Merced Irrigation District pursues cost increases for farmers

02/04/2014 10:45 PM

02/04/2014 11:04 PM

Merced farmers already expect extreme water shortages this year and the available water likely will be more expensive.

Merced Irrigation District officials on Tuesday took the first step toward raising water rates for growers and may seek to increase a maintenance assessment, commonly referred to as a standby fee, for all farmers in the district.

The MID board voted unanimously to conduct a cost services study and an engineer’s report to explore increasing expenses for farmers to help the district cover a projected $10.6 million revenue shortfall. The district expects to see a decline in revenue because it likely will have far less water to sell to its growers or out-of-district users this year because of the drought.

Exactly how much water rates and standby fees could increase won’t be clear until the reports are completed and presented at the board’s March 4 meeting.

“We’ll have much more solid numbers then,” MID General Manager John Sweigard explained.

However, Sweigard said, without a landowner-approved increase in standby fees, water rates could climb to as much as $72 per acre-foot of water for growers. Last year the district charged $23.25 per acre-foot. An acre-foot is the amount of water it would take to cover an acre 1 foot deep.

A public hearing on proposed increases is expected in mid-April.

Potential rate and fee increases are more bad news for struggling farmers like Atwater’s Zachary Lewis.

“It’s already hard enough on the small growers,” Lewis said. “I understand we all have to pay our dues to keep the canals maintained, but this year is going to be tough enough as it is. I’d rather see them keep the fees the same.”

Irrigation districts throughout the state face historically low water supplies and revenues as the state enters its third year of drought, officials said.

Tuesday’s discussion on potential fee hikes came on the heels of a formal emergency drought declaration from the MID board.

The proposed fee and rate increases would help cover a projected $10.6 million revenue shortfall in MID’s budget, according Brian Stubbert, MID’s budget director.

The district could use some of its reserve fund to help balance its budget, officials said.

During a typical year, the district would sell about 300,000 acre-feet of water to Merced growers but, under present drought conditions, the district likely will have only about 98,000 acre-feet of water available to growers, roughly one-third of its normal amount, Stubbert said.

Without price increases, the district projects a shortfall of $4.6 million. Additionally, MID officials say they will not sell any water to out-of-district customers this year, which will cost the district $6 million more in lost revenue, Stubbert said.

“In the past those transfers have gone to help other irrigation districts, the fish and the environment,” Sweigard explained.

Board member Scott Koehn stressed that any increase in rates or fees would need to be rolled back once the district is in better financial shape.

“These proposals are simply about surviving this one year,” Sweigard said. “It’s a survival mechanism only.”

The board of directors on Tuesday also began developing a long-term water management plan they hope will help the district avoid similar situations in the future.

Sweigard said the district likely will need to address both potential water rate increases and standby fees, which are assessments paid by farmers per acre of land to help maintain canals and other facilities. Presently, the standby fee for growers is $24 per acre, officials confirmed. A standby fee increase would require a vote within the district.

Farmland owners like Anthony Roggero believe any standby fee vote would fail.

“I’m against it because it’s them (MID) essentially trying to balance their budget on our backs,” Roggero said. “I just think they just don’t want to cut any expenses on their end. That’s why I’m opposed to it.”

Sweigard noted that MID made significant cuts in recent years, including layoffs, and said cutting the staff any further likely would affect the district’s basic operations.

Other growers, like Stan Morimoto, said raising the standby fees may be the only way to keep the district afloat this year.

“It’s a very touchy situation, but it seems to me, simply raising the (water rates) may not do any good if there’s just no water for them to sell,” Morimoto said. “I think raising the standby fee on a temporary basis until MID gets its footing back may be their only option.”

Potential cost increases will likely be a hot topic on Friday at the “MID Drought Crisis Water Supply Outlook” meeting at the Merced County fairground. The meeting is scheduled to begin at 1 p.m. in Sierra Hall.

Morimoto said he believes most Merced County growers understand the current crisis and will support a temporary cost increase.

“But I hope more farmers start getting involved in these meetings,” Morimoto said. “I think we need a lot more people involved than we’ve been getting.”

Additional information is available on the MID website at www.mercedid.org. Click on the “Drought Watch” link.

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