City's draft FY2026 budget includes 20% proposed water, 14% sewer rate increases; county approvals still required

Finance Director Mary told the commission the FY2026 recommendation includes significant proposed increases to utility user charges: "In the recommended budget, we will have proposed 20% increase in water rates and a 14% increase in sewer rates," she said during her presentation.

Mary said most of the water increase is intended to fund capital investment in the system rather than shift costs to property taxes. She explained that the city is following a commission-approved two-year plan to move water and sewer funding toward rate-based, self-supporting models rather than subsidizing those utilities with property taxes. "We made a policy decision to stop having property taxes support the cost of water," she told commissioners, citing past litigation and policy changes.

City staff explained what the increases mean for a typical user: Mary estimated the recommended water changes would add about $134 a year (about $11 per month) to an average residential bill, and the sewer increase would add about $146 a year (about $12 per month). The finance director said $1.03 of an example $1.49 water rate increase covered capital improvements, with other portions covering operating and maintenance costs.

The recommended budget includes a one-time general-fund transfer to shore up sewer reserves: a $546,000 transfer to the sewer fund was proposed to bolster its reserves. Mary noted that the one-time transfer amount may require adjustment because the city had just been informed of higher sewer charges from one of the county authorities; she told commissioners staff will adjust that transfer to maintain a balanced budget.

Staff repeatedly cautioned the commission that final sewer rates will be set outside the city by the Oakland County Water Resource Commissioners and that Great Lakes Water Authority and SACWA (South Oakland County Water Authority) increases upstream influence local charges. Mary said the county-level approvals and the county drain commission's final rate setting will occur in May and that the city will return with finalized rates after those bodies act.

Commissioners asked technical questions: one requested audit-level detail on the upstream water supplier cost increases and on why year-to-year water-consumption patterns fluctuate materially despite stable population. The finance director and city staff suggested several factors (weather, conservation, device adoption, telework patterns) and agreed to supply additional analysis to the commission.

Ending

Staff said the final water and sewer rates will be finalized after county and regional bodies set their charges; the commission will revisit the adopted rate schedule at the May meeting before final adoption of the city's FY2026 budget.