Subcommittee recommends Santa Rosa Water’s $170.2 million 2026–27 budget to Board after presentation on rates, reserves and truck‑waste revenue

The Board of Public Utilities Budget Review Subcommittee voted to recommend Santa Rosa Water’s fiscal year 2026–27 operations, maintenance and capital appropriation requests to the full Board after a staff presentation and committee questions.

Director Burke opened item 4.1 and staff presenters outlined the package. Nick Harvey, Deputy Director of Administration, said the proposed total budget for FY 2026–27 is about $170.2 million, which includes capital, debt service and O&M; he said Santa Rosa’s share of the regional reuse enterprise is budgeted at roughly $58 million. Harvey told the subcommittee the budget assumes a 1.1% increase in water deliveries, that wastewater demand will remain flat, and that the proposed five‑year rate schedule includes roughly a 6% increase to water usage and fixed fees and about a 5% increase to sewer usage and fixed fees effective in the coming rate year.

Harvey described key cost pressures: salaries escalated about 4% systemwide, electricity costs in the regional enterprise are rising (about a 10% increase noted) partly because of CHP engine maintenance and higher energy needs for UV disinfection systems, and internal overhead allocations have increased while some external overhead allocations dropped because of general fund reductions. He said staff models a water purchase budget of about $23.6 million based on an anticipated delivery volume near 15,610 acre‑feet and an 8.21% wholesale rate increase implemented by Sonoma Water.

Harvey also summarized reserve positions and planned operating shortfalls: as of June 30, 2025, the water enterprise added about $5.8 million to undesignated reserves (bringing that balance to roughly $21.2 million), the wastewater enterprise added about $4.1 million (to roughly $19.0 million), and the regional refund reserve added about $7.5 million (to about $16.3 million). Under the current rate model staff showed planned operating gaps of approximately $6.5 million for water and about $6.9 million for local wastewater for the coming year.

Liz Hanley, Supervising Engineer for Asset Management, summarized CIP proposals: roughly $16.0 million for water (up from about $15.0 million the prior year, with reservoir projects the largest share), about $14.7 million for wastewater (sewer mains and trunks the bulk), about $13.0 million in regional plant infrastructure spending, and about $1.7 million for stormwater and creek projects (down from about $3.4 million the prior year).

A staff chart showed partner allocations and a regional refund reserve that generated nearly $7.5 million last year, in part because of strong truck‑waste program revenues. Harvey said the truck‑waste program was budgeted at about $3.6 million last year but collected about $4.7 million in actual revenues, which he described as a smoothing hedge for partner allocations.

A committee member asked staff for a clearer, single‑line presentation of total departmental revenues to match the $170.2 million departmental expenditure pie chart and objected to labeling that figure as "funding" (saying the word implied it was revenue rather than total expenditures). Staff said some pie charts omit capital or debt service by design and that revenue bars are shown by fund; staff agreed to consider a consolidated revenue display to improve clarity.

Another committee member asked whether Santa Rosa’s truck‑waste program is growing because the city is the cheapest or closest option in the region. Sean McNeel, Deputy Director, Environmental, said distance from generators is the primary driver, that Santa Rosa is competitively priced, and that staff will renew and complete a rate study and review the program’s fee structure. McNeel said the truck‑waste stream includes multiple types of high‑strength loads (including some dairy and brewery wastes) and that a large dairy processor that now routes processing to Santa Rosa represents a material portion of that revenue (staff estimated that processor contributes on the order of $2.0–$2.5 million annually to the program’s revenue).

Staff outlined the remaining schedule: a BPU study session on the O&M and CIP budgets (tomorrow per the agenda), an April subcommittee report and recommendation to City Council, City Council preliminary action on April 21 to permit partner allocations to be mailed before May 1, council budget study sessions in early May and final adoption at the June 16 public hearing.

A subcommittee member moved that the subcommittee recommend the Board of Public Utilities approve the fiscal year 2026–27 water, local wastewater, regional reuse, stormwater and creeks O&M and capital appropriation requests; another member seconded the motion. Secretary Mononttoya called the roll; Vice Chair Noni and Chair Wright were recorded present and voting. The secretary announced the motion passed unanimously with board member Barcelo absent.

The subcommittee adjourned after the vote; staff will take the subcommittee recommendation forward to the Board and then to City Council as scheduled.