Water department seeks rate increases, expands CIP for wells and treatment as it outlines FY26 budget

The Department of Water Supply presented its FY26 budget and a proposed rate structure designed to generate roughly 10% additional revenue while protecting a lifeline level for low residential users.

Director Stoffel Bean told the committee the department is an enterprise fund whose revenues come from water fees and that the FY26 operating budget increases from about $83.2 million to about $91.5 million. The CIP request rises from approximately $23.8 million to about $45.1 million, with the added funding focused on water-source development (wells), treatment-plant filtration improvements, major storage such as the Kamoli storage project, transmission and dam safety work.

Key rate proposals discussed in the presentation and staff Q&A included an overall design to protect basic household water use while applying larger increases to higher-volume users: the residential four-tier proposal would hold the first (lifeline) tier at no increase, raise the second tier about 7.5%, the third tier about 15% and the fourth tier about 25%. The department also proposed a 5% increase for agricultural rates and a 25% increase for the hotel rate class. Director Stoffel Bean said the department's "mission is to find more water for affordable housing" while acknowledging source development takes years.

Department staff described major programmatic work in FY26: source development (wells that can take many years to permit and construct), treatment upgrades to improve filtration and handle turbidity events, a large storage project in Kamoli, coordination on reclaimed/recycled water funding with the Department of Environmental Management, and increased emphasis on water conservation and enforcement (two enforcement positions proposed). Staff said they expect to pursue FEMA, EPA, USDA and other grant funding for generators and projects and confirmed they are also pursuing a water development fund update and a consultant-led fees and water system master plan.

Committee members asked about a proposed desalination study and where brine disposal and electricity costs would factor; staff said a technical evaluation is complete and public outreach and site selection are the next steps but cautioned desalination projects have high energy and brine-disposal challenges. Members also pressed staff on the department's carryover savings, ability to deliver projects, and coordination with state permitting agencies; the department said CIP engineering staffing has improved and that consultants are helping deliver projects but conceded permits and state reviews remain a timeline risk.

Why it matters: water rates and capital spending affect household bills, development feasibility and long-term reliability — especially in West and East Maui where source constraints and drought risk are high. The committee flagged potential shortage triggers and the link between state decisions (streamflow management and declaratory rulings) and local shortage planning.

What comes next: staff will provide written responses to questions on revenue projections by tier, the status of specific projects (such as Kamoli filtration upgrades and Nahiku well progress), the status of grant funding requests, and a schedule for well development and project delivery. The committee also discussed outreach in advance of potential shortage-stage notices if drought conditions persist or state rulings limit diversions.