Budget

It is required, pursuant to Government Code Section 61110, to adopt a budget that conforms to generally accepted accounting principles before September 1 of each year.  The budget outlines anticipated revenue and expense for the year.  The Board of Directors adopted a Preliminary Budget on June 15, 2006, and a Final Budget at their regular Board meeting on July 20, 2006.

The 2006/07 consolidated fund budget represents a 40% increase from the 2005/06 adopted budget.  The bulk of this increase ($430,700) is due to property tax revenue and connection fee growth.  The budget is balanced on a consolidated level between operating income and operating expense.  The capital budget is funded by $184,700 in capital reserves and $58,450 in general reserves.  The major capital projects for fiscal year 2006/07 include the clearwell tank interior coating, adjustments to valves in certain roads in conjunction with the HROA road project, and wastewater perc beds discharge options.

The 2006/07 operating budgets represent growth in the staff level for continued service to an expanding Heritage Ranch.  The new Tract 1990 will come on line this fiscal year and include five new lift stations and a water booster station to service 221 residential lots.  The growth of Heritage Ranch will impact the District with higher operating costs.  Many of these costs are fixed and are not supported by revenue until new subdivisions are fully occupied by rate payers.

Below is a summary of our current year and highlights of next year’s budget:

2005/06 Year Budget

· Water and sewer operating income will end the year near the budget amount.

· Non-operating income will end the year above budget by 5%, due to an increase in property taxes but offset by reduction in connection fee revenue.

· Capital reserves revenue spending will be below budget by 60%, due to not completing the clear well tank project.  The project will be completed next year.

· Salaries and wages will be below budget by 4%. 

· Utilities will be under budget by 10%, due to the wet winter with low water demand and less energy needed for pumping.

· Maintenance and supplies will be over budget by 8% due to some unbudgeted emergency repairs to a lift station and higher cost for fuel and oil. 

· General and administrative expenses will be under budget by 1.5%.

 

2006/07 Year Budget

· Water revenue is projected to increase by 7% and sewer revenue by 5% due to the rate increase and new connections.

· Hook-up and connection fees are budgeted with a projection of 88 new homes with water connections and 78 new homes with sewer connections. 

· Personnel cost will increase by 22% because two new positions were funded.  One position is a new water treatment operator and the other is an office assistant. 

· Maintenance and supplies will increase by 14% due to small increases in most line items including chemicals, lab testing, fuel, meters and equipment maintenance.

· Depreciation funding is increasing to the 5^th year level of $297,500. 

· An additional $273,550 of income has been reserved for future capital projects.