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City Council rejects proposed water-rate increase; staff told to identify $20 million in cuts
Summary
On first reading council declined the water-rate ordinance proposed for FY26. Councilmembers and staff said rejecting the rate requires about $20 million in operating reductions, including possible elimination of 86 positions and cuts to maintenance and chemical treatments that could affect water quality and service.
Corpus Christi City Council on Tuesday rejected a proposed set of water-rate increases intended to cover rising operating costs and long-term debt, leaving staff to identify roughly $20 million in cuts to balance the utilities fund.
The council voted against the ordinance that would have raised rates for inside-city customers, wholesale and large-volume users and added a 75¢ charge for the first 2,000 gallons of residential usage. Andy McCartney, the consultant from NewGen who led the rate study, told the council the proposal was designed to meet the utility’s business needs, including debt-service coverage and operating reserves.
The rates presented would have raised the raw-water charge from $0.95 to $1.18 per thousand gallons, added a 75¢ charge on the first 2,000 gallons of residential use (a proposal the study team reduced from a $1 proposal after stakeholder feedback) and increased volumetric and minimum charges for several customer classes. McCartney said the changes reflected large upcoming raw-water supply costs and a three-year phase-in of stormwater legacy debt to spread the burden.
City Manager Peter Zanoni warned the council that rejecting the increase requires large, immediate service reductions. "We have to cut $20,000,000 out of the water operation to have a balanced budget," Zanoni said during the meeting. Nick Winkelman, director of Water Systems, presented an initial menu of possible cuts he said would total the amount: eliminating 86 positions (about 26% of CCW’s workforce), reducing maintenance-of-lines staff that respond to main breaks, ending permanent street repairs tied to water main work, removing some chemical treatments and pausing selected public outreach functions.
Winkelman described program-level effects rather than a single-line reduction: "Total positions eliminated would be 86," he said, and outlined that cutting certain chemicals such as potassium permanganate and sodium chloride could cause taste-and-odor changes and increase nitrification risk in the distribution system. He said fluoride—about $500,000 annually—could also be suspended; staff noted that fluoride is not a regulatory requirement but that removing it would draw pushback from the local medical and dental community.
Councilmembers pressed for alternatives. Councilman Roberto Hernandez and others asked for lower-rate options, such as a partial increase smaller than the consultant recommendation; Councilman Tony Roy asked staff to produce a “hybrid” option that combined some revenue with program reductions. Several councilmembers said line-by-line cuts (for example, trimming advertising, rentals or temporary services) should be explored before proposing layoffs.
Public commenters expressed concern about the effects of higher rates on residents and small businesses. Julie Rogers, speaking during the budget-related public comment, tied municipal priorities to service levels but emphasized household impacts. Multiple residents who addressed water rates said the increases would strain low-income households and local businesses.
After discussion the council did not approve the ordinance. Councilmembers directed staff to return with alternatives and a menu of program and line-item reductions as well as any smaller-rate options for the September 9 meeting. Zanoni and department staff said they would prepare materials that show the specific operational consequences of each option so council could weigh service, regulatory and fiscal impacts.
Why this matters: Corpus Christi utility customers face the prospect of either rate increases tied to rising supply and debt costs or significant reductions in service and maintenance, both of which have direct effects on public health, fire and business operations. Staff emphasized that some cuts could have regulatory or public-safety consequences and that debt-service obligations limit how much managers can reduce.
Next steps: Council instructed staff to deliver alternative packages (program reductions, line-item trims and scaled rate options) for council review at the next meeting; staff also said the Public Utility Commission appeal over outside-city customer rates remains outstanding and could affect ultimate billing and credits for some customers.
