Residents can expect an increase in their monthly bill for water, sewer, drainage, security and garbage collection services as the Community Services District begins work on its 2008-2009 budget.
"There will be cost increases on a lot of fronts, particularly when it comes to replacing reserves," General Manager Ed Crouse told the CSD Finance Committee Tuesday. "A rate increase is likely because I'm not sure we could ever cut enough. (The only question is) just the order of magnitude."
Director Bobbi Belton said she wanted to "look at some areas where we could cut and not reduce services to a great extent."
Last year the average monthly CSD bill increased about 10 percent when water, sewer, drainage and garbage collection rates were raised. Security rates remained the same.
Crouse said the committee will look at a draft version of the district's expenses for the next fiscal year at its March meeting. The committee will also receive a comparison of the district's rates with the city and county of Sacramento, Folsom, Elk Grove and Rancho Cordova.
One of the areas where costs have gone up is garbage collection, Crouse said. The contract with a waste collection company for the service includes a yearly adjustment for fuel, labor, tipping charges and other cost increases, he said.
Crouse said some issues that triggered large legal expenditures have been addressed and those costs will drop out of the budget. But there will continue to be consulting costs for the wastewater discharge permit the district is pursuing and legal costs for ongoing negotiations for a financing and services agreement with developers.
Once the agreement is signed, the negotiating costs will be passed on to the developers, although it's unclear when that will happen. "The developers said they weren't going to be moving forward with any of their projects in '08. They may consider moving forward with their projects in '09 ... and it may even slip till '10 or '11 or '12," Crouse told the committee. "I think part of the dialogue we're having now is that because of the economy everybody's taking a hard look. ... The housing prices have dropped substantially,"
"Is it worthwhile to continue spending legal money ... to sit and negotiate when nothing's going to happen for at least 12 months, 14 months, 20 months?" Belton asked.
Crouse replied that the developers "would like to sign something so they know with certainty these are the fixed costs ... and we're saying, ‘Why are we doing something now if it isn't going to come into effect until three or four years down the road? Why don't you come back when you're really ready?'"
Director Dick Taylor pointed out the expansion of the water treatment plant has to be planned ahead of time to meet the needs of new development.
"I don't want to give away the store if inflation goes up 8 per cent a year," Belton responded.
The district faces questions about income as well as costs. Belton said there is concern that the state will take property tax revenue from the special districts during the present budget crisis, as it did for two years beginning in 2004. The CSD raised rates and used reserves to compensate for the 80 percent cutback in property tax revenue. It was the first rate increase in years for the district.
The 2007-2008 budget projected $568,000 in property tax revenues and 10 new hook-ups, down from 60 to 100 in previous years.
Another factor that could affect rates is conservation pricing for water. The CSD board began holding workshops on setting rates that would encourage residents to cut back on their water use last year. The next public workshop is scheduled for 7 p.m. March 18 at the CSD Building.
The goal of conservation pricing is to reduce the amount of water used for irrigation by increasing the cost, Taylor said at the Finance Committee meeting.
"Do you think we would get people to conserve?" Belton asked.
"You do, but you don't get a big reduction. It's shown that you can raise it 10 percent and you'll only get maybe a 3 to 4 percent reduction in usage," Crouse said.
The district is required to provide ratepayers with 45 days' notice for hearings on rate increases.
Les Tyler resigned as director of administration Feb. 1, according to General Manager Ed Crouse. A recruitment effort is now underway to find his replacement. Tyler's responsibilities encompassed finance, accounting, human resources and information technology.
A temporary replacement has been hired and is working on the budget process, Crouse said.
Crouse will take Tyler's role as the district finance officer until a permanent replacement is hired.
Tyler joined the district in July 2006.
Director Bobbi Belton continued to pursue putting a measure on the November ballot "to see if taxpayers are willing to increase the ceiling on the security tax to pay for one additional patrol officer."
Residents have expressed a preference for more patrol presence in the community in CSD customer satisfaction surveys.
Belton suggested putting a measure on the ballot at the January board meeting and at this month's CSD Security Committee meeting. A two-third vote of approval would be required for the tax increase to pass. The cost of putting the measure on the ballot would be $5,000.
Belton asked that an accurate assessment of the cost of an additional officer be prepared for the March Finance Committee meeting. The increase is now estimated to be about $2 a month. "It has to be accurate," she said. She added that the vote would provide the board with "hard direction from our ratepayers."
Director Dick Taylor suggested raising the ceiling for the security tax to allow an increase of up to 10 percent a year instead of tying the vote to a specific dollar amount for a hire.
Belton disagreed, saying, "I think with our community to have to spell things out in black and white. ... I don't want to leave it open-ended."
The deadline for getting a measure on the ballot is 88 days before the election, according to CSD staff.