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Board hears FY 2026–27 budget preview, agrees to uphold previously approved water rates
Summary
Financial staff presented a FY 2026–27 budget preview, reporting a $27.5 million operating proposal, a $4 million CIP appropriation recommendation and a 108% CIP execution rate for the current year; the board agreed to uphold previously approved rate increases and discussed Lake Hodges supply and legal cost pressures.
Financial manager Aguilar and senior engineer Eric Search presented the San Dieguito Water District’s fiscal year 2026–27 operating and capital budget preview, including revenue and capital execution updates.
Aguilar said staff assumed a 12% district rate increase for budgeting and an 11% assumption for the San Diego County Water Authority rate used in the forward projection. "We do anticipate at least 600 acre feet of local water from Lake Hodges for next year," Aguilar said, summarizing a key supply assumption for next year’s demand estimate.
Eric Search reviewed capital program execution for FY25–26, reporting appropriations of $2,590,000 for planned projects and encumbrances of $2,800,000 — approximately a 108% execution rate, above the 75% target used in the district’s rate study. Search said staff funded the additional encumbrance using CIP project savings and carryforward dollars.
On operating figures, staff presented a proposed FY27 operating budget of $27.5 million and explained drivers behind the projected 14% operating increase, including higher legal costs associated with Lake Hodges litigation, inflationary pressures, and draft increases in the city’s internal cost-allocation study. "There is a big increase in legal costs anticipated for next year," Aguilar said, characterizing it as "short term pain for long term gain."
During board discussion a public commenter, Russell Levin, asked whether the meter-replacement budget line was for like‑for‑like residential meter swaps or for a full automated meter installation. Levin asked, "I was under the impression we're switching to electronic meters over the course of many years, and it would be millions of dollars." Staff responded that the presentation included two meter-related line items: a $200,000 meter-replacement line for existing-technology replacements and a separate AMI (automated metering infrastructure) implementation item budgeted and planned over an 8-year rollout; staff noted additional spending in the current CIP comes from carryforward funds.
Board members discussed reserve targets and the proposed rate stabilization target, which staff said is planned at 15% of potable revenue (about 15% of $25 million in combined potable revenue and fixed revenue, as presented). A motion to uphold the previously approved FY26–27 water rates and charges was made and the record indicates the board concurred with that action; staff said final budget adoption will return to the board in June.
