Emporia proposes 20% water and sewer rate hike as utility fund faces debt and major sewer repairs

Emporia Finance Director Alicia Hargrove presented the proposed FY2026–27 Utility Fund budget at the City Council budget work session on April 21, 2026, proposing a 20% increase to both water and sewer rates effective July 1, 2026. Hargrove said the increase would raise charges-for-service revenue from about $4.97 million to $5.26 million and, combined with other receipts, produce total proposed utility revenues of $11.82 million.

Hargrove summarized the proposed tiered rate schedule and said a typical minimum-bill customer would see a monthly increase of $11.81 — $5.74 for water and $6.07 for sewer — if the council approves the change. She framed the budget under the theme “Difficult Decisions Today to Ensure Reliable Utility Services Tomorrow.”

Councilman James C. Saunders questioned the water revenue projections, noting the FY2025–26 adopted budget included roughly $2.6 million in water sales while year-end projections were near $1.8 million, and said he would have difficulty supporting the budget without a clearer explanation of the assumptions. City Manager William E. Johnson III and Hargrove offered to meet with Saunders and other members to walk through the calculations and to prepare an analysis using anticipated post-refinancing debt payments.

Hargrove reported the proposed budget is balanced at $11.82 million but that one-time capital and short-term borrowing account for a significant portion of the increase; she said operating expenditures decline when those items are excluded. The projected debt-service coverage ratio is 2.27 compared with 3.02 the prior year, calculated without including the one-time large payment expected to be refinanced.

Treasurer Karen A. Taylor outlined persistent collection challenges, reporting delinquent inactive utility accounts totaled about $496,000 through March 2026 and had fallen to roughly $479,000 amid collection efforts such as state tax intercepts and liens. Taylor recommended Council consider amending the City Code to require customers on the cutoff list to bring accounts current before service restoration and to increase deposits (the current deposit is $150; she noted neighboring localities often require deposits around three times the minimum monthly bill, roughly $300).

Director of Public Services Melvin Prince reported that recent video inspections by Red Zone Robotics show serious deterioration across the sewer system, including sections with missing pipe and sewage discharging into soil; he warned that temporary repairs would not be sufficient for long-term viability. Building Official Mike Allen added that the Virginia Maintenance Code requires occupied structures to maintain utility service and that prolonged loss of water could lead to enforcement action.

Johnson summarized staff's position that while the Utility Fund budget is balanced without a direct General Fund subsidy as presented, the fund remains strained and will require improved collections, possible rate adjustments and planned infrastructure investments to maintain reliable service.

The council did not take a final vote; staff will provide additional revenue-assumption detail, a post-refinancing debt analysis if requested, and legal/ordinance language for any proposed changes to collection or deposit rules before future budget sessions.