Provo unveils $323.3 million tentative FY2026 budget; mayor proposes smaller water-rate increase after master-plan warning

Provo City officials on Monday presented a tentative FY2026 city budget totaling $323,326,393 and asked the City Council to tentatively adopt it, while proposing a smaller water-rate increase after a consultant warned that construction inflation is lifting long-term replacement costs.

The mayor and city staff told the council that a water master plan from Bowen Collins recommends higher water funding because of recent construction inflation and long-term replacement needs. The administration proposed a compromise that would increase water revenue by 2.5% this year instead of the 5% the council had been considering; the highest-consuming customer tier would see an average bill increase of about 9.9% under the new proposal versus about 18.5% under the larger increase.

Why it matters: Provo’s water system serves the whole city and staff said the master plan covers a 10-year implementation horizon and also models an 80-year lifecycle for planning purposes. The council’s choice on rates will affect how quickly the city builds a reserve for planned replacements versus relying on emergency repairs.

City leaders said the water division has recently been spending roughly $6 million per year on capital projects, and the master plan recommended adding roughly $65 million in new revenue over 10 years. Mayor (name not specified) told the council the administration had identified $1.1 million in annual water-division efficiencies that can be reinvested without a rate change, and that the city has secured $94.5 million in outside funding targeted to Provo water infrastructure. “Outside funding should always be our first choice. Residents’ pockets should always be our last resort,” the mayor said.

Public-works director Gordon Haidt, who summarized the consultant’s work, said the master plan does not call for replacing the entire system immediately but does recommend phased, planned replacements and higher funding to offset inflated construction costs. “This large increase is recommended as a function of the massive amount of construction inflation observed over the last few years,” Haidt said, reading from the master plan.

The administration emphasized the city has maintained water infrastructure well and cited inspections showing long-lived assets in good condition, including a 95-year-old tank inspected recently. Staff also described the difference between planned and emergency replacement costs and said the recommended approach favors planned replacement when feasible.

Process and next steps: The council voted to tentatively adopt the proposed city budget by a 6–0 vote with Councilor Christiansen excused. Mayor and staff said public hearings on the tentative budget will be held June 3 and June 17, and fuller technical briefings with the consultant can be scheduled at the council’s request.

Budget details and clarifications: John Borgett, the administrative services director, noted the tentative budget document is available on the city website and that the administration will email detailed materials and a bill-impact calculator. Staff said the consultant’s 10‑year scenario plus baseline spending would total about $125 million available for water projects if the study’s full rate plan were adopted; the administration says its combination of efficiencies and outside funding would produce about $163 million in investment over the 10‑year period if no rate increase were enacted.

Council action: The council’s tentative adoption of the budget does not finalize line-by-line appropriations; it puts the budget on the path to additional review and public hearings ahead of final adoption. Staff emphasized residents will have multiple opportunities to review the materials and ask questions at the June hearings.