Courtney (staff member) presented the utility’s first draft of the 2026 operating budget on Oct. 21, saying staff will return next month with recommended edits and a final review. The draft assumes no rate increase for next year because the utility does not expect PSC approval of any pending rate case until late 2026 or early 2027.

Key budget assumptions and highlights presented by staff include:

- Operating revenues: A modest projected decline driven by a 2% assumed conservation-related consumption decrease; staff use actual consumption through September and budget October–December conservatively.
- Purchased water: Milwaukee Water Works' planned rate increase (estimated at about 7% starting in September) pushed purchased-water costs higher.
- Nonoperating income: A $4,000,000 grant award expected in 2026 was confirmed by staff and included in projections.
- Major expense drivers: billing software maintenance and cloud hosting, ongoing legal fees (including an active billing/contract dispute), a planned water-system master-plan model update, wage and benefits increases (a proposed 3.25% base increase for solid performers), and pension rate changes (WRS contribution rising from 6.95% to 7.2%).

Courtney said that when vacancies and partial-year savings in 2025 are normalized, the comparable increase for 2026 is about 4.4% overall for compensation and benefits; the utility’s target benchmark for total compensation increases is 5–7% over the market range (a benchmark set by prior studies). Commissioners reviewed larger items (all expenses over $250,000 or changes greater than $25,000) and asked clarifying questions about PSC assessments, credit-card fee recovery and multi-family metering incentives.

The commission did not adopt the budget at the meeting; staff will present a revised draft and final recommendations next month.