OPENING STATEMENTS:

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OPENING STATEMENTS
As you can imagine, this budget season has
provided many moving targets for the budget
development.
The budgets which will be presented will likely
continue to be modified somewhat throughout the
process.
The Budget Committee of Mr. Barrett and Mr.
Cheatham will continue to work with staff.
Staff will also provide an opportunity for input
from the various budget officers of the
communities as we move through this process.
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WHATS TO COME?
1. FY2010 Budget with WTE remaining with SPSA the
entire year - 170 per ton
2. Adoption on May 27th
The Budget being presented is developed as if the
WTE will be with SPSA for the entire year.
When the WTE deal is finalized we will present
another budget for the Board to consider and
adopt.
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EXPENDITURE BUDGET AT A GLANCE
Assumes that the WTE will remain with the SPSA
System the entire year.
120,342,027 - Total anticipated budget (2009
was 102,242,232 not including 26
million in the capital budget last yr.)
17,999,900 - Capital Budget (10 mil WTE, 8
mil other) Cash 104,692,027 - from VB
deferral of rebate
44,183,359 - Debt Portion of the Budget no
restructuring 60,508,668
26,199,673 - WTE Operational Only Portion of
the Budget
34,308,995
3,647,000 - Other contributions to closure
funds, etc
30,661,995
775,786 - Set aside for Reserve and
Contingency
27,536,309 - Balance for all other operations
including transportation, landfill,
recycling, transfer stations, safety,
environmental and the like
Each 1 million in revenue needed from municipal
tipping fee cost 3.64 on the municipal tipping
fee (based on 275,000 municipal tons).
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BUDGET AT A GLANCE
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BUDGET AT A GLANCE
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BUDGET AT A GLANCE
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WHY THE BUDGET INCREASE?
The proposed Budget increase equals 20,449,795
(primarily capital and reserve).
Major Reasons
Capital Expenditures of approx. 18 million are
CASH funded thru Virginia Beachs deferment of
its tipping fee rebate (17 million) and
operation and maintenance costs for the VB
landfill (2 million. These two items are
estimated to be 19 million for FY2010 based on
the 170 per ton tipping fee. Previous capital
projects were financed (borrowed money) and did
not appear in the Operating Budget as shown
this year.
Reserve and Reserve/Contingency Items These are
approx. 2.2 million plus 1.5 million in
operational contingencies.
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CHANGES FROM THE 2009 BUDGET
1. 85 LESS EMPLOYEE positions (17 of the
workforce) A decrease from 494 authorized
positions to 409 FY2010 full time positions A
total reduction of over 3.2 million.
2. Increase in legal/consultant costs from a
budget number of 620,000 to 1,320,000 to more
accurately reflect actual costs when compared to
the past several years and the work that is
anticipated in the coming year.
3. No employee salary increases are provided in
this budget.
4. 18 million of Capital Expense is being
cash-funded through deferred payments to
Virginia Beach. (Depreciation is approx. 14.5
million a year and 3.4 million depletion
reduction in the air space at the landfill.)
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CHANGES FROM THE 2009 BUDGET, cont
5. The municipal tipping fee will remain the same
as it was set in April which is 170 per ton.
6. Reduction of approx. 1.2 million in
operational costs occurred in the FY2009 budget.
7. Contingency and contingency/reserve funds
are provided in the budget in order to meet
unexpected and unanticipated situations that may
arise during the year. VRA will be requiring a
reserve fund but the amount has not yet been
established.
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UNIQUE FUNDING STRUCTURES FOR FY2010
1. Tipping fee is increased from 104 to 170 as
proposed by CAOs.
2. 5 communities are backing the Virginia
Resources Authority (VRA) Bond Restructuring of
up to 72 million. This could possibly provide
approx. 15.2 million in debt payment savings.
This is not figured into the budget at this time.
3. 2 communities are backing the 13.2 million
and 4 million lines of credit SPSA holds with
Wachovia Bank. With these 2 communities backing
the loans, SPSA will seek to roll the lines
forward when they come due in September/October
(interest only is being paid). The 4 million
line of credit is proposed to be paid off in the
debt service schedule. The line will then be
rolled forward for future use if needed.
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UNIQUE FUNDING STRUCTURES FOR FY2010, cont
4. Virginia Beach will defer payments it would
normally receive from SPSA due to the
difference between the 170 per ton rate and the
VB capped rate of 53.88. Virginia Beach will
also defer the amount that SPSA pays VB for
the operation and maintenance of the VB landfill
which is estimated to be 2 million.
5. Based on the deferrals relating to VB, SPSA
will owe Virginia Beach approximately 9 million
from those deferrals in FY2009 and approx. 19
million in FY2010.
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VIRGINIA BEACH DEFERRAL WHAT DOES IT MEAN?
For FY2009 Approx. 9 million that will have to
be repaid in the future.
For FY2010 Approx. 19 million (17 m rebate 2
m VB Landfill 0M) that will have to be repaid
in addition to the 11 million from FY2009 if
all the funds are used during the year.
This continues the policy to borrow money for
capital requirements which is something SPSA must
consider changing.
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DEBT SERVICE
With the rolling forward of Wachovias 13.2
million and 4 million lines of credit loans when
they come due in FY 2010, the debt service will
be approx. 44 million for FY 2010. This does
not figure in the restructuring which has not
been finalized at this time.
There are plans being developed that SPSA could
realize an approx. 15.2 million savings in debt
service for each of FY2010 and FY2011 if the VRA
debt restructuring takes place in a timely manner
and as proposed by the CAO plan.
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CAPITAL IMPROVEMENT PROGRAM COSTS
The CIP for the FY 2010 budget has been
established to be 18 million. As indicated
earlier, depreciation is approx. 14.5 million a
year and 3.4 for air space reduction at the
regional landfill.
These funds are being used in an effort to help
maintain facilities and equipment needed to
provide services in a manner that will make them
attractive when the time comes for their
divesture.
Funding source is from the deferred SPSA payments
to Virginia Beach which is scheduled to be paid
back in the future.
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CONTINGENCIES
1. 1.5 million for Operating Budget Contingency
2. Approx. 775,786 million in Reserve/Contingenc
y Category
3. 1.5 million to the Landfill Closure Fund
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NEXT STEPS
1. Consider the budget document. Write down
questions and send them to me so they can be
answered or set up a meeting with me to more
thoroughly discuss the budget in greater detail.
2. Vote to consider the adoption of the budget at
the May 27th meeting.
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SPECIAL THANKS TO Mr. Barry Cheatham and Mr.
Mike Barrett The Executive Committee ALL
DEPARTMENT MANAGERS GERALYN HARRELL CLEMENT
MIKOWSKI CHARLIE FAGG
AND ESPECIALLY TO THE CAOs AND THEIR STAFF
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END OF BUDGET PRESENTATION