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Manchester water utility projects $1 million shortfall in FY26 draft budget; board proposes 3% rate increase
Summary
At its April 24 meeting the Board of Water Commissioners reviewed a FY26 draft budget that shows expenditures outpacing revenues by about $1 million and discussed a proposed 3% rate increase starting Oct. 1, 2025; a final vote is expected in June.
The Board of Water Commissioners reviewed a draft fiscal year 2026 budget at its April 24 meeting and heard officials say expenditures will exceed projected cash inflows by about $1 million, leading staff to recommend a 3% rate increase beginning Oct. 1, 2025.
Board President Hamer opened the discussion as the director and finance staff presented a high-level budget summary showing total capital and operating expenditures of roughly $26.7 million and, after long-term debt, about $32 million. Staff said projected revenue, capital financing and transfers total about $31 million, leaving an approximate shortfall of $1 million for FY26 and a projected negative cash balance of about $504,000 on June 30, 2026.
The shortfall is driven by planned capital spending and debt-service obligations. Staff noted that every percentage point of rate increase on the water-usage and service-charge lines produces about $245,000 in additional revenue; a 3% increase would yield roughly three times that amount.
The draft budget includes a personnel line of about $7.1 million, reflecting full implementation of a compensation study referred to as the Evergreen program. Staff said that implementation will raise pay for many positions — in some cases by more than 10% for lower-paid roles — and that several union contracts will require further negotiation, with some contracts expiring June 2026.
Officials said the presentation at the April meeting was informational and that the board will receive a more detailed budget presentation next month, followed by a final budget vote at the June meeting. The presenters asked commissioners to review the materials and bring questions to the budget presentation, so staff can tighten the draft and reduce the projected deficit.
Staff emphasized the board’s intention to limit rate increases while meeting capital and debt obligations, noting prior practice of keeping increases modest. The director said the 3% assumption in the draft is intended to be conservative and to allow time to sharpen revenue and expenditure estimates before a final vote.
Looking ahead, staff said they will supply line-item detail at the next meeting, explain major drivers for increases, and model alternatives for closing the gap between expenditures and revenues.
