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WSSC proposes 9.8% water-rate increase and 2.5% system-development‑charge rise; Montgomery Council splits on proposal
Summary
Transportation and Environment committee recommended support for a WSSC Water FY26 operating plan that would raise rates 9.8% and increase the system development charge (SDC) 2.5% for FY26; the full council recorded a 10–1 straw vote in favor of the operating rate and a unanimous concurrence on the SDC increase.
The Montgomery County Council’s Transportation and Environment (T&E) committee reported a 3–0 recommendation to support the Washington Suburban Sanitary Commission (WSSC Water) FY26 operating proposal that assumes a 9.8% rate increase and a 2.5% increase in the system-development charge (SDC) for FY26.
Overview and staff briefing: WSSC Water presented a FY26 proposed operating budget of $1,140,000,000, an $116,000,000 (11.4%) increase over FY25. WSSC’s presentation identified two principal drivers: an increase in "PAYGO" (pay‑as‑you‑go capital funding) — the utility proposed raising PAYGO by $42,400,000 to target roughly 25% of debt‑equivalent funding — and staffing and compensation needs, including 77 new positions (20 for enhanced services, 28 conversions from contractual services and the balance responding to regulatory requirements). CFO Tim Pim Saar and finance staff explained that the PAYGO shift would reduce the need for debt-financed projects over time and strengthen long‑term financial metrics.
Regional disposal and other costs: WSSC highlighted an adjustment in regional sewage disposal (charges from DC Water/Blue Plains) — WSSC recorded a FY24 settlement that increases short‑term costs by about $6,500,000 and raised the FY26 projection by $1,700,000; staff said those amounts would need to be absorbed or offset within FY26 resources.
SDC: For the SDC the utility proposed a 2.5% increase for FY26 after decades without adjustments; staff said a modest CPI‑style increase is intended to avoid issuing SDC‑supported debt in future years and to smooth the fund balance over a six‑year planning horizon. The T&E committee and county staff recommended concurrence with the 2.5% increase; the council voted unanimously in favor of that item.
Council reaction and vote: Council members expressed divided views about the overall 9.8% rate. Some members noted severe infrastructure stress and the recent winter spike in water‑main breaks (committee and utility staff cited a high winter break count). Others preferred a lower increase in line with Prince George’s County’s 9% spending cap and urged additional vetting of non‑rate revenue and PAYGO assumptions. During the full‑council session a hand/voice straw vote on the WSSC operating recommendation recorded 10 in favor and 1 opposed.
Why it matters: WSSC’s proposed rate path addresses aging infrastructure, rising contractual and regulatory costs, and a push to raise PAYGO to reduce future debt. Utility staff emphasized that delays in capital maintenance and replacement increase emergency repairs and long‑term costs.
Next steps: The Montgomery County Council and Prince George’s County Council will reconcile their positions at a bi‑county meeting. If both counties concur, WSSC moves forward with the approved budget and rate schedule; if not, staff-level negotiation and adjustments typically follow.
Ending: The council signaled conditional support for the SDC increase and recorded a split view on the FY26 rate request; the utility and councils will finalize a position at the bi‑county meeting Thursday.
