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Water Department requests $607.5M operating budget, outlines accelerated replacement and affordability work
Summary
Water Commissioner Randy Hayman presented a proposed FY26 water operating budget of $607.5 million, described accelerated water main and sewer replacement targets, loan and grant activity (including PENVEST applications), and steps to expand enrollment in the tiered assistance program (TAP).
Randy Hayman, Water Commissioner, presented the Philadelphia Water Department’s proposed fiscal year 2026 operating budget and explained increases driven by personnel, compliance, maintenance and vehicle replacement needs.
Hayman said the FY26 operating component of the water fund totals $607,500,000, an increase of about $71,000,000 (13%) over FY25 estimated obligations. He attributed the increase to class‑100 personnel costs (including hiring to meet regulatory compliance), class‑200 purchase‑of‑service costs for permit compliance and critical maintenance and class‑400 vehicle replacement.
Hayman described the scale of the system the department operates: three drinking‑water treatment plants, three water‑pollution control plants, dozens of pumping stations, roughly 3,200 miles of water mains, about 3,700 miles of sewers and more than 25,000 fire hydrants. He said the department is ramping replacement activity to combat aging infrastructure: over the last 29 years water‑main replacement averaged 19 miles per year and the department intends to increase that toward a goal of roughly 32 miles per year; sewer replacement historically averaged 7.8 miles per year and the department is increasing to 14 miles in FY25 with a plan to grow that by one mile per year toward 20 miles per year. Hayman gave per‑mile cost figures cited in testimony of about $5,250,000 per mile for distribution work and about $9,000,000 per mile for sewer reconstruction.
Hayman said the department applied for $951,000,000 in state and federal funding, has been approved for $941,000,000 in low‑interest loans and $4,800,000 in forgivable loans, and is pursuing $223,000,000 in grant applications (about $107,000,000 awarded so far). Councilmembers asked for details on how PENVEST (the Pennsylvania Infrastructure Investment Authority) funds would be allocated; Hayman said prioritization is based on infrastructure need and pipe age rather than specific neighborhoods, although two PENVEST‑funded lead‑replacement pilots totaling $9.9 million each target lead lateral removal in Kensington.
On affordability, Hayman said approximately 64,000 customers are enrolled in the tiered assistance program (TAP) and that the department is increasing outreach. Susan Crosby, deputy revenue commissioner for water, told council that auto‑enrollment pilots and administrative data partnerships helped expand TAP participation substantially: a LIHWAP pilot enrolled roughly 3,200 customers in late 2023 and subsequent administrative‑data auto‑enrollment added roughly 37,500 more customers.
Council members asked about reserves and rate pressures. Lawrence Yangeli, deputy commissioner for finance, said the rate stabilization (restabilization) fund had been above $200 million in 2017 and is now about $125 million; industry guidance cited in testimony recommends a fund balance on the order of 135 million and roughly a 363‑day cash target, while PWD currently maintains about 154 days of cash on hand. Officials said if a pending rate increase is approved it would replenish reserves but also that continued TAP expansion and other affordability measures reduce near‑term revenue.
Ending: Water officials committed to provide written details requested by council on PENVEST allocations, minority participation figures for bond financings, and follow‑up materials on reserves and rate scenarios.
