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Waterford council reviews preliminary FY2026–27 budget, hears staff warnings on reserves and utility rate hikes
Summary
City staff presented a preliminary FY2026–27 budget showing a $295,677 general-fund deficit, projected reserves of about $3.2 million (58%), a planned 25% water rate increase in March 2027 and multi-year wastewater increases; council gave direction to retain parks funding and to workshop project prioritization.
City staff presented the preliminary FY2026–27 budget at a council workshop, saying the general fund is budgeted to end the year with a $295,677 deficit and projected reserves of about $3.2 million, representing roughly a 58% reserve balance.
The presentation, given by Miss Hamilla, outlined revenues of about $5.3 million and planned capital and operating expenditures of about $5.6 million that together produce the projected draw on reserves. "We have budgeted 276,800 in capital items from the general fund reserves to be spent," Miss Hamilla said, and noted operating expenses are growing faster than revenues.
Staff highlighted major revenue sources — property tax, sales tax and the utility user tax — and said these three account for roughly half of general-fund revenues. The presentation included a chart showing police services consume about 54% of general-fund costs.
The council heard that the water fund will face a 25% rate increase in March 2027 (after an earlier increase on March 1, 2026) and that wastewater rates are scheduled to increase 3% this year with two additional consecutive 3% increases in following years. "Water in March 2027 will have a 25% increase," staff said.
On capital, staff reported roughly $6.3 million in planned citywide capital projects next year, including more than $2 million in water capital (a $1.2 million placeholder for a new well and $800,000 for waterline upgrades) and approximately $685,000 in wastewater projects (including biosolid removal and a $250,000 allocation for phase 2 sewer improvements). Staff said about $2.7 million in grant-funded street work is planned.
Council members pressed for priorities. One member said parks and ballfield improvements are highly used and should be a priority; another suggested the council could withhold the $250,000 parks allocation if necessary. Council ultimately gave direction to keep the parks allocation in the draft and to schedule a short workshop to prioritize specific park projects and fencing for baseball fields.
Staff also described other fund balances and constraints, including several restricted special revenue and capital funds and outstanding loans tied to legacy HOME program activity. During questions, staff said HOME funds are restrictive under HUD rules and require a local match to be used for homebuyer or rehab programs.
The council did not take a final vote on the budget at the workshop; staff sought direction for the draft to take into the final budget process. The next steps are a short prioritization workshop and later formal budget adoption proceedings.
