City utilities face $2.5 billion-plus deferred asset gap; staff says rate adjustments needed

City of Sacramento Department of Utilities staff told the Utilities Rate Advisory Commission on Jan. 28 that the city’s water, storm drainage and wastewater systems carry a combined estimated deferred asset investment in the range of more than $2.4 billion and that current revenues and one‑time gains are insufficient to address the gap.

Cheryl Hume, engineering and water resources division manager, described deferred maintenance as postponed repairs and replacements that push systems beyond recommended life expectancies and increase the risk of catastrophic failures and emergency costs. Hume said the department estimates roughly $832 million of deferred maintenance for the water system, about $364 million for the storm drainage system and about $1.3 billion for the wastewater system.

Kelly Sherfy, supervising financial analyst, told commissioners that fiscal year 2025 closed with stronger‑than‑budgeted results across funds but that much of the…