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Llano council debates water-rate scenarios, funding and use of interest earnings under proposed master-fee change
Summary
At a Llano City Council meeting, staff presented proposed changes to the master fee schedule and multiple water-rate scenarios (including "scenario 6a"), prompting extended debate over deficits, capital planning and whether to use interest earnings to service debt; no final rate vote was taken.
City manager Finley briefed the Llano City Council on a proposed resolution (R2026-07) to amend the master fee schedule and walked council through several water-rate scenarios, including a staff-recommended "scenario 6a." Finley said the base charge for city customers had been reduced in the proposal and that scenario 6a would yield about $2,355,000 in revenue, though council members warned that the utility would still face deficits under some options.
Why it matters: Council must balance keeping water affordable for low-tier customers with the utility's legal obligation to cover debt service and operations. Council members repeatedly pressed staff for clearer figures on total revenue, total expenses and the schedule for capital projects before approving any rate change.
Finley, the city manager, summarized the rate structure and its projected effects, saying the administration had "basically reduced the base charge, of $6.82 per meter for city customers" and that the scenario reflected interest earnings applied to debt service to help the budget. Council member S8 (speaking from the dais) warned, "as of today, we're losing money in water, and we're losing money based on these rates as a utility fund as a whole," urging a holistic review of total revenue and expenses.
Council members asked for updates on related projects that affect long-term costs. Questions included the status of a contract with LCRA and the permitting and contracting options for river dredging. A staff response noted that the drought contingency plan and a related water plan were still being finalized, and that the Collier contract for dredging had expired; any dredging would require new permitting and possibly a new contractor.
Several members pressed staff not to assume grants or future state funding. One council member cautioned against immediately using interest earnings to repay loans without secured funding for the full scope of necessary repairs, saying the roughly $7,000,000 cited for initial work appeared insufficient once engineering, project management and permitting costs were included.
What the council asked staff to do: Members asked staff to return with a simplified multi-year income/expense statement (total revenue and total expense across utility operations, not just water) and clearer capital-timing assumptions so the council could better compare rate scenarios, potential savings, and alternatives to rate increases.
Outcome: The item remained a discussion; no motion to adopt the resolution or to set new water rates was recorded. Staff were directed to provide more-detailed financials and to return for further consideration at a subsequent meeting.
Sources: Presentation and Q&A led by City manager Finley; comments and questions from multiple council members during discussion of agenda item 3 (master fee schedule).
