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Committee reviews water and sewer budgets, hears lift-station design request and possible rate timing
Summary
Members reviewed water and wastewater utility budgets, discussed MMSD cost estimates, utility reserves and timing for possible rate increases, and considered design funding for lift-station upgrades that would be borrowed in later years.
The Germantown Public Works and Highway Committee reviewed the proposed 2026 water and wastewater budgets Wednesday and discussed near-term capital needs for lift-station upgrades and the timing of possible utility rate increases.
Why it matters: Water and sewer utilities operate on enterprise funds that must cover operating costs, depreciation and debt service. Decisions on rates and capital borrowing will affect utility reserves and may require future rate adjustments.
Staff told the committee that wastewater expenditures in the proposed budget were up roughly 7% compared with the prior year, primarily because of higher cost estimates from MMSD. Revised MMSD figures were expected to slightly reduce the increase, staff said. For the water utility, staff said they had identified roughly $500,000 in operating reductions, but salary, benefit and depreciation changes meant the water utility’s net position still reflected pressure in financial statements.
Matthew, the village finance director, said the water utility showed positive cash flow in 2024—"we had a cash flow of about $600,000"—but when depreciation is included the utilities are operating at an accounting loss. That operating-position detail will be part of deliberations by the Public Service Commission (or the village’s PSC-equivalent advisory body) if a rate increase is proposed.
Staff described current reserve levels: roughly $2.1 million in the water fund and $1.2 million in the sewer fund. Staff said the sewer fund’s balance equates to about a month to six weeks of operating costs and that the village would aim to grow reserves toward a multi-month target over coming years.
Committee members discussed timing for rate changes. Staff said a sewer rate increase was more likely in 2026, with water following in 2027 if needed, because the village implemented a water-rate step earlier this year and must monitor results before requesting another increase. The committee and staff emphasized that any rate changes would go through the utility-advisory committee before the board considered them.
Capital planning for wastewater includes design funds for Old Farm and Main Street lift-station upgrades in 2026, with construction planned for later years. Staff referenced an engineering study and said the design estimate was taken from that study; construction costs were expected to rise because the project’s construction would occur in 2027–28. Staff also reiterated that multiple procurement processes (RFPs) would be used for major contracts.
Committee members asked about specific capital contributions and reimbursements: water meters shared costs between water and sewer, and an earlier MMSD reimbursement for a private-lateral replacement in the Glenwood area was recorded in 2023–24 but is not expected to recur in 2026. Staff said they will continue to track possible low-interest loan programs and other funding sources for lift-station work.
Ending: Staff will continue to refine utility budgets and report back to the utility-advisory committee and the Public Works committee before any formal rate recommendations or borrowing are presented to the village board.
