Bethlehem City Council Budget Hearing for Water, Sewer, and Public Works - November 10, 2025

On November 10, 2025, the Bethlehem City Council held its first budget hearing of the season, focusing on the proposed 2026 budgets for the water, sewer, public works, liquid fuels, stormwater, and non-utility capital funds. Presentations were delivered by City Business Administrator Eric Evans, Public Works Director Michael Alkula, and Water & Sewer Resources Director Edward Boscola. Council members and the public participated in discussions covering operational challenges, capital plans, and financial strategies.

Water and Sewer Budget Presentation

• Edward Boscola presented the water and sewer budgets, highlighting that the combined budgets for water, sewer, and capital funds total $69 million for 2026. The water fund serves 37,000 metered customers (population ~120,000) and produces about 5 billion gallons of drinking water annually. Wastewater treatment averages 11 million gallons per day (4 billion gallons per year).
• Water consumption has remained flat over the past decade despite economic development, driven by conservation and efficiency gains. A PUC rate case is proposed in the 2026 budget (no rate increase yet), as the last water rate increase was in 2021. The sewer fund has no rate increase proposed for 2026.
• The water fund faces significant debt service (approximately $8–9 million annually) from the Penn Forest Dam rebuild, but payments are set to drop after 2027. The sewer fund carries lower debt (~$2 million/year).
• Capital projects include water main and meter replacements (25,000 meters over six years, with 21,000 customers now on AMI), a roof replacement at the water treatment plant, a new 2-million-gallon reservoir, and sewer plant upgrades (digester gas membrane, aeration tank improvements).
• The department is exploring solar arrays at the water treatment plant and a combined heat and power (CHP) project using biogas at the wastewater plant, aligned with the city’s Climate Action Plan.
• Council members expressed strong support and gratitude for the department’s work, noting 15 consecutive years of winning an industry award for water quality. Councilwoman Laird asked about monitoring of major water users (e.g., Spray-Tech) and the status of the billing software rollout (budgeted at $300,000 for 2026, up from $190,000). Councilwoman Wilhelm inquired about lead service line replacement (over 500 replaced; estimated total ~2,000).

Public Works Budget Presentation

• Public Works Director Michael Alkula presented the operating budget, which increases by about $600,000 (largely due to salaries). The operating budget without salaries is flat. Noteworthy changes: decreased engineering equipment spending, increased urban forestry funding for storm cleanup, and reduced electrical maintenance costs.
• The liquid fuels fund is budgeted at $5 million for paving in 2026 (half from UGI cost-sharing). In 2025, in-house crews placed 11,500 tons (18 lane miles) vs. 3,000 tons outsourced. The department aims to run two paving crews in 2026 if fully staffed (currently two vacancies, down from four to five in prior years).
• Stormwater budget is $10 million for 2026, including $3.5 million for yet-to-be-identified needs. Key projects include the East Boulevard detention basin ($2.5 million, with $1.5 million city share after grant reduction) and Bridal Path swale stabilization.
• Non-utility capital projects include completion of French Park improvements ($1.5 million), Rose Garden upgrades ($150,000), ADA upgrades in the Southside Arts District, Linda Street two-way conversion (grant-funded), East Broad Street active transportation plan ($1 million, multimodal grant funded), and West Broad Street safety/streetscape improvements (nearly $10 million federal grant, with $1.4 million match still needed).
• Fleet electrification continues: 27 EV/hybrid vehicles (7% of fleet), with six more planned for 2026.
• Council members praised public works for their public-facing work and responsiveness. Councilwoman Wilhelm raised concerns about street tree safety; tree inventory reassessment is underway. Councilwoman Cramsey Smith noted the need for more sidewalk funding (current $10,000 for minor repairs).

Non-Utility Capital Fund Presentation

• Eric Evans presented a plan to fund $22 million in non-utility capital projects for 2026–2029 without incurring new debt. The funding would come from two sources: a capital reserve escrow account of $10.7 million (built from unexpected revenues like Act 42 gaming payments and surplus EIT/mercantile/interest) and a cash balance of $11.3 million (built over 15 years).
• Evans detailed the city’s financial recovery from 2010 (when it had near-zero cash and relied on borrowing for operations) to its current strong position. The plan would allow the city to avoid a bond issuance that would have cost $35.3 million total ($22 million principal plus $13 million interest over 20 years).
• The 2026 capital plan uses $9.1 million of the $22 million; the remainder will be allocated in future years. The city’s debt service is projected to drop from $44 million paid in 2022–2025 to $36 million remaining by 2030.
• City Controller Yasso noted that the capital reserve account was built from revenues that became predictable (e.g., Act 42 payments of $1.5 million per year for three years) but were not previously incorporated into the operating budget. He suggested earlier communication to council. Evans explained that the state did not guarantee the revenue until recently. No tax increase is proposed for 2026.

Public Comments & Testimony

• Will Webber (resident of Elizabeth Avenue) criticized the city’s failure to provide residents with a water usage monitoring app (like those offered by other municipalities). He argued that the app should not be tied to online bill payment and that residents need real-time alerts to avoid large bills from leaks. He stated that without such an app, residents are at a disadvantage.

Key Outcomes

• No votes were taken; this was a public hearing for discussion.
• The next budget hearing is scheduled for Wednesday, November 12, 2025, at 6 p.m.
• Final adoption of the 2026 budget ordinances will occur at the regular council meeting on Tuesday, December 16, 2025.