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In 1925 City leaders made a smart business decision when they issued $7 million in bond proceeds to purchase a water supply company they called City Water Board, which would eventually become the San Antonio Water System. Today, as a result of strong management practices, this public utility provides ratepayers in the majority of Bexar County with affordable water and wastewater services.
Pursuant to City Ordinance No. 75686, SAWS is required to transfer to the General Fund of the City up to 5 percent of gross revenues. Since 1992, the payment received by the City has remained constant at 2.7 percent. By comparison, Austin’s water utility contributes 8.2 percent of its gross revenues to the City of Austin and CPS Energy contributes 14 percent of its gross revenues to the City of San Antonio, which accounts for a significant portion of the City’s operating budget.
During the 2019 City budget work sessions, I proposed for the Council to call on SAWS to increase its contribution to the General Fund. I was told at that time by SAWS that this would necessitate an additional rate increase. I didn’t buy it. This year, I will again call for SAWS to increase its contribution to the City to 4 percent, which is an increase of 1.3 percent and should result in an increase of an estimated $9.5 million without any rate increase. This is still below the amount to which the City is entitled.
These contributions help keep the City’s tax rate low and provides for services residents of the City of San Antonio have come to expect. Of course I am mindful that all of these revenues come from the taxpayer/ratepayer. However, a distinguishable factor is that residents outside of the City limits are enjoying the benefits of reliable utilities the City of San Antonio owns without paying City property taxes. They use the roads, parks and public safety the City offers without having the same tax burdens as City residents.
The State has significantly altered how cities can raise revenues by placing restrictions on annexation as well as implementing a revenue cap. We must therefore rely on local, internal mechanisms to provide vital city services and balance our budget.
I would not recommend supporting an increase in their contribution if it meant that SAWS would be required to pass along that cost to the ratepayers in the form of a rate increase. I don’t believe this is the case given the healthy balance sheet and strong management.
As the region grows, so does the demand for SAWS’ services. In the last decade, SAWS has diversified its portfolio of assets to include desalination, aquifer storage, and the controversial Vista Ridge Pipeline. Conservation has also been a critical component of resource security. They have done such a great job, they are considering relinquishing contracts of smaller water assets and, once Vista Ridge comes online sometime next year, will look to sell the water to potential regional customers.
SAWS is flush with cash. According to the latest monthly financial report, SAWS has 472 operating days of unrestricted cash on hand, or just over $426 million. They also show an investment portfolio with a market value of $911 million as of June 30, 2019. In 2015, a previous Council approved multi-year rate increases, which have generated an estimated $26.9 million in additional revenue to SAWS this year and over $100 million since then.
We are, in essence, the shareholders of the company and have not seen a dividend increase in nearly three decades. Now is the time for SAWS to increase its commitment to the residents of San Antonio.