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Lancaster council keeps water and wastewater rates unchanged; proposes 3% across‑the‑board pay increase and uses reserves for stormwater projects
Summary
City staff and consultant NewGen told the council the utility fund is in solid financial condition and recommended no water/wastewater rate increase for FY26; the proposed FY2025–26 budget includes a 3% cost‑of‑living adjustment for city employees, capital projects funded from reserves and a recognized shortfall in the stormwater fund pending consultant recommendations.
Lancaster City Manager Opal Mottem Jones presented the proposed FY2025–26 budget and said the city’s water and wastewater fund shows roughly $25 million in revenues against about $23.7 million in expenditures, leaving the utility in a healthy reserve position.
At the city’s Aug. 11 special work session, Chris Eckert of NewGen Strategies and Solutions said wholesale water purchased from Dallas is expected to rise about 3% year‑over‑year and Trinity River Authority wastewater costs are projected to increase around 14%, but that Lancaster’s current revenue, reserves and debt‑coverage position mean he was recommending no change to water or wastewater rates for the coming fiscal year. “Because of all of that, I am recommending to you no change in water and wastewater rates going into next year,” Eckert told council.
Jones said the city plans to fund several capital projects using a combination of reserves and impact fees rather than raising residential utility rates for FY26. She named two proposed water/wastewater projects in the packet: a 12‑inch water line along Sunny Meadow Road (approximately $2.7 million) and an 8‑inch wastewater extension along Blue Grove Road (about $1.3 million).
The city manager also described the stormwater fund as operating at a shortfall under current rates: staff projects roughly $2.9 million in stormwater expenditures versus about $2.4 million in revenue. Jones said the city has engaged Freese & Nichols to reevaluate commercial stormwater billing and will return later this year or early next year with recommendations. While those recommendations are pending, she said staff proposes using fund balance to proceed with two non‑grant stormwater projects to avoid further price escalation on projects currently in the queue for state grant consideration.
On employee compensation, Jones reminded the council that Lancaster went several years without cost‑of‑living adjustments and that the city has pursued a long‑term plan to move pay toward market. She presented a recommended 3% across‑the‑board cost‑of‑living adjustment for all city employees as part of the FY26 budget. When asked for the cost to civil‑service public safety positions, staff said the difference between steps only and steps plus a 3% COLA is just under $500,000 for police and fire combined.
Council members asked staff when wholesale pressures might force rate increases in future years; Eckert said it was difficult to be definitive but that increases in wholesale costs and growth variables make it plausible an increase could be recommended next year.
Next steps: council scheduled public hearings on the budget and proposed tax rate (proposed rate 0.59949 per $100 of assessed valuation) for Aug. 18 and Aug. 25 and will revisit the stormwater billing recommendation after the consultant’s work is finished.
