In yet another ugly example of the valley's slumping housing and construction markets, the water authority is projecting a $52 million drop in revenue from new customer hookups over the next year.

The authority's current budget, which runs through June 30, assumes $159.7 million in "connection charge" revenue. That figure is expected to fall to $107.5 million by the end of the next fiscal year in mid-2009.

More than 51,300 new customers hooked up to the valley's water system in 2005, the authority's busiest year on record. New connections sank to 37,485 in 2006, then plunged to 22,307 in 2007.

Connection charges account for 57 percent of the authority's funding for major construction, but the sharp drop in new hookups is not expected to jeopardize any current or future capital projects.

That is because connection charges grew much more quickly than anticipated before the recent slump, allowing the authority to insulate itself from volatility in the housing market by building a large reserve fund.

"That allows us to ride through this," said Cary Casey, the authority's finance director.

Dick Wimmer, the authority's deputy general manager, said the authority designed its method of funding new construction in 1997 with such a downturn in the housing market in mind.

"We've borrowed $2 billion since then and are still looked on favorably in the bond markets," he said. "This is the plan that's been in place. It has stood the test of time, and it works."

Wimmer's comments came during a budget workshop on Thursday.

The water authority is proposing a $695.6 million spending plan for the coming fiscal year, which starts July 1.

That is roughly $30 million more than the current budget, an increase traced to the rising cost of chemicals and maintenance at the authority's two water treatment plants.

Some $308 million is slated for new construction, and most of that money will go to the "third straw" the authority is building to tap water deep in Lake Mead.

The proposed budget for next year includes 26 new staff positions, nine of which will replace temporary and expensive consultants at an annual cost savings of about $600,000.

The current staff of the water authority includes about 380 full-time employees and another 40 or so who divide their time between the authority and its largest member agency, the Las Vegas Valley Water District.

The water authority board will vote on the final budget for next year on May 15.

Contact reporter Henry Brean at hbrean@reviewjournal.com or 702-383-0350.