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.

Speaking at the March 18 board meeting, Finance and Administration Director Cecilia Min said 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 – and by the district’s efforts to rebuild reserves, rather than by any specific new development project.

At the end of her presentation, the board voted unanimously to mail the required Proposition 218 notice to district customers. 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. After further analysis and public input, the board may adopt lower rates before finalizing the budget in June.

Before the board voted, two audience members urged the board to take a middle-ground approach on the rate increase. (See "Middle Ground Urged on Proposed 31% Rate Hike").

Min spent about 1½ hours using a succession of slides and staff input to explain how she built the budget to cover an expected $2.5 million increase in costs in the upcoming year.

She told the board she abandoned the old budgeting method because the underlying accounting data were “full of errors and incomplete”: invoices were booked in the wrong periods, some lacked invoice dates and coding was inconsistent. Under those conditions, she said, she couldn’t responsibly project next year’s costs from last year’s numbers.

As a result, she “took a big U-turn” and adopted zero-based budgeting. She pulled 18 months of invoices, sat down with department heads and asked for each item: Do we still need this? How much do we need? From those answers, they built the new budget from the ground up rather than relying on last year’s flawed history.

Next, Min turned to market trends: the external forces driving costs. She cited a Consumer Price Index of about 2.8% for 2026 and generally assumed a 3% increase unless contracts dictated otherwise.

She highlighted health care as a major driver: CalPERS data showed an 8.26% premium increase for 2026, and over the last five years, health insurance had risen 8-10% annually, with Kaiser increasing 15.5% in 2023.

She also researched chemical prices, citing sector-wide data showing double-digit increases: from about 30% to more than 60% for some disinfectants, pH adjusters and corrosion control chemicals. According to the district’s own records, chemical expenses were already running about 82% of their annual budget line.

Min also noted that many Northern California water systems are adopting annual rate increases of roughly 6.7% to 9.7% to keep up with similar pressures.

Min then made the case that past district rate increases have not kept pace with these realities. She 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 about 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.”

Min also presented audited results for the year ended June 30, 2022, showing a $2.2 million loss. About $1.5 million of that was depreciation, but even after removing depreciation, the district still had roughly a $500,000 operating loss. There was no rate increase that year because of protests.

She also referenced a 2023 grand jury report that examined rate history from 2013-14 through 2021-22. The report found average annual increases of only 2.6%, with a compounded increase of 22.85% over eight years, and concluded the district’s rate increases had been insufficient.

Min stressed that this was an external finding, not her own opinion, and said it confirmed her conclusion that the district had been undercharging for its services for many years.

Min outlined several goals for the 2026-27 budget, saying it is intended not just to fund another year of operations but to fix structural problems in how the district manages its finances and infrastructure.

She said the budget aims to include realistic funding for emergency repairs so they are not repeatedly paid out of reserves, rebuild operating reserves toward a safer six-month level, strengthen accounting systems and complete overdue audits, and shift the district toward planned, long-range maintenance and capital replacement through a 10-year plan instead of reacting to failures.

With that context, she presented her proposed budget for fiscal year 2026-27. In total, she projected about $12 million in operating revenue against roughly $8.6 million in operating expenses and $4.2 million in general and administrative costs, for total expenses of about $12.8 million. That leaves a projected operating loss of about $515,000 before property taxes.

Min said property tax income will need to be used to close that gap and end with a modest net positive, though ideally, those funds would be reserved for building reserves and supporting long-term needs.

She then detailed increased costs across operations and administration. On the operations side, increases include higher chemical costs, additional lab testing, rental equipment for emergency repairs, and expanded funding for water main, valve, hydrant and drainage repairs to address aging infrastructure. She also included funding for employee training so staff can operate specialized equipment and respond more quickly to issues such as sewer spills.

On the administrative side, increases include election costs, strategic planning, communications, document management, a cloud-based accounting system, recruitment, insurance, legal costs, IT services, and rising health care and benefit costs.

Min also proposed increasing the monthly reserve contribution for water and wastewater from $16 to $21 per customer – a $5 increase – to help rebuild reserves.

She acknowledged the size of the increase but said it reflects the true cost of operating the system under current market conditions, correcting for years of insufficient rates documented by the grand jury and confirmed by audited losses.

Following her presentation, Interim General Manager Amelia Wilder asked the board to authorize mailing the Proposition 218 notices with the proposed rates, noting the rates cannot go up but can go down. The board voted 4-0 to proceed. Director Bill Gere did not attend the meeting.

Director Randy Jenco made a point of separating his vote on the notice from his position on the eventual budget. He said he would support sending out the Prop 218 notice, but warned, “I am not going to vote for a budget that shows security in black … has to take care of itself. And if we have less security, that’s the way it’s got to be, in my mind.”