The Sacramento Municipal Utility District\u2019s Board signed off on a $1.54 billion 2011 budget, which includes significant reductions in capital project spending and operating expenses. The budget, approved Dec. 2, projects a net income increase of about $8 million. At the same time, it includes millions of dollars in cuts brought about a drop in power sales attributed to the economic downturn that gripped much of the region the past two years. \u201cWe were spending close to $170 million a year on basic infrastructure; this year it\u2019s about $120 million,\u201d SMUD chief financial officer Jim Tracy said. He said the muni reduced its spending on capital projects by almost $50 million and operating expenses by almost $10 million. \u201cThe budget also reflects a 0.3 percent increase in actual sales\u201d Tracy said. That represents projected 10.5 billion kWh in net retail sales of electricity in 2011. The budget anticipates a $42 million drop in electricity sales in 2011, which would bring the cumulative shortfall to about $97 million since September 2009. The financial plan also assumes that the number of customers participating in SMUD\u2019s low-income discount rate is to grow to about 111,500 in 2011, which would require a subsidy of $38 million, according to the utility. \u201cIt\u2019s tough to do a budget, and in tough times it becomes even harder,\u201d board member Bill Slayton said. \u201cI think that management and staff have done a good job to keep ourselves financially healthy while at the same time keeping the rates 25 percent below the neighboring utility (Pacific Gas & Electric), which is eight times our size.\u201d \u201cDoing all this without raising rates I think is quite an accomplishment,\u201d Slayton said. SMUD\u2019s 2010 budget was $1.62 billion. In 2009, it was about $1.51 billion. Also during the meeting, the board held its annual election of officers. Renee Taylor was chosen to serve as board president in 2011, while Nancy Bui-Thompson was elected vice president.