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Hagerstown budget staff warn of water fund deficit, outline $16M+ in FY27 water capital projects
Summary
Staff reported a projected FY27 water fund operating deficit of about $3 million, a projected cash draw of roughly $14.4 million under current assumptions, and described major FY27 capital projects including Wilson Treatment Plant, Edgemont Reservoir and Zone Five improvements; wastewater projects include an $11.2M equipment package and a new lab.
City budget staff presented the FY2027 enterprise fund projections with a focus on water and wastewater.
On the water side staff reported that, using the revenue assumptions in the budget model prepared when departments submitted figures in December, the FY27 water fund shows an operating deficit of about $3 million and a projected cash decrease of roughly $14.4 million. Staff cautioned that those revenue estimates were based on the prior rate structure and that a new rate model and a proposed five-year rate plan (to be considered in the evening public hearing) will alter revenue projections.
Staff highlighted major FY27 capital projects in the water fund: roughly $2.1 million budgeted in FY27 for Wilson Treatment Plant work (blower replacements, Delpac storage tank replacements) with $10.5 million budgeted over five years; $5.1 million budgeted in FY27 for Edgemont Reservoir improvements (dam safety and a probable-maximum-precipitation emergency spillway) with $26.5 million over five years, and about $4.7 million budgeted in FY27 for Zone Five system improvements (tank and mains) with $8.1 million over the next two years and a noted $500,000 grant supporting study work.
On wastewater staff said FY27 service charges are projected at about $18.1 million and identified high-cost FY27 projects including $11.2 million for wastewater treatment plant equipment (electrical/pumping and nutrient removal upgrades; $10 million anticipated to be financed by MDE) and $3.05 million for a lab conversion at 1040 Frederick St. (shared water/wastewater lab), plus $3 million for solids processing facility improvements.
Staff answered technical questions about tap and connection fees: the tap fee for a 3/4-inch (residential) service was cited as $1,145 plus a $50 application fee, with additional benefit/allocation fees per-gallon that staff said were last adjusted in 2022; the current consultant recommended a 5% increase to the benefit fees. Staff emphasized that some user fees are set by ordinance while others can be adjusted administratively and said they would bring back more detail on connection and benefit fees.
Council planned a public hearing that evening on the proposed five-year rate plan and the tax rate; staff indicated some rate and fee changes will be introduced by ordinance while miscellaneous fees can be adjusted sooner by administrative order.
