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DPW director and finance staff explain higher use of water/sewer net position; rate model update planned
Summary
Public works director Peter Rice and finance staff told councilors the increased use of water and sewer net position in FY26 reflects trued‑up consumption projections, a projected loss of a large wholesale customer and operating cost pressures; staff said a rate‑model review will start this summer.
Public Works Director Peter Rice and Finance Director Nathan Lenny addressed council questions about water and sewer finances at the May 28 work session, explaining why use of net position (fund balance) is higher in the proposed FY26 plan.
Rice said the city operates two water and two wastewater plants, maintains reservoir and wellhead protection and performs many functions in‑house (collection, tree audits, parking operations) that other communities contract. He argued the in‑house model yields operational benefits during emergencies and provides value beyond raw cost comparisons.
Finance staff explained the primary drivers for elevated FY26 use of fund balance on the sewer side: consumption projections did not realize the growth staff had previously budgeted, and the city may lose a large wholesale water customer (Anheuser‑Busch), reducing projected consumption. Lenny said the city reduced planned water rate requests from 6% to 4% in recognition of household affordability concerns, and that staff will update the rate model and present options to council this summer.
Why it matters: water and sewer revenues are consumption driven; lower than expected throughput reduces operating revenue and increases reliance on fund balance. Lenny said staff will bring a rate‑model update and options for addressing distribution of costs across year‑round and seasonal users.
Ending: staff committed to begin a rate‑model review this summer and hold work sessions with the council to present options; no final rate change was adopted at the May 28 work session.
