CONROE, TX - June 9, 2017 - On Tuesday, The Lone Star Groundwater Conservation District, at a Budget Workshop open to the public, considered factors affecting the establishment of the District's proposed Fiscal Year 2018 water use fee. The District's Budget Committee recommended the 2018 water use fee for groundwater produced from the Chico/Evangeline/ Jasper be set at 11 cents per thousand gallons withdrawn, an increase of 3.5 cents over the current rate of 7.5 cents. No fee increase is proposed for groundwater produced from the Catahoula ($0.06/1000 gallons).
The Committee discussed two major factors that were considered in making its recommendation. One, the committee restated that 2016's 30 percent reduction in withdrawals that occurred as a result of a mandated conversion to alternate water supplies going forward is still being absorbed into the District's budget as the transition continues into its second year. Originally, in previous planning before the conversion, the board identified cash reserves as a supplement to this transition period. However, these cash reserves were more quickly depleted than originally anticipated by the second factor, ongoing litigation.
The Committee emphasized that the ongoing litigation initiated by the City of Conroe, Quadvest, et al., has placed a substantial burden on the District's finances. Those legal fees now exceed $500,000 and are anticipated to continue to mount during the 2018 fiscal year (January 1 thru December 31).
The committee also acknowledged that, should the plaintiffs decide to withdraw their lawsuit or if all parties involved are able to reach an appropriate agreement before this November, when rate notices go out to permittees, the full rate increase would not be necessary in 2018.
On January 1, 2016, the District's Regulatory Plan (DRP) was implemented, requiring each Large Volume Groundwater User (permits holders that are authorized to produce 10 million gallons or more annually) to reduce its permitted use by 30 percent. District water use fees are based on permitted allocation, resulting in a proportional reduction in income in 2016. That decrease in revenue, coupled with the legal fees incurred to date, has resulted in a net loss of $778,621 in 2016. Approximately 64 percent of that net loss is a direct result of ongoing litigation costs with Conroe.
While the District has made significant cuts to its operating budget over the past 18 months and continues to seek ways to reduce expenditures, the combination of the two factors detailed above render it impossible to carry out its legislative mandate to protect the groundwater resources of Montgomery County without an increase in water use fees.
There was no decision made on the fee at the Budget Hearing nor will there be any action taken at the next Regular Board meeting scheduled for June 13. It was the consensus of the members present that additional meetings will be held to continue to discuss proposed rates and the overall budget, and to seek additional input from the public. Should any changes in water use fees be made by the full Board of Directors, they would not go in to affect until January 1, 2018.
The next Budget Workshop is tentatively scheduled for June 28th at the District offices.