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Brazos River Authority proposes $106/acre-foot system rate for FY26; warns of larger increases to fund major projects
Summary
The Brazos River Authority presented a preliminary FY2026 budget that proposes a system rate of $106 per acre-foot, recommends using rate-stabilization reserves to smooth near-term rates and projects sustained increases over the next decade to finance major capital projects including Bellhouse, Allens Creek and East Williamson County expansions.
The Brazos River Authority on Friday presented a preliminary fiscal year 2026 budget that would set the system rate at $106 per acre-foot and use reserves and debt to fund an expanding capital program.
In a presentation to the BRA board, Chief Financial Officer Michelle Giroir said the FY26 plan increases the authority’s operating budget for salary and benefits, includes a 2.5% employment cost index and a 3% merit pool, and anticipates a roughly 17% increase in health insurance costs.
The nut graf: The BRA’s financial model shows the authority will begin issuing debt next year to fund large projects and expects system rates to continue rising over the next decade, crossing $200 per acre-foot around 2034 under current assumptions — a projection staff said reflects construction inflation, project timing and the agency’s policy reserves.
Board members and staff discussed drivers of the increase. Giroir said long lead times and heavy demand for construction materials and skilled labor are pushing project costs higher; she said construction-sector inflation has outpaced CPI over the last five years and that concrete and pump lead times can be 18 months to two years.
Giroir said the draft budget assumes $33 million of debt issuance in 2026 and that the authority will rely on debt rather than reserves for most large capital projects going forward. She described a planned use of $6.6 million from the rate-stabilization reserve in FY26 to lower near-term upward pressure on rates, and explained that using those reserves will reduce the system rate in the short term but will require higher rates later to replenish funds.
Chief Executive Officer David Collinsworth and board members repeatedly emphasized the tradeoffs between holding rates steady and funding major long‑lived infrastructure. Collinsworth told the board that BRA’s dams and treatment plants are aging and that deferring major work would raise longer‑term costs and risks.
Staff outlined staffing changes and fees: the FY26 budget includes seven new full‑time positions (two placed in cost‑reimbursable operations so they do not affect the system rate) and a planned review of dozens of user fees (NSF fees, permit fees, hangar leases and others) with recommendations to the board in July.
The presentation projected the authority would begin FY26 with about $100 million in reserves, spend about $86–87 million on capital projects during the year and finish the year with roughly $50 million in ending reserves after issuing debt and covering operations.
Board members asked how the authority will communicate and justify rate increases to customers. Giroir and Collinsworth said staff are scheduling customer meetings in June to present the plan, the long‑range capital program and the asset‑condition rationale for phased rate increases. Giroir said the authority will work with bond counsel and advisors on timing and structure of debt issuance and noted that legislation under consideration could extend financing terms to 50 years for qualifying state projects, which would change modeled rates.
The board did not take a vote Friday; staff said the draft budget will return to the July meeting after customer outreach and final adjustments.
