The Budget and Fiscal Management Committee received an extended staff briefing May 28 on the proposed 2026 sewer wholesale rate and a new 10‑year capital forecast for King County’s Regional Wastewater Treatment Division (WTD). Council staff and WTD reported that a sharp rise in projected capital spending, driven largely by regulatory projects tied to a modified combined sewer overflow (CSO) consent decree, is the principal driver of higher sewer‑rate forecasts.

Key figures and schedule: Jenny Giambattista, council staff, said the 10‑year capital forecast is about $11,400,000,000 — roughly $3,100,000,000 more than the prior 10‑year forecast. WTD staff reported that regulatory projects (largely CSO work) now represent a larger share of the portfolio; WTD’s estimate for CSO projects is approximately $5,300,000,000. The “Mouth of the Duwamish” program — a set of projects to control overflows from five CSO outfalls into the Duwamish River, including a wet‑weather treatment facility, storage tanks and new conveyance — contributed most of the change, with staff saying updated cost estimates added roughly $2,000,000,000 to the forecast.

Forecast uncertainty and cost accuracy: Staff cautioned that early cost estimates for large projects have wide accuracy ranges; WTD told the committee the cost estimate for the Mouth of the Duwamish project at this stage has an estimated accuracy of about minus 50% to plus 100%. Council staff said WTD updated its capital forecasting approach this year and staff are working with the division to better understand that methodology.

How rates are set and who pays: The sewer charge is a wholesale rate billed to local sewer agencies, not directly to individual households; the local agencies then set retail customer bills. By contract the wholesale rate must be adopted before July 1 each year. Andy Miklow, council staff, summarized capital funding: cash generated from rates and the capacity charge plus debt financing (revenue bonds and state/federal loans) fund the capital improvement program. WTD’s current cash funding target in the forecast is about 28% of CIP (a shift from a prior 40% target), with the remainder financed by debt; staff said the 28% target derives from an original‑cost depreciation method used to smooth rates.

Rate path and smoothing: Staff presented both a raw and a smoothed rate path. For 2026 the proposed wholesale rate is roughly in line with last year’s forecast (about a half‑percentage point higher), but the later years show much larger increases than previously projected. Table 8 in the packet shows a smoothing approach for 2026 that reduces a near‑term spike; staff warned that without smoothing the 2027 increase would be much larger — WTD estimated a 2027 pre‑smoothing increase of about 21.22% versus a smoothed projection of about 12.5%.

Regulatory drivers: The briefing spent extended time on the modified CSO consent decree (the county’s obligation to reduce combined sewer overflows). The consent‑decree modifications extended certain compliance deadlines and required larger projects in some locations; staff said the county, Ecology and EPA agreed to modify the decree and that the county adopted the modified consent decree last summer. Staff emphasized regulatory work and market costs (inflation, labor, materials) as primary drivers of the higher capital estimate.

Operational and staffing assumptions: WTD projects 2026 operating expenditures of about $249,300,000, a 9.5% increase from 2025; staff said operating costs rise thereafter as WTD assumes higher staffing levels to manage an expanded capital program and an aging system. Staff also said rate smoothing, debt decisions and cash funding targets are balancing tools used to reduce year‑to‑year volatility in rates.

Concerns, oversight and next steps: Numerous councilmembers and regional bodies pressed for more transparency, independent oversight and options for rate predictability and affordability. Councilmember Claudia Balducci, chair of the Regional Water Quality Committee (RWQC), summarized RWQC and MUPAC letters that urged improved engagement with contract agencies, independent oversight (for example, an oversight function similar to what was used for Brightwater), and multi‑year rate predictability. Staff and WTD agreed to return with more detailed information at the next BFM meeting, including district‑level impacts, the math behind residential customer equivalent (RCE) calculations, capital‑forecast methodology changes, and potential timelines for any code or contract changes.

What the committee did not do: The committee did not adopt the 2026 wholesale rate at this meeting; the item was discussion‑only. Staff told the committee the council must adopt the wholesale rate before July 1, and the committee expects to consider action at the next scheduled BFM meeting so the division can meet contract deadlines with local agencies.

Representative quotes from the briefing (verbatim): “It takes time to get through all of that. But I would note that I think it is on page 3 20 of your staff report... I call it the stacking effect,” said Cameron Grohm, Wastewater Treatment Division director. “Open up the hood. You see what we see,” Grohm added when describing the level of detail WTD has been sharing with partners. Jenny Giambattista, council staff, summarized the change: “The 10 year capital forecast, which is about $11,400,000,000 or about $3,100,000,000 more than the previous 10 year forecast.”

Timing: Staff said the rate must be adopted before July 1; council action on the 2026 rate is expected June 17 (or, if needed, June 24 as an emergency) to meet the contract deadline.