Title
Briefing on the Preliminary 2027 Utility Operating Budgets, Capital Facilities Plan, and General Facility Charges
Recommended Action
Information only. No action requested.
Report
Issue:
Review the preliminary 2027 utility operating budgets, 2027-2032 Capital Facilities Plan (CFP), and General Facility Charges (GFCs).
Staff Contact:
Gary Franks, Water Resources Director, Public Works Department, 360.753.8780
Mike Vessey, Drinking Water Utility Director, Public Works Department, 360.753.8318
Ron Jones, Waste ReSources Director, Public Works Department, 360.753.8509
Presenters:
Gary Franks, Water Resources Director
Mike Vessey, Drinking Water Utility Director
Ron Jones, Waste ReSources Director
Background and Analysis:
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. 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. They also build resilience to changing climate conditions, such as increased rainfall intensity and frequency.
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., facility, legal, and executive services) and any year-end savings remain within the utilities to support future operating or capital needs.
The Utility Advisory Committee (UAC) annually reviews City utility finances, customer rates, the six-year CFP, and GFCs. In October, the UAC forwards formal recommendations to the City Council for consideration during their November/December budget deliberations.
Proposed 2027 Rate Adjustments
Staff will present preliminary 2027 utility operating budget drivers, including changes in operating budget costs and other factors affecting future utility rates. Preliminary rate recommendations are not yet ready. Staff will present preliminary rate recommendations in October. This allows the time needed to ensure expense and revenue projections are as accurate as possible and consistent across all City funds.
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 2027, staff recommend:
• Drinking Water: 2% increase
• Wastewater: 5% increase
• Storm & Surface Water: 5% increase
• LOTT Clean Water Alliance: 3% Increase
2027-2032 Capital Facilities Plan
The preliminary six-year CFP identifies major capital investments needed to maintain, replace, improve, and expand utility infrastructure and to meet current and anticipated operational, regulatory, and community needs. It provides a longer-term view of planned capital investments and the associated financial needs of each utility. Staff will highlight significant projects and associated funding.
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. The City offers Utility Assistance Programs to mitigate affordability concerns. At the same time, utility services provide critical environmental and public health protection for all community members.
Capital projects may both benefit and burden communities depending upon 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 and promote equitable distribution of benefits.
Neighborhood/Community Interests (if known):
City utilities are foundational to community health, environmental quality, and livability in Olympia.
Options:
Information only. No action requested.
Financial Impact:
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:
None