Llano City Council adopts phased water-rate increase after lengthy debate, 4–1

Llano City Council voted 4–1 to adopt resolution R2026-07, a phased amendment to the city's master fee schedule that raises water rates under a plan labeled 'scenario 6A.' The measure follows months of staff analysis and an extended public discussion at the Nov. 25 meeting about debt service, capital needs and rate design.

Finley, the staff finance presenter, told the council the utility (Fund 20) shows recent anomalies — including ARPA receipts and large capital projects — and that the water enterprise is projected to run a roughly $225,000 deficit in the current fiscal year under the baseline assumptions. “Even with an increase presented in scenario 6A, the city water revenue will be in a deficit to plan of approximately $300,000,” Finley said during the presentation.

Councilmembers discussed several rate scenarios that staff had modeled. One option labeled '6' would increase a monthly base charge by about $6 and was described as producing a larger effect on commercial customers. Scenario 6A was presented as a flatter alternative that reduces the relative impact on low-volume residential users while contributing to revenue. Councilmembers also debated a hybrid split that would phase the loan-repayment portion of the increase over two years; an initial motion to approve that split was defeated 3–2.

On the defeated split motion, a councilmember argued for a compromise to spread the loan repayment portion across two years so the immediate consumer impact would be reduced. Another member responded that the city cannot afford to indefinitely defer repayment of principal and that doing nothing could expose the utility to a much larger cumulative loss; one speaker cited a 'do nothing' projection as a multimillion-dollar shortfall.

After further exchanges about fairness between small residential customers and large commercial users, one council member moved to adopt scenario 6A and another seconded. The final vote was 4 in favor, 1 opposed. The council directed staff to monitor results, continue outreach to large users and return with updated financials; the motion carried with the city manager and finance staff to report back within the next one to two years.

What the vote does and does not do: The action amends the master fee schedule to implement the 6A rate structure as described by staff; it does not commit the council to specific future capital projects or grant approvals. Councilmembers repeatedly emphasized that the adopted plan is part of an ongoing monitoring process and asked staff to return with monthly or quarterly variance reports.

Next steps: Staff will update billing tables, notify customers of the new rates under the city's standard public-notice procedures and continue to present financial updates to council. The council also asked staff to pursue grant opportunities where feasible and to reassess rate impacts if major customers leave or conservation sharply reduces usage.

Sources: Council discussion and staff presentation during the Nov. 25 Llano City Council meeting. Quotes and attributions are to staff presenter Finley and councilmembers recorded in the meeting transcript.