San Juan Water District faces $21M budget gap from improvement projects
The San Juan Water District is eyeing a projected $21.3 million budget deficit for the 2026-27 fiscal year, but staff said the shortfall does not signal financial trouble.
The water district plans to spend about $58.15 million next fiscal year, according to a presentation to the board Thursday night. However, Finance Director Donna Silva said about $27.9 million of that total is earmarked for planned capital improvement expenditures. The district’s projected revenues are about $36.8 million.
“When you are saving up money to pay for future capital projects, there’s going to be years when you’re using what you’ve saved on those projects, and therefore your expenses are going to be greater than your revenues,” Silva said. “That’s the case this (year), so that is not cause for alarm.”
Included in capital improvement expenses is $10 million for the Kokila Reservoir replacement. A new 4.56 million-gallon reservoir will serve as an operational and emergency storage facility for the water district, according to the presentation. Construction is already underway, as the district spent $4 million on the project during the 2025-26 fiscal year.
Another high-cost project is the replacement of service laterals in Granite Bay’s Hidden Lakes neighborhood, according to the presentation. The project is expected to cost $1.65 million. Efforts to replace the lines come after the water district’s service line failure rate was 35% higher than the national average in 2020.
At the end of the upcoming fiscal year, the water district expects to have total reserves of about $43.5 million, according to Silva’s presentation.
Silva also recommended that the board take a more aggressive approach to paying down its CalPERS liabilities, with a $400,000-per-year payment versus a $200,000-per-year payment.
“If you did two years of $400,000, you would save the ratepayers $726,000,” Silva said.
The San Juan Water District primarily serves Granite Bay and sells water to the city of Folsom, Orange Vale Water Co., Fair Oaks Water District, Citrus Heights Water District and the Sacramento Suburban Water District serving North Highlands and Arden Arcade, according to the presentation.
A public hearing for the proposed budget is scheduled for 6 p.m. June 17 at the district board meeting at 9935 Auburn Folsom Road.
