The San Juan Water Conservancy District (SJWCD) Board of Directors approved a draft 2026 budget and a budget amendment for the district’s 2025 budget at an Oct. 20 meeting.
The board previously discussed the budget and the district’s financial situation at an Oct. 6 meeting.
At that meeting, the board focused on the high legal costs the district is experiencing due to ongoing litigation initiated against the SJWCD by the Pagosa Area Water and Sanitation District (PAWSD) over selling the Running Iron Ranch, which the districts jointly own and where the SJWCD aims to build a reservoir.
Board members discussed potential ways to cut costs elsewhere to pay the legal expenses, although relatively few savings were identified.
Another source of uncertainty at the meeting was the ongoing bidding process to secure an engineering firm to help move the reservoir project forward.
As discussed at the meeting, the exact costs of this were unclear at the time and the schedule for when this work would be done was uncertain.
At the Oct. 20 meeting, SJWCD treasurer Joe Tedder prefaced his discussion of the draft 2026 budget with a treasurer’s report on the district’s current fiscal situation.
He explained that when he wrote his treasurer’s report he was estimating legal expenses of $93,000 for the district in 2025, compared to the $22,000 foreseen in the district’s budget.
However, since then, Tedder stated that his estimate of legal expenses for 2025 had increased by $13,000.
“Without the overrun on legal, we have a normal year,” Tedder said. “It’s unfortunate.”
After the board voted to accept the treasurer’s report, Tedder moved on to discuss the 2026 budget.
The draft budget estimates $173,991 in property tax income for the district, up from a forecasted $167,384 in 2025, and proposes $254,335 in expenditures, including $100,000 for engineering and $75,000 for expenses related to the Running Iron Ranch litigation.
Expenditures are up from the forecasted end-of-year 2025 expenditures of $194,412.
The draft budget also includes $10,000 in contingency, resulting in net expenditures of $264,335 for 2026.
The district will drop its fund balance from an estimated $321,476 at the end of 2025 to $231,132 at the end of 2026 — a change of $90,344.
After a discussion of the approval process for the budget, where Tedder noted that the district has to receive public comments and approve its final budget by Dec. 15, he stated that the only modification he would suggest from the previous budget discussion is increasing the amount budgeted for engineering in 2026 from $100,000 to $125,000.
SJWCD board member Charles Riehm spoke in support of this change, noting that changes in timing for the engineering work could increase costs.
SJWCD president Candace Jones noted that the district might also have to modify the draft budget based on what the rent payments for a new office space might be given the district’s lease is ending and it is having to relocate.
The board voted unanimously to approve the draft 2026 budget before discussing when and where a meeting to hear public comments on the budget in December would occur given the district’s upcoming relocation.
The board concluded that it would hold a meeting at 4 p.m. on Dec. 10 to hear comments on the budget and that this meeting would be held at the district’s new office location, which is still to be determined.
Tedder then presented the budget amendment for 2025, explaining that the district has expected for some time to overrun its budget due to high legal expenses related to litigation over the Running Iron Ranch.
He noted that Colorado law does not allow local governments or special districts to spend more money than is appropriated.
However, he indicated that there are ways to change the amount appropriated to address unexpected revenues or expenditures.
Tedder explained that the board could pass a resolution indicating that the district is going to overspend its budget and explaining the emergency that caused this overspending.
He stated that this interpretation of the budget amendment process was confirmed by SJWCD’s legal counsel and by staff at the Colorado Department of Local Affairs, who also indicated that the district’s high legal expenses would count as an emergency.
Riehm commented that these inquiries were a “good call.”
Tedder stated that overrunning the budget could have serious legal consequences, particularly for the treasurer.
He then read the resolution to the board, which states that the budget overruns were caused by the costs of litigation with PAWSD over the Running Iron Ranch sale — costs that were unknown at the time the 2025 budget was approved.
The resolution continues that the SJWCD’s appropriation for the general legal council fund will be increased from $22,000 to $110,000 with the additional money coming from the district’s reserves.
Riehm asked if there was any downside to the budget amendment the district was about to make.
Jones indicated that there was not and Tedder added that overspending the budget would be significantly worse than the change.
The board then unanimously voted to approve the resolution amending the district’s budget.
josh@pagosasun.com
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