Title
2026 Utility Operating Budget, Rates, Capital Facilities Plan and General Facility Charges
Recommended Action/UAC Deliverable:
Review staff’s briefing on preliminary 2026 Operating Budgets, proposed utility rates, general facility charges (GFCs), and capital facilities plans and provide recommendations to City Council
Issue:
The Utility Advisory Committee (UAC) is asked to review the preliminary 2026 utility rates (including LOTT), operating budgets, capital facility plans (CFP) and General Facility Charges (GFCs). The UAC’s recommendation will be forwarded to the City Council for review on October 20th and for consideration during Council budget deliberations in November and December.
Staff Contact:
Gary Franks, Public Works Waste ReSources Director, 360.753.8780
Mike Vessey, Public Works Drinking Water Utility Director, 360.753.8318
Presenters:
Same as above
Background and Analysis:
The UAC conducts an annual review of the City’s utility finances, customer rates, capital facilities plan, and general facilities charges (GFCs).
City Utilities deliver essential public health and environmental services through four enterprise-funded utilities:
• Drinking Water
• Wastewater
• Storm and Surface Water
• Waste ReSources (Solid waste)
The City also partners with LOTT Clean Water Alliance for regional wastewater treatment services.
Each utility plays a critical role in meeting community needs while complying with state and federal regulations. Core responsibilities include:
• Providing clean, reliable drinking water in sufficient quantity.
• Safely conveying wastewater to the LOTT Alliance for treatment and discharge.
• Managing solid waste and recycling systems by way of education and collection.
• Reducing flooding risks, improving water quality, and protecting aquatic habitat.
City utilities are enterprise funds, meaning they are fully funded by customer rates and fees. They do not receive general fund revenue, nor do utility revenues support general government services. Utilities contribute proportionally to citywide overhead (e.g., legal, executive, facility costs), and any year-end savings remain within the utility funds for future needs.
Proposed 2026 Rate Adjustments:
Staff presented the proposed 2026 utility rate adjustments at the previous UAC meeting, along with the summary of historical bi-monthly residential utility bill. The overall anticipated increase is approximately 3.74%. For 2026, staff recommend:
• Drinking Water - 3% Rate Increase
• Wastewater - 3% Rate Increase
• Stormwater - 7.5% Rate Increase
• Waste Resources 4% Rate Increase
• LOTT Alliance - 3% Rate Increase
General Facilities Charges
GFCs are one-time fees charged to new development to reflect the cost and value of existing utility infrastructure. For 2026 staff recommends the following increases:
• Drinking Water GFC: 5%
• Wastewater GFCs: 5%
• Storm and Surface Water GFCs: 5%
• LOTT Clean Water Alliance 5%
Capital Facilities Plan (CFP) 2026-2031 - City Utilities Overview
On September 5, 2025, staff presented the preliminary 2026-2031 CFP to the UAC focusing on the four City utilities. The 2026-2031 CFP aligns with the Utility Management Plans, which reflect the growth and development goals established in the City’s Comprehensive Plan. Overall, the plan anticipates sufficient funding from projected revenues to support the identified utility projects over the six-year period.
The UAC will be asked to submit a recommendation letter to the City Council, addressing:
• The 2026-2031 Capital Facilities Plan
• The 2026 utility budget & proposed rates
• General Facility Charges (GFCs)
Climate Analysis:
While utility budgets do not directly impact greenhouse gas emissions, they fund infrastructure investments that enhance climate resilience by reducing risk and vulnerability to climate related events.
Equity Analysis:
Utility budgets, rates and fees can disproportionately impact low-income and vulnerable populations. At the same time, utility services provide essential protections that benefits all community members.
To mitigate affordability concerns, the City offers two Utility Assistance Programs. Capital projects implemented by the three water-related utilities (Wastewater, Storm and Surface Water and Drinking Water) may both benefit and burden communities depending on location and design.
Staff assess potential impacts during the planning phase of each project to:
• Minimize unintended harm
• Promote equitable distribution of benefits
• Reduce construction related disruptions
• Avoid long-term displacement pressures (e.g. rising property values)
Recommendation
The UAC is requested to provide a formal letter of recommendation to City Council regarding the proposed 2026 utility operating budgets, rates, general facility charges, and capital facilities plans.
Neighborhood/Community Interests:
City utilities are fundamental to Olympia’s public health, environmental stewardship, and overall livability. Ensuring long term infrastructure sustainability aligns with a broader community values and goals.
Financial Impact:
Utility rates fund day-to-day operations and capital investments. UAC recommendations will inform Council decisions during City’s budget process and final budget adoption by end of the calendar year.
Attachment:
2026 Residential Utility Rates
2026 General Facility Charges and CDC’s