The State of California is facing a $20 billion plus deficit.  Vallejo - a city of 117,000 - has filed bankruptcy.  Cities and counties up and down the Golden State are in a financial squeeze.

But not the South San Joaquin Irrigation District.

As the SSJID enters its 99th year of operation this month the governing board is preparing to cushion the people it serves against future rainy days and provide funding for upcoming projects by squirreling away $38 million in reserves.

That represents $19.4 million more that the district's 2008 maintenance and operations budget of $18.6 million.

The SSJID board meets Tuesday at 9 a.m. at the district office, 11011 E. Highway 120 to consider adopting a reserve policy. The agenda also contains the audit report that lists the district's net assets at $275.1 million.

So how did the SSJID become arguably one of the best run government agencies in California? Two words: water and power.

The SSJID is one of the few - if not the only -irrigation district in California to develop its own reservoirs and water conveyance systems without any state or federal help. By relying on local bonds the district built a system - as well as the Tri-Dam Project along with the Oakdale Irrigation District - that is paying huge dividends. As of Dec. 31, 2007, the district had no long term debt.

It also is in a position to follow through on a board commitment to harness the Tri-Dam Project to benefit farmers, residents, and businesses within its service territory of Manteca, Ripon, and Escalon. And the way they want to do that is to reduce electricity costs for everyone within their boundaries by 15 percent across the board by entering the retail power business after being in the wholesale side of the equation for more than 55 years.

SSJID is building reserves not only at a time when most jurisdictions are siphoning off what they set aside in previous years to maintain service levels but while waiving water charges for irrigation water delivery for 2008. It is akin to a city suspending all fees for a year, increasing the level of service, and still putting aside money from its general fund accounts for future projects and reserves.

What money is being set side for in reserves

If the board adopts the proposed policy, the district will set aside in reserve:

$2 million to cover district property tax losses that the state indicated in March that they may seize half that amount to help hire parole agents for 20,000 convicts the state intends to release. The other half is set aside to cover the amount of property taxes the district collects that the state has indicated it may shift to the county.

$1 million for contractual obligations for employee health care and retirement costs that are expected to rise plus cover wage increases that could average 5 percent in 2009.

$10 million for new operating programs that including between $500,000 and $10 million for land as well as a new building for district headquarters plus spending $30 million to pressurize water deliveries southwest of Manteca to combat salt water intrusion.

$10 million to cover repairs from natural disasters such as earthquakes. The district has over 300 miles of concrete pipelines for irrigation and another 40 miles for domestic water with no insurance. Canals in remote locations are also subject to earthquakes as well as slides. Total exposure to the pipelines is estimated at between $1 million and $100 million while the canal repair exposure is between $250,000 to $10 million.
$15 million to stabilize the annual maintenance and operations of the district against unexpected economic downturns. The district spends $18.6 million a year on operations and maintenance.

The district's financial management underscores how effectively it has been in running, maintaining and operating a wholesale power system as well as points to the fiscally conservative approach they are taking to enter the retail power service arena.

SSJID makes $23.58 every second from PG&E power sales & investment interest

SSJID in one-tick of a second-hand:

nets $19.02 by selling electricity to PG&E from its share of Tri-Dam Project receipts.
earns $4.56 in interest on money that it has been stockpiling since PG&E started paying full market rate for that electricity at the beginning of 2006.
Actually, both could be much higher as the projections were made back in December using what SSJID Assistant Manager John Stein characterizes at the time as "conservative" revenue projections.

The SSJID board's 2008 spending plan has the overall day-to-day budget pegged at $29,593,300 in revenue against $18,621,397 in expenses to generate $10,9871,903 in net income.

That is on top of a $20,952,862 capital improvement budget including $12 million for the solar energy farm. Once that project is completed it will effectively wipe out any need to buy electricity from PG&E to power the South County Surface Water Treatment Plant.

SSJID, which operates Tri-Dam with the Oakdale Irrigation District, is projecting it will receive $10 million of its cut of the "profits" after expenses and capital improvements for Stanislaus River hydro system are covered in 2008.

That's conservative as the district has received as much as $18 million a year since the 50-year contract with PG&E ended. That deal that expired three years ago sold the utility wholesale power at rates set in 1955 in return for assuring taxpayers in SSJID and OID wouldn't get stuck with paying off the $52 million bonds.

A drought could severely hamper Tri-Dam's ability to generate power and would reduce revenues.

Interest income is budgeted at $2.4 million. That's up 60 percent over 2007 interest income of $1.4 million.

The increase is solid despite interest rates softening as SSJID has piled on an additional $11 million-plus in the last year from Tri-Dam receipts.

To contact Dennis Wyatt, e-mail dwyatt@mantecabulletin.comThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it . Read more