Rancho Murieta finance committee to send property-tax reallocation to board to cover utility losses

Rancho Murieta — Finance staff presented an audit update and proposed reallocating property-tax revenue to cover operating losses in the district’s utility funds at the Finance Committee meeting on July 9.

"The audits are expected to be done in three months," Cecilia said during the committee’s audit update, adding that if staff gives audit partner Ingrid requested materials by the following day, auditors could deliver a draft financial statement by the 14th. Cecilia presented unaudited preliminary financials for July–May and warned that bank reconciliations and beginning balances remain incomplete until the audit work is finished.

The staff presentation showed operating revenue running at about 89% of budget (the committee’s benchmark is 92%) and operating expenses at about 93% of budget. Cecilia said operating results before property-tax allocations showed a loss (reported in the presentation as "negative 772"), and that property-tax receipts have been used to offset those shortfalls.

To address those shortfalls, Cecilia proposed an amendment to the FY2023 adopted budget that would revise how property-tax revenue is allocated. "Staff recommends that the board finance committee approve an amendment to the adopted '23 budgets to revise the property tax allocation percentage," she said, proposing that property tax be reallocated to cover operating losses in the water, wastewater and solid-waste funds and that the final allocation be determined from the audited financial statements.

Committee members pressed staff on why the adopted budget had previously directed a large property-tax subsidy to security — roughly $414,000 in the FY2023 allocation shown in the adopted budget — while water and wastewater were running substantial losses (Cecilia’s presentation showed a roughly $1.7 million loss for water). Several directors said allocating large property-tax amounts to security produced an inflated security fund balance even as utility operations ran short.

Members also discussed budget coding that had obscured one-time costs, including capacity-purchase charges and emergency pump expenses; Cecilia said she had reclassified capacity purchase in the next budget and planned to move developer-related invoices out of operating codes and seek reimbursement from developers where appropriate.

After discussion, committee members directed staff to take the proposed property-tax reallocation amendment to the full board for consideration and asked that it not be buried on the consent calendar. The committee asked staff to provide a short presentation and to allow public input at the board meeting.

The committee did not take a formal vote on the amendment at the meeting. The committee adjourned after giving staff the direction to place the amendment on an upcoming board agenda.