BLW presents preliminary FY26 budget with higher operating, capital spending; insurance litigation flagged

Marietta Board of Lights and Water staff presented a preliminary FY26 budget to the Budget & Rates Committee on April 7, describing year-over-year revenue growth and higher operating and capital spending while flagging insurance and litigation risks that could affect future budgets.

Staff said the adopted FY25 budget was $164,521,882 and that preliminary FY26 totals are approximately $172 million, reflecting increases driven in part by higher electrical and water costs. From a revenue perspective, staff reported roughly $7 million in additional charges for services and about $1.8 million in planned use of reserves. On the expenditure side, staff described about $500,000 in additional personnel costs, roughly $9.5 million in increased operating expenses and $5.7 million in higher capital spending. Staff also said depreciation will be budgeted this year where it had previously been recorded only in actuals.

The BLW capital program for FY26 was described as roughly $18.8 million, with an allocation breakdown that includes approximately $7.0 million for electrical projects, $10.5 million for water projects, $1.0 million for information technology and $300,000 for customer care. Major projects highlighted included relocation work tied to Rottenwood Creek Trail (about $1.25 million) and a sewer main replacement ($1.15 million), the Whitlock transmission main replacement ($1.75 million) and a CCTV truck budgeted at $450,000. Staff said some of the electrical capital will fund vehicle replacements to catch up with the city’s vehicle-replacement schedule.

Staff reported indirect cost recoveries of roughly $2.2 million from the general fund and said $1.7 million of reserves are planned for use. The presenter said there were no changes to full-time employee counts in the proposed FY26 budget, though salary savings of about $817,000 were included to reflect five current open positions. A 4% salary increase was described as “baked into” the numbers; staff said an additional amount for electrical employees remains under development and will be resolved before the final May budget presentation.

Committee members asked several technical and process questions, including whether an enterprise fund could adopt a calendar-year budget, how MEAG (Municipal Electric Authority of Georgia) projections are used in forecasting, and how year-end settlements and supplier price variability influence assumptions. Staff said MEAG provides a 10-year budgeting estimate and that the city uses those projections with internal adjustments.

Staff also briefed the committee on insurance and litigation concerns. The presenter referenced a Georgia case involving the City of Milton in which a judge allowed a verdict exceeding typical sovereign-immunity caps; the presenter said that verdict was reported at about $30 million and that the state legislature considered changing damage caps. Staff described a House-passed proposal that would have set higher caps (reported in the meeting as $3 million per individual and $5 million per occurrence) and said a Senate amendment that would have removed sovereign immunity for cities did not advance. Staff told the committee that higher statutory caps or an adverse court outcome could materially raise insurance costs; they estimated insurers could charge materially higher premiums if exposure rose, and noted the budget assumes a planning-level 20% insurance-cost increase for now.

No formal action was required on the preliminary budget; staff will present a final budget in May that will incorporate any committee direction and any changes adopted by the full board, including the committee’s wastewater-rate recommendation if approved by the board.