“Changes in the economy have an impact on the water district,” David Barnum, chief financial officer for the Ramona Municipal Water District (RMWD), said at the first in a series of budget workshops. “We anticipate this year and possibly next year to be a difficult time in terms of water for Ramona.”
During the Feb. 24 workshop, Barnum reviewed how money is generated by the district and distributed to the various funds established. Barnum’s role, and that of the RMWD staff, is to provide the board with factual and up-to-date information.
The first budget workshop was designed as an introduction to current situations in the district and financing proposed plans for the future.
“The goal is to continue to provide the level of service our customers expect, but at the lowest possible rate,” said Barnum.
The impact of small expenditures has an impact on rates. For example, if water rates have a $100,000 increase in expense, or a $100,000 decrease in revenues, the impact will be an increase of 2 cents on water rates, Barnum said.
“Revenues in the district are generated from rates and property taxes,” Barnum said. “Rates are established two times each year.”
RMWD buys water from the San Diego County Water Authority (CWA) and the Metropolitan Water District (MWD). Traditionally, the CWA and MWD raise their rates on Jan. 1 of each year.
“What is critical is that we pass only that rate increase through to our customers,” stated Barnum.
A potential rate increase to RMWD customers is a three-fold process that must comply with Proposition 218, which requires RMWD to mail a notice to all affected rate payers of a public hearing for individuals to protest the proposed increase. If 51 percent of the rate payers come forward during the formal hearing, the rate increase fails.
“Last year the district mailed 10,415 rate increase letters and received only two formal protests,” said Barnum.
It is expected that RMWD will mail notices of proposed rate increases in April with a public hearing scheduled for June 23.
A portion of the budgeting process includes accounting funds set up for water, fire, parks, sanitation, capital improvements and capital replacement.
“We do not make a profit, receive no dividends, and have no shareholders,” said Barnum. “To help keep rates down, we budget our expenditures and budget our revenues to match them.”
One of the sources of revenue for the district is property taxes, Barnum said, noting that RMWD gets a small portion of the total property taxes.
“Last year, RMWD received $5.5 million from that discretionary property tax,” he said. “We use that money to help pay for five outstanding water debt loans,and fire operations.”
Last year, 70 percent of this money was spent for those purposes and 30 percent remained for projects proposed by the district, Barnum said.
The amount of funding RMWD could receive this year will be affected by the current economic spiral and unemployment rates. Barnum believes that the low housing market could impact RMWD in the form of delinquencies on water bills, as well as property tax revenues declining.