Budget Message / Highlights - Metropolitan Water Reclamation ...

METROPOLITAN WATER RECLAMATION DISTRICT OF GREATER CHICAGO
2009 BUDGET
Budget Message / Highlights
The District’s Capital Improvements Bond Fund, the District’s other capital fund, includes major capital infrastructure projects
whose useful lives extend beyond 20 years, and which will be financed by long-term debt, Federal and State grants, and State
Revolving Fund loans.
The 1995 Tax Extension Limitation Law (Tax Cap), and subsequent amendments to the bill, dramatically impacted the
methods of financing the Capital Improvements Bond Fund. The original legislation required, in general, that all new debt be
approved by referendum. However, an exemption for projects initiated before October 1, 1991 was granted to the District to
enable completion of the Tunnel and Reservoir Plan (TARP). The bill was later amended to establish a “debt extension base,”
which allowed local governments, with nonreferendum authority, to continue to issue nonreferendum debt in terms of “limited
bonds,” as long as their annual debt service levies did not exceed 1994 levels. This law was further amended in 1997 to exclude
TARP project debt from this debt service extension base. These changes allow the District to effectively utilize “limited bonds”
as a source of financing.
Construction Fund
The Construction Fund appropriation for 2009 totals $35.6 million, an increase of $3.4 million from 2008. Five projects are
budgeted for award in 2009, at a total contract cost of $10.2 million and requiring an appropriation of $5.8 million. The
remaining $29.8 million appropriation is required for salaries, support, and projects under construction. In 2008, five new
projects were appropriated for $17.2 million; and the appropriation for projects under construction, salaries, and support
required $29.7 million.
Beginning in 2002, the budgeting of Engineering staff working on Capital projects was split between the Construction Fund
and the Capital Improvements Bond Fund. For 2009, 45 positions are budgeted in the Construction Fund and 191 positions are
budgeted in the Capital Improvements Bond Fund. Directly budgeting staff and personnel-related costs such as health care in
the several funds avoids complicated interfund reimbursement procedures and accounting with no negative financial impact.
The distribution of positions between the funds is re-evaluated annually to reflect current projects.
Capital projects in the Construction Fund are primarily supported by property taxes and thus subject to Tax Cap limitation. The
passage of legislation in 1997 allowing for expanded authority to issue “limited bonds” by excluding pre-existing TARP
projects, provides additional financing flexibility to proceed with our capital program. The 2009 tax levy for the Construction
Fund of $11.4 million is a 100.0 percent increase from 2008, when there was no tax levy.
A listing and description of proposed projects, and projects under construction, scheduled for 2009, can be found in Section V
(Capital Program) of this Budget document.
Capital Improvements Bond Fund
The 2009 appropriation for the Capital Improvements Bond Fund is $932.9 million, an increase of $189.5 million, or 25.5
percent from 2008. The appropriation is based on the scheduled award of $861.2 million in projects. Capital Improvements
Bond Fund projects scheduled for award in 2009 with estimated award values consist of two Tunnel and Reservoir Plan
projects at $317.0 million, six plant expansion and improvement projects at $102.6 million; four solids management projects at
$106.1 million; seven collection projects at $70.2 million and thirteen replacement of facilities projects at $265.3 million.
The increase in appropriation for the Capital Improvements Bond Fund of $189.5 million reflects the pattern in the award of
major projects. An appropriation for the open value of existing contracts is also carried forward from the prior year.
The remaining $71.7 million appropriation for this Fund will provide for salaries, studies, services, and supplies to support
District design and administration of proposed and ongoing construction activity, including the TARP reservoirs. A
comprehensive narrative, and exhibits detailing our entire Capital program, is provided in the Capital Budget (Section V), of
this Budget document.
Retirement Fund
The Retirement Fund of the District is established under Illinois Compiled Statutes to provide funding and administration for a
retirement program for District employees. The Fund is financed with employee and employer contributions, and investment
income, which are distributed to the fund when collected. The annual appropriation requests for this fund are taxes receivable
from previous years’ tax levies.
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