Item 25 - Public Hearing - Fiscal Year 2025-26 City Budget

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Assumptions (continued) The 2019 Water and Sewer Rate Study has not been incorporated into current or future financial projections, as its assumptions are no longer aligned with current conditions. Over the past two years, the City has not adopted any water or sewer rate adjustments, and as a result, actual revenues have gradually diverged from the estimates outlined in the 2019 Water Financial Plan Schedule. In the interim, a multi-year trend analysis was used to estimate revenues. On May 20, 2025, the City Council approved a service agreement to conduct a long-term financial planning and cost of service study for the Water and Sewer Enterprises. While no rate increases were assumed in the FY25-26 budget, it is anticipated that new rates will be adopted within the current fiscal year, with FY26-27 marking the first full year under the new rate structure. Completion of the Cost of Service Study will enable the City to more accurately define a scope, schedule, and budget for addressing major capital needs, including PFAS treatment facilities and other critical infrastructure improvements. ti d) 103