Customers of the Ramona Municipal Water District (RMWD) can soon expect to receive a letter informing them of proposed water and sewer rate increases, and notifying them of the public hearing scheduled for May 25.
RMWD directors are reviewing the fiscal year 2010-11 budget proposal and have not finalized the proposed rate increase, but they agreed on March 23 to state in the letter that rate increases for water and for sewer will not exceed 12 percent. The sewer rate increase pertains to customers of the San Vicente and the Santa Maria sewer treatment plants.
The letter, in compliance with Proposition 218 that requires a public agency to provide written notice by mail regarding fees or charges, will also notify customers that the “pass through” rates will not exceed 35 percent over a three-year period. These rates refer to rate increases charged to the RMWD from the suppliers of water and electricity that the district will pass on to its customers.
In a budget presentation to the board on March 9, RMWD Chief Financial Officer David Barnum said San Diego Gas & Electric (SDG&E) may increase electric rates by 10 percent. Estimated rate increases from the San Diego County Water Authority (CWA) are 17 to 20 percent for treated water and 15 to 17 percent for untreated water. RMWD purchases its water from the CWA, which in turn purchases water from the Metropolitan Water District.
“We don’t have any control of the cost of water with the water authority,” said Barnum.
San Diego County imports approximately 82 percent of its water with about 54 percent coming from the Colorado River. The amount of water from the Colorado River is basically locked-up due to pacts and legal issues, said Barnum.
About 28 percent of the water comes from the State Water Project (Bay-Delta), which restricts pumping to three months a year due to environmentally sensitive habitat. Those three months — July, August and September — are not the best months for pumping because there is not as much water flowing from runoff, said Barnum
With the increase in rainfall this year, Barnum said many residents have wondered why rates would go up. Of the 18 percent of water coming from local water supplies, Barnum said only 5 percent comes from rainfall. The county doesn’t have the capacity to capture and store a lot of rainfall, although the raising of the San Vicente dam is one project that will help to increase that capacity in the future, he said.
On a pie chart, Barnum showed that by 2020 local water supplies for the county should increase to 40 percent with a portion of that increase due to seawater desalination.
Although residents have been asked to conserve water, their compliance has led to declining water sales. Untreated water sales declined 17 percent and treated water sales dropped 13 percent, Barnum said.
“As our sales declined, we had issues with our revenue,” said Barnum.
Addressing the economy, Barnum noted that property values have declined, leading to less property tax revenues. Special districts receive less than 4 percent of property taxes.
For fiscal year 2008-09, the district’s share of property tax revenue was $5.3 million; in 2009-10 that dropped to about $5 million. Barnum said $4.6 million is predicted in property tax money for the 2010-11 fiscal year that will start on July 1.
Barnum also said a banker warned that the lending environment is getting tighter and lenders may be tougher.
“There’s an impact from financial markets to RMWD,” he said.
While the costs of fire protection continue to rise, Barnum said the fire EDU (equivalent dwelling unit) of $188.52 per EDU has not changed in 14 years. An increase must go to a vote of the people.
By tackling fiscal problems this past year, the RMWD could be in better shape than other water districts, said Barnum.
RMWD realized the declining water sales and property tax revenue would impact the district and therefore cut overhead and labor costs, each by 10 percent, said Barnum. The district addressed its expenses before raising rates, he said, while other water districts did not take such steps.
“We chose to address cost-cutting first,” said Barnum.
The proposed operating budget includes no new personnel and no temporary labor. Any vacant jobs will be reviewed by the general manager, and the district anticipates they will remain unfilled. Only critical equipment purchases will be considered and critical projects will be prioritized and budgeted accordingly.
Barnum thanked the budget ad hoc committee of Board President Jim Robinson and Director Bryan Wadlington.
“The ad hoc committee made our job easier,” Barnum said. “They provided very clear direction.”
A budget workshop on final expenses, revenues and rates is scheduled for April 27.