The Community Services District is considering a "worst case" draft budget that would increase residents' monthly bill by 14.5 percent. The average monthly bill for water, sewer, drainage, garbage collection and security services is now $114.44 and would go to $131.08 for residents in the gated community if the proposed rate increases are approved for the 2008-2009 budget.

The increases are attributed to higher costs for salaries and benefits, workers compensation coverage, fuel and energy, chemicals, permits and costs associated with meeting regulatory requirements.

The draft budget proposals for rate increases go to the board Wednesday so the 45-day notice required for a rate hearing can begin by May 1.

"You have to build a worst-case budget and then spend 45 days fine-tuning it to get it back down, a collective effort of the board and the Finance Committee," General Manager Ed Crouse told the Finance Committee last week. "Once you set the rates, you can't raise them but you can lower them."

"I think we have to cut as close to the bone as we can before we come and ask (ratepayers) for a rate increase," said Director Bobbi Belton.

The 2008-2009 budget takes effect July 1.

The component rate increases are projected at 16 percent for water, 21 percent for sewer, 3.5 percent for garbage collection, 14 percent for security and 5 percent for drainage.

Crouse said an additional wastewater treatment plant position and $50,000 for training to optimize plant operations are included in the sewer rate increase "at least for budgeting purposes" as a response to recommendations in a plant operations audit.

The projected rate increase for security does not include adding a patrol officer.

"Security tax went to the maximum and drainage tax went to the maximum based on the new workers comp," Crouse said. The security tax is currently $21 a month for residents who live behind the gates. It would go to $23.89 in the draft budget, one cent below the maximum tax rate.

Crouse told the Finance Committee workers compensation insurance will increase from $72,000 to $122,000 in the new fiscal year. "All across the board our workers comp went up," he said. "It's all a function of wages and the employee classification. ... Workers comp claims can drive up your experience modifier, even if it's just one bad one. ... (The modifier) is the highest it's ever been."

The majority of disability claims have been in the Security Department, but "not by a substantial margin," Crouse said.

The district is required by law to balance operating expenses and revenues. The total revenue for 2008-2009 is projected to be $4,881,762. This includes $568,000 in property tax revenue.

After years of priding itself on not having rate increases, the CSD raised rates and used the reserves contribution built into the rates to compensate for an 80 percent state cutback in property tax revenue that began in 2004.

The reserves contribution was partially reinstated when the property tax revenue level was restored after a two-year suspension.

Since the state took the property tax revenue from the special districts during a budget crisis, CSD directors are concerned history could repeat itself in the current state budget crisis.

The cease and desist order on district water operations also took a toll on reserves. The CSD completed its responsibilities for the cease and desist order issues in January.

The average monthly bill went up about 10 percent in the current budget. A three-year projection puts the annual rate increase at about 5 percent in 2009-2010 and 2010-2011. A catch-up reserve contribution included in the three-year projection would, if enacted, push the 2008-2009 rate increase to 20.5 percent.

The district is unable to depend on a growing customer base to offset cost increases since no new development is expected until 2012, according to Crouse.

The proposed increases would bring security and drainage costs to their maximum tax ceilings. A two-thirds vote of approval in a district-wide election is required to raise the ceilings for the special taxes.

The budget discussions didn't include water conservation pricing, although the rate structure for conservation pricing will be made available for the board's consideration, Crouse said. The board has explored establishing higher rates to promote water conservation in a series of workshops, but hasn't taken action to implement the pricing.

Previous coverage of the budget process is available here.