The drought is one reason the City of Modesto has received a "negative outlook" for water service. The city is using less water and that means less revenue.
Moody's Investors Service didn't lower the city's bond rating, but basically said it's not sure the city's water enterprise is in the best shape to cover its debt.
Modesto is using 37 percent less water, and for every one percent conserved the city loses $260,000 dollars in revenue.
Modesto Mayor Garrad Marsh says the city is saving money because it's producing less water.
The average homeowner pays $44 a month, half of that is the charge for the standard hookup.
"If everybody in Modesto turned all the toilets off, turned all their showers off, quit washing clothes and quit watering their yards, we'd still get $22 for every household," says Marsh.
Marsh says a water rate study is underway but that doesn't mean the cost of water will go up anytime soon.
He says more expenses like the new water treatment plant, infrastructure and hooking more homes to water meters have increased the water department costs this fiscal year.