RANCHO MURIETA, CA (MPG) - Average residential utility bills behind the gates in Rancho Murieta  –covering water, wastewater, drainage, solid waste and patrol services – could jump by about 31.5%, or roughly $92 per month, under a preliminary Rancho Murieta Community Services District budget proposal.

Finance and Administration Director Cecilia Min told the district’s Finance Committee on March 12 that the average residential bill would increase from $292.11 to $384.18 under the proposed 2026-27 budget. The district currently serves about 2,917 service connections in Rancho Murieta, though rates vary by property type.

The proposed increase is driven largely by rising operating and administrative costs – projected to increase by about $2.55 million next year – as well as the district’s effort to rebuild reserves, rather than by any specific new development project.

Proposition 218 Notice

Committee members asked numerous questions about the cost increases, but ultimately agreed to forward the draft budget and rate structure to the full board for review at its March 18 meeting before staff mails the required Proposition 218 notice.

The notice – which must be mailed by March 31 – informs property owners of the proposed increase and establishes the maximum rates the board could adopt. Final rates may be lower but not higher.

Min stressed that the draft was not the final budget.

“This is a proposed budget. It’s not approved. It’s a draft, and the actual budget that we will be confirming is going to be in May and June,” she told the committee. “So this is just a proposal. Everything can still be changed, and this is for the purpose of finding out what our rate should be.”

Over the next two months, staff expects to receive more precise figures on items like insurance, including dam and levee coverage, and other major contracts, and will continue refining the numbers before the board adopts a final budget.

Zero-Based Budgeting

Min also explained why she used zero-based budgeting this year instead of the traditional “last year plus a few percent” approach. Prior budgets were built on incomplete and error-prone financial data, she said, with inconsistent account coding. Many invoices were recorded when paid rather than when the cost was incurred, distorting month-end and year-end financial results.

Because of that, Min said she and her team started from zero, creating a new budget by reviewing the last year and a half of vendor invoices to determine which expenses would be needed next year. She said the ground-up approach, though labor-intensive, was necessary to avoid simply rolling forward past mistakes and underbudgeting key costs again.

Min said most of the increase is driven by sharply higher operating and administrative costs. The draft budget also adds three new positions and increases the monthly reserve contribution for water and wastewater from $16 to $21.

“I’m proposing a $5 increase because we do need to prop up our reserves,” she said.

Operational Costs

On the operations side, Min pointed to sharp increases in chemical prices, more frequent emergency repairs, and the need to rent equipment such as vector trucks, bypass pumps, generators, and excavators to maintain the district’s aging water, sewer and drainage infrastructure. Rising costs for mandatory laboratory testing and upgrades to the district’s SCADA control system are also contributing to higher expenses. Additional maintenance parts, tools, staff training and licensing requirements are further driving up operational costs. The estimated increase totals $1.644 million.

Administrative Costs

On the administrative side, Min cited major increases in insurance premiums – including new coverage for dams and levees – as well as higher retiree and benefit costs, including retiree benefit obligations and employee health plans that turned out to be far greater than earlier budgets assumed. She also pointed to increased legal and compliance expenses related to water rights, developer agreements and facility service agreements, as well as governance costs, including the upcoming board election and training for new directors.

Additional expenses include a long-delayed strategic planning effort and upgrades to administrative systems, including moving the district’s Great Plains accounting system to a cloud host, adding backup internet service, and cleaning up and digitizing decades of paper records. Altogether, administrative costs are projected to increase by $890,831.

Min again emphasized that the Prop. 218 notice will show the maximum potential rate – the legal ceiling – not a guaranteed final rate, and that as better cost information comes in over the next two months, the board will still have the opportunity to reduce rates or adjust line items before adopting the final budget and rates in June.

Past Rate Increases

Min said earlier rate increases were too modest and did not keep pace with rising costs, forcing the district to rely more heavily on property tax revenue to support operations rather than building reserves for future infrastructure needs.

She also showed a graphic indicating that the average residential water bill rose from about $209 per month in 2021 to about $283 in 2025, an increase of roughly $73, or 35%,  over five years.

“Across the water utility sector, costs have been rising for several years, yet typical rate increases have been only $20 to $30 per month,” Min said. “Those increases don’t even cover health plan premiums alone. … So if we continue to do a 3.5% increase, we’re never going to balance our budgets.

“These rising costs are not just affecting us; every utility in Northern California is going through the same thing,” Min said after the meeting. “We can’t run a deficit. We can’t skip needed repairs.”

Finance Committee

The Finance Committee is made up of Board President John Merchant, Director Bill Gere, Director of Finance and Administration Cecelia Min, Interim General Manager Amelia Wilder, Interim Operations Manager Travis Bohannon and other staff. The committee reviews financial issues in depth and reports its recommendations to the full board.