Tampa Bay Water presents FY2026 budget; rate rises about 2¢ per 1,000 gallons

Tampa Bay Water officials presented the proposed fiscal year 2026 operating budget and capital improvement program to the board during a budget workshop on April 21.

Chief Financial Officer Christina Sackett told the board the proposed uniform rate for fiscal year 2026 is “slightly below $2.64 per thousand gallons which is an increase of about 2¢ or less than 1% from the current fiscal year.” She said staff plans to use $4,000,000 from the rate stabilization account and about $500,000 from the operating reserve to limit the rate change.

The budget, Sackett said, is driven by rising debt service after the agency issued $420,000,000 of bonds in October 2024 to fund roughly $580,000,000 in capital contracts. Debt service now accounts for roughly 43% of the agency’s total costs; total FY2026 costs were presented as $219,400,000 and the capital improvement program (CIP) estimated expenditures as $254,500,000.

Nut graf: The package puts most near‑term rate pressure on debt service tied to recent bond sales while using reserves to blunt the immediate uniform rate change. Board members pressed staff for detail on debt pacing, reserve balances and how potential water‑quality projects could affect future rates.

Sackett walked the board through how the agency divides fixed and variable components of the uniform rate, noting variable costs (power, chemicals) account for about 21% of the total budget and the fixed portion the remaining 79%. She said staff projects system demand of about 209,700,000 gallons per day, unchanged from the current fiscal year, and budgeted a variable rate near $0.61 per thousand gallons.

Board members asked detailed questions about debt planning and personnel costs. Commissioner Eggers asked how staff balances issuing debt now versus later; Sackett said the agency “looks out for the next 2 to 3 years” when planning debt issuance to avoid over‑borrowing for uncertain future projects such as PFAS treatment or next water supplies. When asked about the rate stabilization and operating reserve balances, Sackett said the rate stabilization fund would retain roughly $38,000,000 after the planned draw and the operating reserve would be about $6,900,000 after the $500,000 use.

Members also queried compensation and merit projections built into the budget. Sackett said the proposed budget includes a 3% cost‑of‑living adjustment and up to 3% in merit increases; the average merit paid in FY2025 was about 2.05%.

The presentation included a review of the CIP funding mix: staff said roughly 70% of FY2026 CIP spending is expected to be financed with existing revenue bonds (series 2022 and 2024), about $33,400,000 will come from Hillsborough County reimbursements, and approximately $18,500,000 is expected from grants and district cost share.

On water quality and potential future projects, board members and staff discussed both PFAS and total organic carbon (TOC) treatment. Warren Hogg and other staff described a range of potential water‑quality projects in the CIP and noted an ongoing pause in EPA rule activity; Sackett and others said potential PFAS projects could be large and might require additional debt if implemented. The board heard an estimate presented by staff that some PFAS‑related projects considered in recent planning could be in the hundreds of millions of dollars and, if funded with bonds, would materially increase annual debt service.

Cybersecurity funding was raised by board members during the workshop. Casey LaLamia, the agency’s IT director, said the agency has “a solid foundation” and that “my perception is it's increasing, and it's continuing to increase” when asked about the threat environment; he described investments to increase monitoring of operational technology and SCADA systems.

The board was told the budget process will include a public hearing set for May 19 and that staff will return to request formal approval of the operating budget and the FY2026 CIP after that hearing.

Ending: Tampa Bay Water staff provided documents and slides to member governments and said they will continue outreach to answer technical questions before the May public hearing.