Highland Village staff previews $645,000 utility funding gap and rate options ahead of budget adoption

City staff presented council with a budget preview on Aug. 11 that outlines options to close an estimated $645,000 revenue gap in the utility fund for FY2026-27. The presentation emphasized wholesale pass-through costs from regional water and wastewater providers, scheduled capital projects and a near-term debt issuance.

"The increase that for 2027 is expected to be a total of $645,000," staff said, summarizing utility-side pressures including a wholesale rate change from the water district and increases in lift-station maintenance. Staff offered two rate options: raising the base charges for water and wastewater, or combining smaller base increases with higher volume charges for certain tiers. Staff noted the city will present detailed ordinance language and formal rate options in the October-November timeframe and said any city-rate adjustment would follow public hearings prior to adoption.

Staff also provided working-capital projections: a current projection of about 140 days of working capital that staff expects to fall to roughly 102 days in 2027 under current assumptions and to the 90-day target in subsequent years if the adjustments are adopted. A utility debt issue of about $10.5 million to fund capital projects including the Vista Ridge well and lift station rehabs was flagged as an upcoming action that will influence rates and debt service needs.

Why it matters: rate changes affect every utility customer and will be part of the budget adoption process. Staff framed the options as ways to smooth rate changes over a multi-year horizon rather than making annual adjustments.