City leaders are considering a 5% increase for water utility rates and 3% for wastewater for next year’s budget—and several budget cycles thereafter.
At the regular City Council meeting June 27, Grady Reed, a senior project manager with HDR Engineering, which the city hired to complete a rate study, recommended an average increase of about 4% combined water and wastewater utility rates for fiscal year 2025, and then similar rate increases for several years afterwards to address aging infrastructure and new growth.
“Where I see Taylor is, you are both trying to fund growth, but at the same time you have had an aging system,” Grady said. “So you are kind of being hit from both sides.”
The proposal would mean an average increase of $5.40 per month for residential users and $12.35 for commercial users per 5,000 gallons of water and wastewater for the total bill each month, Grady said.
Currently, Taylor’s rates of 65 cents for water and 72 cents for wastewater per 5,000 gallons, is second only to Pflugerville in terms of highest rates among 13 comparable communities in the greater Austin area, according to the study.
Grady said the study’s proposed higher water rates as opposed to those for wastewater are due to the need for the water utility to become more financially solvent on its own without relying on the wastewater revenues to subsidize costs.
“That’s just trying to catch up,” Grady said. “The wastewater has tended to do better from a financial standpoint when we look at the revenue coming in versus the expenses, while the water utility has struggled a bit. So this is just trying to get the water utility up where they are carrying their full share.”
Chief Financial Officer Jeff Wood said the rate study was needed, despite three others conducted since 2015 that led to significant increases, to further secure the utility’s solvency in the face of fast-paced growth.
“We thought we were pretty good after 2021,” he said. “And then Samsung (Austin Semiconductor) came along, so we did an update last year based on the projections for Samsung’s usage,” Wood said. “Those have continued to change as we go along. We have had some new growth prospects come into town or get discussed, so we thought it was prudent to do another rate study.”
The multibilliondollar South Koreanowned chipmaking fabrication facility is under construction in southwest Taylor.
“We want to make sure we are keeping the system financially sound, but at the same time, we are not charging more than we need to,” Wood added.
Elected officials expressed an openness to consider the recommendations of the study for next year’s budget.
“The average of water and wastewater was a 3.9% increase,” said District 3 Councilman Kelly Cmerek. “And our annual inflation is about 3.4, so basically the increase we are proposing is just a little bit above what the annual inflation rate is for the country as a whole. So it seems reasonable.”
District 4 Councilman Robert Garcia said part of the increases were due to the need to replace lead pipes in the system, which is required by the Environmental Protection Agency.
“That’s something that is out of our control because we have to follow the EPA guidelines,” Garcia said. “So that’s one of the reasons why we are having to conduct a rate increase.”
Safety is also an issue, the councilman said.
“We have so much infrastructure to replace,” he added. ‘We still have clay pipes out there. I want the community to understand. And obviously we still have lead pipes, and I am concerned about the safety of our community and getting rid of that stuff as soon as possible.”
