Item 07 - AW’s Proposed Fiscal Year 2026-2027 Operating Budget, Capital Budget,and 5-Year Capital Improvement — original pdf

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Proposed Budget 2027 Austin Water | July 29, 2026  AGENDA FY 2027 Proposed Budget Overview Sources and Uses of Funds Capital Improvement Plan Debt Management Minimizing Bill Impacts Ongoing Budget Considerations 2 FY 2027 Proposed Budget Overview Austin Water  Budget Overview & Highlights  2024 Cost of Service Study  Rate design for equitable cost recovery by customer class  Rates for water and wastewater services are self-sustaining  Public Involvement Committee (PIC) reviewed methodology and provided input  Extensive community engagement  Austin Water and Community Priorities  Phased rate increases FY 2025-2030  Prioritize affordability while investing in resiliency and reliability  Strong financial health and stable bond ratings, with industry-leading debt management strategies  FY 2027 Rate Impacts  Proposed average monthly residential bill increase of $7.76 per month  Customer Assistance Program average monthly bill increase of $6.96 per month 4  Fund Summary DESCRIPTION FY26 AMENDED BUDGET FY26 ESTIMATED FY27 PROPOSED BUDGET Beginning Fund Balance $289.0 $284.4 $288.1 Revenue & Transfers In $829.3 $840.3 $883.1 Expenditures & Transfers Out $863.9 $836.7 $899.8 Change in Fund Balance ($34.6) $3.6 ($16.8) Ending Fund Balance $254.4 $288.1 $271.3 FTEs 1,439 1,439 1,482 5 SOURCES & USES OF FUNDS 6 6  Sources of Funds Department Service Revenue: FY 2026 Amended: $761.8 million FY 2027 Proposed: $816.1 million $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 $390.4 $367.2 $398.4 $369.3 $3.6 $3.7 Water Services Wastewater Services Reclaimed Water Services FY26 Amended FY27 Proposed $21.7 $23.6 Miscellaneous Revenue 7  Uses of Funds Department Expenditures: FY 2026 Amended: $863.9 million FY 2027 Proposed: $899.8 million $400 $350 $300 $250 $200 $150 $100 $50 $0 $348.4 $358.6 $281.3 $293.1 $197.0 $208.8 $37.2 $39.3 Program Requirements Other Requirements Debt Service Transfers FY26 Amended FY27 Proposed 8  Significant Requirement Changes (in millions) Wages and Benefits Contractuals and Commodities • $4.3M increase for City-wide wage adjustment • $2.4M increase for City-wide market study adjustment • $1.2M increase for employee health insurance cost • $5.1M increase for 44 new FTEs • $2.4M increase for street cut repairs • ($1.1M) decrease for water conservation advertising campaigns • • • ($1.3M) decrease for water conservation commercial incentives ($2.1M) decrease for consultant contracts and other services ($7.4M) decrease for budget utilization adjustment Utility Billing System Support Capital Related Costs • ($0.6M) decrease • $11.8M increase in debt service requirement • $18.7M increase in CIP cash financing targets 9  Transfer Out to City Departments Transfers Out to City Departments (in millions) General Fund Customer Care Billing System Support Administrative Support Austin Technology Services Capital Delivery Services Economic Development Facility Management 311 Call Center Regional Radio System Emergency Operations (CTECC) Total FY 2026 FY 2027 Change $54.80 $23.22 $19.34 $6.69 $5.78 $4.38 $0.53 $0.44 $0.84 $0.03 $92.83 $58.14 $22.64 $20.08 $9.64 $4.36 $4.16 $0.65 $0.45 $0.38 $0.03 $97.89 $3.34 ($0.58) $0.74 $2.95 ($1.42) ($0.22) $0.12 $0.01 ($0.46) $0.00 $5.06 10  Proposed New Full Time Employees (FTEs) Overtime Reduction (Cost Neutral) Temp / Contractor Conversion New FTEs Total Strategic Goal Thriving Team Service Excellence Proactive Infrastructure Community Trust Next Level 12 3 7 3 2 7 5 2 3 Total 12 13 19 2 10 24 5 3 44 11 CAPITAL IMPROVEMENT PLAN 12 12  Capital Plan Funding $3,400 $3,200 $3,000 $2,800 $2,600 $2,400 $2,200 $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 $2,293M $1,869M $1,368M $1,088M $3,227M AW Priority $2,740M AW Strategic AW Participation AW Allowance AW Renewal FY22-26 Plan FY23-27 Plan FY24-28 Plan FY25-29 Plan FY26-30 Plan FY27-31 Proposed Plan 13  5-Year Capital Plan Highlights 2027 2028 2029 2030 2031 Total Water $145.6 $158.7 $178.4 $163.9 $147.2 $ 793.8 Wastewater 483.4 549.0 503.7 454.9 306.1 2,297.1 Reclaimed 22.7 30.3 31.5 19.3 32.3 136.1 s n o i l l i m Combined $651.7 $738.0 $713.6 $638.1 $485.6 $3,227.0 • Walnut Creek Wastewater Treatment Plant Expansion • Reclaimed Water System Improvements • Williamson Creek Wastewater Interceptor • Ullrich Water Treatment Plant Inherently Safer Disinfection • Southwest Parkway Elevated Storage Tank 14 DEBT MANAGEMENT 15 15  Debt Savings Achieved $740M Total Debt Service Savings FY 2016-2044*: $740M $81.5M $68.5M $33.5M $19.97 $16.78 $4.8M $39.M $0.1M $40.M $12.3M $38.M $50.6M $1.M $36.6M $24.M $12.40 $12.32 $8.21 $8.97 $10.73 $9.82 $320 $280 $240 $200 $160 $120 $80 $40 $0 ) s n o i l l i m n i ( e c i v r e S t b e D 50.00 45.00 40.00 35.00 30.00 25.00 20.00 15.00 10.00 5.00 - s g n v a S i l l i B e g a r e v A 2023-24 Actual 2024-25 Actual Current Debt Service Requirements 2025-26 Estimate 2026-27 Forecast 2027-28 Forecast Planned Defeasance savings (FY27-31) 2028-29 Forecast Defeasance savings 2029-30 Forecast 2030-31 Forecast Avg Bill savings *Total debt service savings includes saving for years prior to 2024 and after 2031 are not shown on the graph 16  Key Performance Metrics DESCRIPTION FY27 TARGET FY26 AMENDED FY26 ESTIMATED FY27 PROPOSED Debt Service Coverage (ratio) 1.85 1.89 2.22 1.98 Days Cash On Hand (days) 245 241 274 260 Cash Financing (%) 29.9% 36% 36% 23.2% (*) *Financial Policy Updated for FY 2027 Proposed Budget: Blended Target reflecting 20% for large generational projects, and 35- 50% minimum cumulative for all other projects. 17  Capital Recovery Fee Revenue $50.00 $45.00 $40.00 $35.00 s n o i l l i M n i $ $30.00 $25.00 $20.00 $15.00 $10.00 $05.00 $00.00 $13.7 $12.1 $30.6 $26.8 $9.4 $8.9 $9.1 $21.3 $19.9 $20.4 $5.4 $11.6 2021 2022 2023 2024 2025 YTD 2026 Water CRF Wastewater CRF 18 MINIMIZING BILL IMPACTS 19 19 Average Residential Bill Impact 2026 CURRENT 2027 PROPOSED CHANGE HOW MUCH PER GALLON WITH PROPOSED RATES? Water 5,800 Gallons Includes Water Reserve Fund Surcharge + Community Benefit Charge Wastewater 4,000 Gallons Includes Community Benefit Charge Total Bill $47.45 $50.49 +$3.04 $52.46 $57.18 +$4.72 $99.91 $107.67 +$7.76 Water is less than a penny $0.009 Wastewater slightly above a penny $0.014 20 Customer Assistance Program (CAP) FY 2027 Proposed Rates Monthly Average Residential Water Bill Comparison: Non-CAP vs CAP (5,800 Gals. Water and 4,000 Gals. Wastewater) Water Wastewater Combined Increase from FY26: NON-CAP $50.49 $57.18 $107.67 CAP $ DISCOUNT % DISCOUNT $23.29 $31.62 $54.91 $27.20 $25.56 $52.76 53.9% 44.7% 49.0% $7.76 $6.96 • Over 26,000 Residential CAP participants • Over 39,000 Multifamily CAP participants • Waived residential monthly water and wastewater fixed fees • Discounted residential volumetric water and wastewater rates • Multifamily CAP monthly credit $17 ($11 Water and $6 Wastewater) 21 ONGOING BUDGET CONSIDERATIONS 22 22 Ongoing Budget Considerations • Growing Capital Improvements Plan  Several large strategic projects on the horizon  Construction costs continue to rise  Continued debt management efforts • Capital Recovery Fee Revenue  Slowing development is impacting defeasance funding availability • Water Resources Management  Continue to monitor lake levels and inflows  GoPurple investment in reuse strategies to reduce potable demand  Rate design continues conservation focus  Water Forward supply strategies 23 Building Austin’s Water Future, Together. 24