Brazos River Authority adopts $95.7 million capital plan, sets system water rate at $106 per acre-foot for FY2026

The Brazos River Authority board approved its fiscal year 2026 annual operating plan and multiyear capital improvement plan during its July 28 meeting in Waco, adopting a $106 per acre-foot system water rate and a $74.20 per acre-foot agricultural rate for 2026. The board also authorized the general manager/CEO to make expenditures and enter contracts as listed in the approved budget.

The vote adopted a total FY2026 operating budget of $93,597,865 and a capital budget of $95,682,000 across water supply and cost-reimbursable business lines. Chief Financial Officer Michelle Gerois told directors the authority expects to begin the year with about $105 million in reserves, to issue $33 million in debt, and to end FY2026 with about $53.5 million in reserves after planned capital spending.

Gerois said operating and maintenance costs are projected to rise only about 1% from FY2025 to FY2026, with the largest expense categories being salaries and outside services. She said assumptions include a 2.5% employee cost index increase, a 3% merit pool, and a roughly 17% increase in health insurance costs. The Brazos River Authority—s share of O&M for federal reservoir storage for 2026 is projected at $5.4 million, about $500,000 less than FY2025.

On revenues, Gerois said system-rate water sales account for nearly half of the authority—s revenue. Interest income is expected to decline by about $700,000 as cash reserves are spent on capital projects and interest rates are forecast lower next year. Treated water sales from the East Williamson County facility are expected to increase by about $588,000 because of higher demand.

The board resolution authorizes the general manager/CEO to make adjustments in individual line items so long as total spending does not exceed the total authorized for each operating division. The resolution also adopts a methodology for quarterly or monthly payments that applies a multiplier to recover lost interest plus a $20 per-invoice administrative service charge; it sets an annual interest rate of 4.5% (daily rate 0.0123288%) for installment payments.

Directors asked questions about bond covenants and debt coverage. Gerois said the authority maintains a 1.3 debt service coverage ratio in board policy to help secure favorable bond rates; she noted some bond covenants require only a 1.1 ratio. Director questions also touched on refunding opportunities if market interest rates decline; Gerois said staff continually evaluates refunding opportunities.

The board voted to adopt the resolution (motion by Director Henderson; second by Director Crone). The motion carried and the resolution was approved.