Public Utilities lays out FY26 operating and capital plan; managers warn of large pipeline renewal gap

Brock Bukey, director of Public Utilities, presented the department's FY26 budget: a $392.0 million package that includes roughly $218.0 million for operations, about $140.7 million for capital projects and $33.0 million for debt service.

Bukey highlighted planned water and wastewater capital projects, including a northwest recharge basin land purchase, biosolids-to-renewable-natural-gas pipeline work and upgrades at the city's wastewater treatment site. The solid-waste program will continue implementation of council-approved changes from Proposition 218 and a new annual curbside bulky-item pickup program starting July 1, officials said.

In a lengthy exchange with council, Bukey and staff warned the council that the department's current renewal-and-replacement spending is well below industry-recommended targets. Bukey said the utility's lifecycle replacement goal would be to invest roughly 1% of the system's asset value annually; based on earlier engineering work, water-system replacement spending is currently at roughly 0.15% of asset value, producing multi-century replacement cycles at present funding rates. That gap implies hundreds of millions of dollars of catch-up investment to achieve a safer, more modern replacement cadence, officials said.

Councilmembers asked for follow-up data quantifying the deferred-maintenance backlog and for scenarios that describe options to (a) increase annual R&R spending, (b) finance catch-up work by issuing bonds and (c) the potential impact on ratepayers. Bukey said staff will return with more detailed cost estimates and policy options.