Port Arthur council hears attorney general lawsuit background and a consultant— recommended 20% water-wastewater rate increase

Port Arthur City Council on Tuesday received a legal update and a rate-study presentation that underpins a proposed 20% water and wastewater rate increase for fiscal 2026. The city—s outside counsel and a rate consultant told council members the move is meant to address long-running operational shortfalls and to show progress to the Texas Attorney General, which filed suit earlier this year over sewage discharges.

NewGen Strategies partner Eric Kolokhia, who led the rate study presentation, said the utility fund is currently operating in the red. "At the end of this fiscal year it is forecasted that the utility fund will have an operating budget deficit of $5,500,000," Kolokhia said, and the study recommends a 20% increase in rates for 2026 plus future increases as needed to restore reserves and fund capital work.

Kolokhia said the study assumes the utility fund must be self-supporting and that recent transfers from the general fund to the utility fund will not be repaid through the new rates. He summarized the financial picture this way: the operating deficit is about $5.5 million and the capital shortfall about $8 million; the recommended rate action would eliminate the capital deficit and put the utility fund on a path to positive operating cash flow over three years while funding an initial $10 million of capital work.

The presentation tied the recommendation to affordability metrics the consultant used: essential indoor use was defined as 3,500 gallons per month and the firm measured burden for low-income households and compared local bills with statewide averages. Kolokhia said the 20% increase would raise the bill for that essential indoor use by about $14.87 per month and keep Port Arthur in the consultant—s "moderate-to-high burden" category rather than pushing it to the highest burden bracket. He said the city—s typical 5,000-gallon bill would still be roughly in line with statewide averages after the increase.

Council members and members of the public pressed city staff for detail during the public hearing that preceded the presentation. Citizens asked for clarity about senior discounts, meter-replacement plans and whether industry contributions reduce residents— burdens. Utility director staff and finance staff said a senior discount program remains available, noting seniors can apply online or via a paper form and provide identification to establish eligibility. City staff also told the council they expect to present a contract award shortly for new meters and an AMI customer portal that can alert customers to leaks.

City attorney Joseph De La Puente explained the legal context: the state—s attorney general filed suit in February alleging repeated sewage spills and permit violations. "What the attorney general wants is an order from the court requiring the city to do certain things to comply with environmental laws," he told the council. He said turning the city—s wastewater obligations into court-ordered requirements would shift enforcement and raise the stakes for demonstrable corrective action.

Kolokhia said the plan includes $3 million annually for emergency repairs and assumes issuing new debt to eliminate the existing capital deficit; he noted an additional minimum increase (estimated at roughly 5.7%) may be required in fiscal 2027 depending on capital commitments and litigation developments.

Mayor Charlotte Moses and several council members said they support acting now to address failing infrastructure. Several public speakers urged the council to consider affordability impacts on seniors and low-income households; council members noted the consultant—s recommendation increases the senior discount proportionally.

The council later passed an ordinance implementing the 20% increase as part of the budget measures on the meeting agenda. The vote on the water-rate ordinance was taken by voice and the motion carried.