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As schools, cities and counties throughout California lay off workers and cut basic services to close historic budget gaps, a little-known mosquito control agency based in Sonoma County is awash with cash.

The Marin/Sonoma Mosquito and Vector Control District started the budget year with more than $10 million in the bank. That figure far exceeds its annual operating budget of about $7 million, which is covered by the amount the district brings in each year in property taxes.

Remarkably, the size of the district's surplus grew by 50 percent during the economic downturn. In 2006, the district listed $6.7 million in unrestricted net assets.

The district is one of more than 50 mosquito and vector control districts statewide created to stop the spread of diseases borne by such pests as mosquitoes and ticks. A homeowner pays on average about $20 a year in property taxes to fund the agency, which is one of a growing number of little-noticed special districts that are coming under increasing scrutiny.

The districts operate with scant financial oversight, an issue that has prompted board members and critics to question the way districts spend taxpayer money, and which the state controller is tackling through legislation and increased reporting on a website.

Jim Wanderscheid, general manager of the Marin/Sonoma Mosquito and Vector Control District, said the $10 million is not a surplus. About $3.2 million is set aside to temporarily fund operations while the agency awaits its bi-annual property tax collections and about $3 million is earmarked for capital improvement projects, he said.

But Craig Hartzheim, a partner at the firm Moss, Levy & Hartzheim, LLP, which prepared the district's annual financial report, said the district has a $10 million surplus.

"If you're talking about all mosquito abatement districts, I don't think it's very unusual," Hartzheim said about the district's surplus. "If you are a school district, they usually have between 3 and 8 percent of their budgets saved as reserve. Cities have about 8 to 10 percent."

The Sonoma-Marin district's cash stockpile amounts to about 140 percent of its operating budget.

By comparison, Petaluma has an annual budget of about $32 million, faces a potential deficit next year of $4 million and has a reserve of about $240,000.

"Since I've been here, we've had a surplus each year," Wanderscheid said. "One of the reasons we have an excess is because we are conservative. We don't go out and buy something we don't need."

Not everyone on the district's board thinks its spending habits are conservative.

Board member Frank Egger, who served on the Fairfax City Council for about 40 years, questioned the generosity of early retirement packages for two employees that the board approved last month. The agreements boosted pension benefits for the retirees and cost the district an estimated $142,000.

Wanderscheid said the packages save the district money because the retiring employees wouldn't immediately be replaced. However, one full-time employee's responsibilities will be handled by a contractor.

Wanderscheid's proposed retirement package also was challenged because it included a payout of 100 percent of his unused sick days, which some board members said was too generous. In the end, that benefit was reduced.

"You spend money that you wouldn't normally spend if you didn't have a huge surplus," Egger said. "That's the problem. They don't know what to do with the money."

The agency's 35 employees enjoy benefits that include a $500 annual reimbursement for health-related expenses, such as gym memberships or purchase of bicycles. Upon retirement, employees can cash out 50 percent of their unused sick time.

The district this month selected a vendor to install solar panels on the roof of its headquarters in Cotati. The project will cost about $625,000, nearly a 10th of the district's annual budget, and it will be paid for out of the reserves.

Wanderscheid said the district is not overfunded, noting its basic property tax revenue — it has two types of property taxes — fell by about 35 percent during the recession.

But according to county tax data, that basic tax revenue fell by 5 percent, from a peak of $3.5 million in fiscal 2008-2009 to $3.3 million in 2009-2010.

Mosquito and vector control districts in California are required to file annual financial reports to the state Controller's Office.

According to data culled from those reports and analyzed by The Press Democrat, 51 mosquito districts together collected about $150 million from taxpayers in fiscal 2007-2008, the most recent data available.

That year, 42 of 51 mosquito districts took in on average 18 percent more than they spent. The Sonoma-Marin district was one of them, collecting $7.4 million in revenues and spending about $6 million.

Revenues have fallen since because of the recession, but the Sonoma-Marin district is poised to bring in more tax revenue this year than it did in 2007-2008, according to figures from Marin and Sonoma County's tax offices.

State Controller John Chiang is endorsing legislation to expand his office's authority to audit local government agencies, and his office has been publishing salaries of local officials on its website.

"We have no authority or oversight over local funds," said Hallye Jordan, deputy controller. "It's obvious there are problems; there is a lack of accountability and oversight."

The Sonoma-Marin district was among the first of its kind in California when it launched in Marin in 1915. It grew to include central Sonoma County in 1976 and in 2003 annexed largely western areas of Marin and Sonoma counties. The district spans nearly 2,100 square miles and responds each year to about 1,500 requests from the public, according to its website.

Funding comes from property taxes.

The district collects a standard property tax governed by Proposition 13 in much of Sonoma and Marin counties. It is based on the assessed value of the property.

In addition, the district collects a per-parcel amount that it calls a fee assessment on residences, a levy more commonly known as a parcel tax.

The basic property tax averages about $10 per year per household. Most property owners also pay a parcel fee/tax of $10.72 per household.

For those people who own property in the annexed areas, the parcel tax is about $20 per year per residence because they do not pay the district's basic property tax.

Because the parcel tax was adopted as an "assessment," voter approval is not needed to change the rate.

The district's board of trustees sets the rates in the two zones each year at a public meeting. It can increase them based on changes to the consumer price index, and currently is charging less than the maximum allowable.

The board has reduced the charges three times in the past 15 years but subsequently returned them to the previous rate.

"If we didn't need the money, we would have definitely lowered the benefit assessment," Wanderscheid said.

Egger said that since he joined the board in 2005, there have not been discussions among the board members about lowering the rate.

"It's almost like a rubber stamp operation," he said.

The district budgeted about $3 million this year for payroll expenses. Salaries for vector control technicians, who work in the field to identify and treat potentially harmful mosquito habitats, range from $60,000 to $70,000 a year, according to the district's website. A financial and benefits manager position pays about $94,000 and the district manager's salary is listed at about $150,000.

Aside from payroll and pesticides, Wanderscheid said one of the largest expenses of the district is publicity. This year, the district budgeted about $300,000 for publications and education to notify the public about pesticide activities and to teach children to spot potentially dangerous mosquito habitat.

Sebastopol Mayor Guy Wilson, who is on the district board, said the mission of controlling mosquitoes and vectors is important to public health, so a surplus is needed in the event of an emergency.

"I'm disinclined to think this is a problem where we would need to refund taxpayers," Wilson said. "If you're a taxpayer, sure, you're going to be thinking, maybe I shouldn't be paying quite so much on my parcel tax if the money's just sitting around somewhere."

Egger said he is trying to gain more clarity on the district's finances.

"These little independent public districts get no public scrutiny whatsoever," Egger said.

"I'm always trying to get those numbers squared away with the district, but it's tough, even being on the board. There's very little documentation that we get."

You can reach Staff Writer Cathy Bussewitz at 521-5276 or cathy.bussewitz@pressdemocrat.com.