Water board adopts $28 million budget

Directors form ad hoc committee

to work with district’s ag customer

sBy Karen Brainard

Ramona Municipal Water District (RMWD) directors approved a $28 million operating budget for fiscal year 2011-12 and agreed to form an ad hoc committee to address proposed untreated water rates at the request of agricultural customers.

In an unusual circumstance, the board will not be adopting new water and sewer rates until after a public hearing on Oct. 25. Normally one public hearing is held for the budget and the rates, and the board votes on those items simultaneously before the July 1 start of the fiscal year.

This year the budget and rate adoptions were postponed to Sept. 13 for a water rate study to be prepared by an outside firm, Raftelis Financial Consultants Inc.

As required by state law, the water district sent the Proposition 218 notice to customers with proposed not-to-exceed rates at least 45 days before the Sept. 13 public hearing. A clerical error by the law firm preparing the notice, however, left out the time of the hearing which necessitated reissuing the letter and giving another 45 days for the rates hearing.

RMWD Chief Financial Officer and Assistant General Manager David Barnum explained that the district was seeking a budget adoption last Tuesday because it must file a budget with the county and it has loan requirements that require an annual audit and adopted budget. An adopted budget would also provide fiscal guidelines to staff, he said.

The budget can be revised, Barnum added, if in October the board chooses to decrease proposed rates, but that would take a couple of months. While the proposed treated water rate is to remain the same as last year, the untreated rate shows an increase of 60 cents per unit, a 22 percent increase.

Former RMWD board member Doug Wilsman spoke at the budget hearing on Sept. 13, addressing the fact that it did not include adoption of rates.

“We have a budget that is unique in history,” he said. “I’ve watched budgets at least since 1990. I never saw one like this before.”

Wilsman said he reviewed the Raftelis rate study and told the board: “I think you ought to let the public tell you tonight what they think is wrong with the rates that you’ve seen so far.”

Ken Melban with the California Avocado Commission said he had met with Barnum and appreciates the challenges the board faced with the Prop 218 notice and the increased costs of supply. While the untreated water customers only represent about 2 percent of RMWD’s total customers, Melban said they represent about 25 percent of total usage. Melban asked the board to create a task force with two of its members and a minimum of two ag district users and to meet before Oct. 1.

“I don’t think there’s enough time at that public hearing on Oct. 25 to really address some of the questions that we have coming out of the Raftelis report that we would like clarification on. But also to help identify some solutions that we really feel are viable for both parties,” Melban said.

RMWD Board President Bryan Wadlington responded that the Raftelis model, which was made available to the public, has been authenticated and verified through other agencies, so “we’re pretty well satisfied with the model and the way that it was handled.”

Also requesting further study of the untreated water rates were local growers Bob Hatch and Mike Dillon.

Eric Larson, executive director with the San Diego County Farm Bureau, noted Ramona has a robust agricultural community and the growers have done an excellent job of conserving water.

“I think there needs to be a partnership between the district and the growers,” said Larson. “...They want to buy more water, plant more groves and they can if this partnership can be created.”

Larson later told the Sentinel that a concern the growers have about the Raftelis untreated water rate is whether the firm considered the San Diego County Water Authority’s Special Agriculture Water Rate (SAWR).

“We just want to make sure the discount is passed through,” he said.

The board agreed to form an ad hoc committee with Wadlington and Director Kit Kesinger, as chair, serving on it. Larson said Hatch and Dillon will work with the directors, representing the ag community.

The board adopted the 2011-12 budget by a vote of 3-1 with Kesinger voting against it. Director Everett “Red” Hager was absent.

Wadlington noted that it is an “extremely lean budget.”

“We’ve held the budget flat for about two years,” said Barnum during his budget presentation. The operating budget totals $28,317,793.

Over the past several years, the district has faced declining cash balances and water sales, said Barnum. Since 1993 district personnel has dropped from 72.5 positions to 52.5, he noted, with a 10 percent cut in labor expenses in the past two years.

Property tax revenue has also declined. The district receives 4 percent of the property tax revenues, which is used to fund debt service, loans, capital improvement or replacement projects, and fire operations. That amount has decreased from $5.3 million in fiscal year 2008-09 to a forecasted $4.25 million for 2011-12.

“At some point in the future we may not have enough property tax to cover fire,” said Barnum.

Only critical capital replacement projects are included in the budget, he said.

The good news, Barnum noted, is RMWD has cut approximately $1 million from operating costs since 2007-08, the district has never reduced any services to customers, RMWD has paid off two of its long-term debts, and its cash position is improving.