Enclosed are the FY 06-07 operating and capital budgets for the Water Enterprise as recommended by the Mayor and approved by the Board of Supervisors.

The projected revenues to support the operating and capital budgets total $226.4 million: $105.6 million from suburban water sales; $97.5 million from retail water sales; $9.0 million in bond proceeds; $8.0 million from rental income; $1.7 million from interest on available income; $3.1 million from service installations and $1.5 million from miscellaneous sources.

The FY 06-07 operating budget totals $197.7 million, a net increase of $6.7 million (4.66 percent) over FY 05-06 budget of $188.9 million. The increase primarily funds salary standardization and related fringe benefits ($4.6 million) and several new programs ($3.2 million) including eleven (11) new positions.

New funding for FY 06-07 includes: Drinking Water Regulator Compliance Support, the Laboratory Information Management System Program; organizational improvements in the Natural Resources Division; implementation of a Wholesale Customer Water Conservation Program, a pilot Regional Water Desalination Plant, and a significant increase to Water Supply's fuel and chemical budgets.

The Water Enterprise's capital program of $35.2 million is funded through revenues ($26.2 million) and bond proceeds ($9.0 million).