Metro Water Services presents 2026 operating budget increases, urges conversation on stormwater fees and long-term capital needs

Director Scott Potter, director of Metro Water Services, told the council that the utility’s proposed 2026 operating budget reflects rising commodity and service costs and that the only line the department can control directly is labor. “Labor and benefits account for 39% of our budget,” Potter said. He said other recurring costs — electricity, chemicals and repair — limit the utility’s flexibility and that staffing reductions would likely increase overtime in operating divisions.

Potter said the water side of the utility will treat and deliver about 9,000,000 gallons of drinking water over a 24-hour period, reclaim about 56,000,000 gallons of wastewater and produce about 100 tons of biosolids each day. He gave unit-cost examples: “for every gallon of drinking water that we deliver to a home, it costs our customers 0.006¢. So a hundred gallons of water is 60¢,” and “a gallon of wastewater treatment is 0.009¢.”

The budget request Potter presented includes an increase he described as $5,900,000 for commodities, electricity, chemicals and repair, plus an additional $8,000,000 tied to the pay plan, internal service fees, capital and insurance; he characterized the total operating increase for those two items as $13,900,000 and, with other debt-service and reserve adjustments, said the 2026 operating increase compared with last year was $19,300,000.

Potter summarized Metro Water Services’ financial metrics used in ratings calls: the utility’s emergency-and-reserve (E&R) fund has about 783 days of coverage against a target of greater than 500 days; senior debt-service coverage stands at about 2.8 (above a 2.0 target); debt-to-net-plant-assets is about 36% (target <55%); and capital cash financing equals about 49% of the annual capital improvement plan. He said the utility’s revenue-capture rate is roughly 99.8 percent and that those items were positively noted in recent ratings calls with S&P, Moody’s and Kroll.

On stormwater, Potter called the stormwater master plan “an epic undertaking” that is inventorying a countywide system that has not been comprehensively mapped. “We finished 19% of the county at this point,” he said, adding the department is shifting toward neighborhood- and region-level prioritization rather than street-by-street fixes. Potter said stormwater adjustments in the current request include roughly $230,000 for the E&R fund and about $831,000 tied to pay-plan/internal service fees and insurance; he did not present a single unambiguous total figure for the stormwater change in the transcript.

Council members signaled they are ready to discuss potential stormwater-rate adjustments. Council Member Johnston said she is prepared to begin the conversation about stormwater fees and warned that postponing infrastructure investment can force later, larger increases in rates or taxes. Council Member Bradford pressed for more active sewer-extension policy to support housing development in underserved areas; Potter said extending sewer at Metro expense would be a policy decision requiring new funding and likely rate changes.

Potter described long-term capital projects on the water side, including work at the Omohundro plant. He said a program now under way will take about 12 years to complete and that the design includes granular activated carbon (GAC) contact chambers for treating trace contaminants and the ability to add ozone post-treatment if needed. “We built a pilot plant in 2018…and the granular activated carbon contact chambers [were] the best option,” Potter said, adding that the plant’s rebuilt facilities will aim for extensive sustainability, including solar generation sufficient to run the plant. He said the project will also preserve and repurpose historic buildings on the site.

Potter emphasized constraints and trade-offs: water-infrastructure replacement at a 1% annual rate would cost roughly $90,000,000 per year, a level he said the current capital plan does not support; he also noted the utility’s residential rate structure remains progressive and that overall rates are below peer averages. Janine Reid, director of finance, told the council she expects rating-agency reports to be released on the 15th following positive rating calls.

Council members asked about customer impacts and capital prioritization, and Potter said the department will present planning and prioritization tied to master plans and the five-year capital plan. He repeated that staffing is the main lever the utility controls and urged that elected officials and the public consider the trade-offs between service levels and rate impacts.

Potter closed by noting that Metro Water Services operates and maintains more than 6,000 miles of water and sewer pipe, dozens of pump stations, and two plants that can operate off-grid, and that the department expects to continue bringing capital projects forward for council consideration.

A formal vote on the budget item was not taken during this presentation; council members directed staff to return with additional detail and signaled interest in scheduling discussions about stormwater funding options.