Remleh Scherzinger: NID responds to erroneous budget picture | TheUnion.com

Remleh Scherzinger: NID responds to erroneous budget picture

Other Voices
Remleh Scherzinger

The Nevada Irrigation District (NID) Board of Directors and employees across the District take our fiduciary responsibility to our customers very seriously. Recently, some inaccurate information was put forward in an Other Voices submission. As a result, I would like to offer our customers and The Union readers a more accurate picture of the District’s fiscal health.

As background, it is important to know what NID does and how that contributes to its overall fiscal health. In addition to providing both treated drinking and irrigation water to our customers, NID generates and sells to PG&E about 360 gigawatt hours of hydroelectric power, the equivalent of powering more than 60,000 homes annually. In the 1960s, NID made a commitment to use the profits generated by hydroelectric sales to offset the true cost of water delivery. In the 2020 budget, the total cost to deliver water is subsidized by hydroelectric sales by 30% or $13.4 million.

As indicators of a healthy fiscal picture, NID carries a “AA- with a stable outlook” bond rating as designated by the outside rating agency Fitch.We have a 2.68 debt service coverage, which is better than the 1.25 minimum required by bond covenant.

Finally, as of Sept. 30, 2019, NID has $101.7 million in total reserves. That is the good news.

… attacking the District with inaccurate budget figures, quoting inflated rate increases and confusing it with capital spending is not constructive.

Affecting NID’s finances negatively was the drought and increasing costs associated with operating the system (labor, materials, debt service, etc.). Our customers did a great job of conserving water during the drought but the result to the District was reduced water revenues by $8 million. To address drought losses and the increased cost of operating the system, the District, with significant kudos to all of our employees, has created operational efficiencies totaling more than $28.5 million since 2014.

In 2002, a Grand Jury report called out NID for carrying budget reserves that were too high. At that time, the District’s total reserves were over $167 million. In response to the report, NID proactively invested about $270 million in reserves into capital projects to improve its water delivery system.

For 2020, the District proposed a balanced overall budget of $91.2 million, down $13 million from its 2019 budget of $105.6 million. Admittedly the water budget relies on a higher than normal $13.4 million transfer from hydroelectric revenues. As I have stated, continuing with this approach is not sustainable in the long term. The cost of operating the system (27 reservoirs, 19 recreation facilities, seven power plants, 475 canal miles, 12 drinking water systems, 400 miles of treated water lines, etc.) is rising faster than rates resulting in greater reserve spending and the cannibalizing hydroelectric revenues.

The District values transparency. It publicly notices all committee and Board meetings and posts staff reports and official documents to its website. The budget, in particular, gets many public airings prior to adoption and is reviewed quarterly by the board through-out the year. The 2020 budget was discussed in six publicly noticed committee and Board meetings before it was adopted. As a public agency, we recognize and embrace our customers’ and residents’ right to information about the District. In fact, NID recently received the District Transparency Certificate of Excellence from the Special District Leadership Foundation, recognition only granted to 13% of the 2,300 Special Districts in California. Further, NID has received the prestigious award for Excellence in Financial Reporting from the Government Financial Officers Association for the years 2015, 2016, and 2017. Please visit nidwater.com and explore our website to determine our level of transparency and financial distinction for yourself or contact us at (530)273-6185 x217.

While I recognize there are individuals who oppose some of the District’s future capital projects, attacking the District with inaccurate budget figures, quoting inflated rate increases and confusing it with capital spending is not constructive. We desire a constructive dialogue with all of those interested in our operations and will openly respond to all questions and concerns brought forward to the District.

Remleh Scherzinger is general manager of Nevada Irrigation District.


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