Budget debate centers on draft FY2026–27 spending and a council member's challenge over a $3.18 water charge

Council heard a lengthy presentation on the draft FY2026–27 operating budget and then debated next steps as staff described adjustments, options to cover utility shortfalls and potential uses of retained earnings. The discussion prompted a council member to raise a substantive concern about an existing monthly water charge.

During the budget conversation a committee member said the council had approved a $3.18 increase to the monthly minimum water charge in December 2025 and that the increase was sold to the public as dedicated to securing a firm-water contract with LCRA. The speaker said the council halted negotiations with LCRA in February and that continuing to collect the $3.18 but using the revenue for the general utility fund effectively changed the purpose of the charge without a corresponding council action. The speaker noted the $3.18 had increased the monthly minimum from $47.85 to $51.03, a 6.646% increase, and urged the council to address that continuing increase before asking customers to pay more.

Staff responded that the $3.18 was folded into the adopted master fee schedule as part of the base fee rather than being tracked as a separately segregated line item; other council members and staff said that, even if the original contract purpose changed, the city still faces water-quality and system needs that those revenues (and other options) might address.

Why it matters: The exchange touches on rate-setting transparency and how the city accounts for fee revenue once the original, dedicated purpose no longer exists. It bears on public trust and on residents who face utility bill increases.

Details and next steps: Staff outlined budget components including a reported $800,000 requested for water quality projects, a potential $5,000,000 grant submission and projected fund-balance questions; council scheduled a follow-up workshop for Tuesday the 14th at 3:30 p.m. for deeper review and follow-up on retained earnings, dredging RFQs and other items.