Montgomery County PSA approves about 13% increases to water and sewer rates, adopts 2026 budgets

The Montgomery County Public Service Authority voted June 2 to approve a resolution setting new water and sewer rates effective July 1, 2025, and adopted the authority’s fiscal 2026 wastewater and water budgets.

The authority approved a proposed water rate increase of 13.87%, raising the charge from $14.42 to $16.42 per 1,000 gallons, and a proposed sewer rate increase of 13.27%, raising the charge from $10.55 to $11.95 per 1,000 gallons. The board also voted to adopt the fiscal year 2026 wastewater and water budgets during the same meeting.

Why it matters: the rate and budget actions affect customer bills and the PSA’s ability to meet debt-service and operating requirements. Staff attributed most of the increases to higher personnel costs, increased operations-and-maintenance expenses, higher purchase rates from a regional supplier and a new debt payment.

Staff outlined the drivers behind the increases. A staff presenter said water rate increases were “due primarily for salary expense increased due to 3% raise and off cycle increases, reclassification, promote license, etcetera,” and that O&M costs rose “due to an increase in water purchase volume and increase in purchase rate,” noting the authority is sourcing only from the New River Valley Regional Water Authority, which has a higher purchase rate than Radford and the Reiner Woodview wells. For sewer, staff said increases were driven mainly by salary expense and higher treatment volumes and treatment rates; fiscal-year capital spending also rose to fund the purchase of a new vehicle.

Board members asked detailed budget questions before voting. One board member asked whether staff had calculated a “budget neutral” alternative and pointed to apparent excess revenues; staff answered that facility fees and new connections were expected to increase, and that a debt covenant tied to a recent joinder project requires a minimum net-revenue-to-debt-service ratio that affected the calculation. Staff told the board facility-fee revenue was budgeted to increase from about $80,000 in the current year to about $180,000 in fiscal 2026 to reflect anticipated new connections.

Members of the public spoke during the hearing. A commenter who identified herself as Sarah Bond, District A, said she understood the increases but noted the contrast with the board chair’s public opposition to tax-rate increases: “I find it very interesting that the chair of our board is very against increasing tax rates And yet these rates are going up over 13%.” Another commenter, identifying herself as Sarah Baughn, District A, also addressed board communication and attendance concerns during public comment. Those remarks were part of the public-hearing record but did not change the board’s decision on rates and budgets.

The board moved and approved the resolution setting the proposed water and sewer schedule and adopted the wastewater and water budgets. Roll-call votes were recorded and the motions carried.

The authority’s financial report presented at the meeting showed operating cash of $3,689,021, capital improvements cash of $714,078 and customer deposits of $106,950, for total PSA cash balances of $4,510,049 as of May 31, 2025.

The board also held a closed session later in the meeting under the Code of Virginia, section 2.2-3711, for personnel matters and later certified the meeting’s conformity with Virginia law on return to open session.

Less critical details: staff said some revenue increases reflect developer facility fees recorded when subdivisions or developments commit infrastructure even when metered connections come online in later years. The board asked staff to provide clearer pre-meeting documentation in future rate hearings to show the specific drivers (for example, the joiner project and supplier purchase-rate changes) so questions can be addressed before the hearing.