The 2009 appropriation request is $395,002,600, a decrease of $2.2 million, or 0.5 percent from 2008. The major
reasons for this decrease include funding for the OPEB trust at the policy level of 2009 ($12.0 million), offset by expected
increases in facility repairs ($9.4 million).
Property taxes are the major source of revenue for the Corporate Fund. In 2009, the net property tax levy will provide 74.4
percent of the fund's revenue. The property tax levy proposed for 2009 is $242,027,000, an increase of $2.7 million or 1.2
percent from the 2008 levy.
A fund balance within the $45 to $55 million range is viewed by District management and the financial markets as necessary to
maintain financial stability and sustain us through economic uncertainties. This fund balance level is consistent with the level
recommended by the Government Finance Officers Association. In order to ensure that an adequate fund balance is maintained,
all net assets appropriable have not been reappropriated as revenue for the subsequent year. For 2009, a portion amounting to
$20.8 million of the projected net assets will remain unappropriated to provide for a fiscally responsible fund balance.
User charge revenue allocated to the Corporate Fund is estimated at $49.0 million in 2009, an increase of $1.0 million from the
2008 budget. Total user charge revenue for 2008 is estimated at $57.0 million, of which $0.3 million is allocated to the
Construction Fund. While industries have made adjustments to reduce their loadings and associated expenses, current user charge
rates continue to provide revenue paralleling the costs of treatment. However, the current downturn in the state economy may
weaken both the food processing and chemical industries, two major categories of user charge payers. The third major segment of
user charge payers is government operated airports and water filtration facilities. The revenues from these sources are more affected
by weather conditions than the general economy.
User charge rates and revenues parallel changes in operations and maintenance costs. User charge rates are based on USEPArequired
review of the classes of users to ensure that each class pays their proportionate share of actual operations, maintenance,
and replacement (OM&R) costs. Large commercial, industrial and tax-exempt property are charged fees based on the volume
and strength of their effluents, with credit given for the OM&R portion of any property taxes paid. The OM&R credit is
adjusted for any users in tax increment financing (TIF) districts to give credit only for property taxes actually received.
Residential and small commercial/industrial classes pay only property taxes. This rate method ensures that the costs of
providing service to these classes of users are fully recaptured. User charge rate history, annual revenue history, and a list of
major payers appears in the Appendix.
Personal property replacement tax revenue is primarily based on a corporate income tax. It is budgeted at $25.8 million for
2009, a decrease of $1.7 million compared to the adjusted 2008 estimate. The total personal property replacement tax revenues
have shown significant growth since 2002, trending with the state of the economy and is expected to reflect the current
downturn. The allocation to the Corporate Fund has increased from $16.0 million in 2002.
In 2009, land rental revenue is budgeted at $11.0 million. Real estate income for the District has trended upward in recent
years. Expiring leases are reviewed and necessary environmental or other types of property remediation are attempted to be
performed well ahead of lease expiration to expedite re-leasing at current market rates. This process should result in increased
revenues in the future. Revenue from the sale of surplus land is estimated at $2 thousand in 2009 and $2 thousand in 2008.
Investment income is budgeted for 2009 at $4.2 million. The adjusted estimate for 2008 is $4.4 million. The 2007 and 2006
actual amounts were $8.1 and $6.1 million, respectively. This level of income reflects stable short-term interest rates and fund
balances available for investment during the past several years.
The revenue estimate for sewer permit fees for 2009 is $1.8 million. Actual 2008 revenues are projected to be $1.5 million. The
District's policy is to recapture 100 percent of the costs of the sewer permit program, and sewer permit fees are recalculated
annually to accomplish this objective. Permits are required for new real estate development, and applications are expected to
level off or decline slightly in 2009 due to the expected continued turmoil in the area real estate market.
The Corporate Working Cash Fund is used to provide short-term financing to the Corporate Fund. As the property tax levy for
one year is not collected until the next year, short-term financing of the current year tax levy is necessary. The District sells
Working Cash Bonds and is authorized to extend a property tax levy to meet these needs. State statute allows loans in the
amount of 100 percent of the property tax levy plus personal property replacement tax receivables. The estimated amount the
District will allocate as available for loan in 2009 is $254.4 million or 95 percent of the maximum. Public Act 93-252 amended
the District's Act to allow the Board of Commissioners, by a two-thirds vote to transfer fund balances between its Working
Cash Funds. The Board also has authority to transfer accumulated investment income between funds by a two-thirds vote.
Estimated revenues of $4.0 million Personal Property Replacement Tax to the Corporate Working Cash Fund for 2009 will
provide sufficient resources to avoid the need to levy taxes in the foreseeable future.
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