Title
Preliminary 2026 Utility Operating Budget, Rates, and General Facility Charges
Recommended Action/UAC Deliverable:
Briefing only. No action requested at this time. Staff will present a briefing on the preliminary 2026 utility rates, general facility charges, and operating budgets for committee review and discussion.
Issue:
Review and provide input on the 2026 utility rates (including LOTT), operating budgets, and General Facility Charges (GFCs). The UAC will forward formal recommendations to the City Council in October for consideration during its budget deliberations in November/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 Utility Advisory Committee (UAC) annually reviews City utility finances, customer rates, the capital facilities plan and general facilities charges.
City Utilities provide critical public health and environmental services. These services are delivered through four enterprise-funded utilities: Drinking Water, Wastewater, Storm and Surface Water, and Waste ReSources (i.e. solid waste) as well as through Olympia’s partnership in the LOTT Clean Water Alliance for wastewater treatment. Each utility plays a distinct role in meeting community needs and ensuring regulatory compliance with state and federal agencies. City Utility responsibilities include:
• Delivering clean and reliable drinking water in sufficient quantity.
• Safely conveying wastewater to the LOTT Alliance for treatment and discharge.
• Managing solid waste and recycling systems for collection, diversion, and disposal.
• Reducing flooding risks, treating and protecting water quality, and preserving aquatic habitat.
These essential services protect Olympia’s neighborhoods, infrastructure, and environment, while also building resilience to changing climate conditions such as increased rainfall intensity and frequency.
The City Utilities are municipal enterprise funds that are self-supporting through customer rates and fees, with no reliance on general tax revenue. Conversely, Utility revenue does not support general fund programs. Utilities contribute to citywide overhead costs (e.g., building mortgage, legal, and executive services) and any year-end savings remain within the Utilities to support future operating or capital needs.
Proposed 2026 Rate Adjustments:
Staff will present proposed 2026 utility rate adjustments at the meeting, along with the summary of historical bi-monthly residential utility bill. The total 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 charges assessed on new development to reflect the financial value of the existing infrastructure and its benefit to new connections. For 2026 staff recommend:
- Drinking Water GFC: 5% increase, based on a 2022 financial analysis.
- Wastewater, GFCs: 5% increase based on a 2019 GFC update analysis.
- Storm and Surface Water GFCs: 5% increase based on a 2017 financial analysis.
- LOTT Clean Water Alliance proposes a 5% to its Capacity Development Charge (CDC).
Climate Analysis:
While utility budgets do not directly impact greenhouse gas emissions, they fund infrastructure investments that increase climate resilience by reducing risk and vulnerability to climate related issues.
Equity Analysis:
Utility budgets, rates and fees can disproportionately impact low-income and vulnerable community members. At the same time, utility services provide critical environmental and public health protection for all community members.
The City Utilities offer Utility Assistance Programs to mitigate affordability concerns. 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.
Potential burdens may include temporary construction disruptions or longer-term changes such as increased property values and associated tax or rent pressures. Potential benefits, burdens, and disparities are assessed during the initial planning phase of each project to:
- Minimize unintended harm
- Promote equitable distribution of benefits
Neighborhood/Community Interests:
City Utilities are foundational to community health, environmental quality, and livability in Olympia.
Financial Impact:
None at this time.
Final UAC recommendations on utility rates and charges will guide City Council budget decisions later in the year. Utility rates provide ongoing funding for utility operations and capital projects.
Attachments:
Proposed 2026 Residential Utility Rates
Proposed 2026 Residential GFCs and CDCs