FY 2026 Budget Workshop: Corpus Christi Water Proposed Budget and Rates – August 13, 2025

On August 13, 2025, the Corpus Christi City Council held a budget workshop on Corpus Christi Water’s (CCW) proposed FY 2026 operating budget, capital improvement program, and rates for both the wastewater and water funds. Mayor Paulette Guajardo called the meeting to order and roll call established a quorum. Staff and consultants presented cost-of-service studies, rate proposals, infrastructure achievements, consent decree progress, and two decision packages. The agenda stated the meeting was informational only, and no formal action was taken.

Wastewater Fund Highlights

• Major wastewater projects in FY25 included a $102 million construction award for rehabilitation and treatment improvements at the Greenwood wastewater treatment plant; a $111 million investment at the OSO wastewater treatment plant to modernize the ammonia removal system, a four-year project increasing plant capacity to 18 million gallons per day; and substantial completion of the $12.2 million Williams Lift Station project.
• CCW replaced approximately 32,000 linear feet of wastewater lines and rehabilitated 100 manholes through IDIQ contracts.
• The consent decree, in effect since January 2021, remains a major driver of wastewater work. Staff reported that 10 of 17 consent decree milestones are complete, with the remaining milestones on or ahead of schedule.
• The projected average residential wastewater rate in Year 10 of the consent decree is now $94, compared with the original analysis of $80 to $90, primarily due to inflation of about 24.8% between 2020 and 2025 versus the original 15% assumption.
• The proposed FY26 wastewater fund includes $113.6 million in expenditures and $99.4 million in revenue plus fund balance. Revenues increased by $2.6 million from FY25, while expenditures increased by $100,000, for an overall increase of 0.1%, below the water/sewer consumer price index of 4.86%.

Wastewater Decision Packages

• Decision Package 1 proposed adding nine maintenance positions and heavy equipment, with an $800,000 annual cost and a $1.5 million one-time cost. Staff stated the treatment plants have not added staff in at least 15 years despite infrastructure upgrades, and that current maintenance workloads include about 183 preventive and 155 corrective work orders per month.
• Decision Package 2 proposed adding seven positions to operate the OSO reclaimed-water fill station. The station currently provides reclaimed water free of charge, distributes about 20,000 gallons per day, and is open 1–5 p.m. Monday through Friday and 8 a.m.–noon Saturday and Sunday. It typically sells out by mid-afternoon. The station has more than 500 permits and averages 40–42 customers per day, with an estimated 70% residential and 30% commercial split. Staff warned that without additional staffing, the station may have to close or severely limit hours. Construction of a 48-inch OSO gravity main could also force a temporary closure this fall unless alternatives are funded.

Wastewater Rates and Cost of Service

• NewGen Strategies presented the cost-of-service study. The proposed wastewater volumetric rate would increase by $0.34, from $0.807 to $0.841 per 1,000 gallons.
• For residential customers inside city limits, the monthly minimum charge would increase from $35.11 to $38.29. For residential customers outside city limits, it would increase from $30.05 to $33.12.
• For commercial customers inside city limits, the monthly minimum charge would decrease from $46.10 to $38.29. For commercial customers outside city limits, it would decrease from $39.45 to $33.12.
• The stormwater legacy debt phase-in was explained: total legacy debt service is split 50% to wastewater and 50% to water rates. In FY26, water rates would recover $2 million, or about 17%, of the $5.882 million water-side portion; wastewater rates would absorb 50%; and wastewater fund balance would absorb the remaining 33%. In FY27, another $2 million shifts to water rates, with full 50/50 recovery reached in FY28.
• The cost-of-service results showed residential wastewater customers slightly under-recovering and commercial customers slightly over-recovering their cost of service, with classes netting to zero overall.

Water Fund Highlights and Proposed Budget

• Water achievements included a new water supply dashboard; improvements to the Mary Rhodes Pipeline that allow full use of 70–72 million gallons per day; dredging at the O.N. Stevens water treatment plant; substantial completion of the $13.2 million Nueces Bay Boulevard 24-inch water line under the ship channel; and replacement of approximately 47,500 linear feet of water lines across the city.
• The proposed FY26 water fund includes $183.4 million in expenditures, with $177.9 million in revenue plus $5.5 million in fund balance. Revenues increased by $8.3 million and expenditures increased by $7.9 million, a 4.5% increase, below the water/sewer CPI of 4.8%.
• For FY24 billed use, industrial users, including wholesale and retail industrial customers, accounted for 54% of all raw water consumed. For treated water, municipal use and wholesale municipal use accounted for approximately 48% of demand, while large-volume users and wholesale industrial users accounted for approximately 52%.

Water Rates

• For the average residential customer inside city limits with a 5/8-inch meter, the proposed monthly minimum charge increases from $15.83 to $17.25, including the stormwater legacy debt component. Outside city retail charges are lower because outside customers do not benefit from stormwater infrastructure.
• The proposed rate structure includes a new charge for the first 2,000 gallons for residential, commercial, and irrigation customer classes.
• The large-volume taker-pay amount for the first 10 million gallons increases by 30%.
• Proposed wholesale contract rates include public agency wholesale raw water at $1.33, wholesale treated water at $1.80, wholesale treated water network at $25, and non-rate-payer wholesale raw water at $1.36. Composite raw water customers Alice, Beeville, and Mathis remain at $1.03, with annual updates required by contract.
• Sample bill impacts were provided: average residential customer total impact of $8.98 per month; typical restaurant impact of $17.93 per month; irrigation accounts up 39%; large-volume accounts up 14%; and wholesale treated customers down an average of 3%.

CIP Program

• The proposed FY26 wastewater CIP totals approximately $110 million across 24 projects, down from about $182 million in FY25. Staff said the reduction was not due to cancelled projects but to re-timing budgets based on actual design and construction durations. Of 29 wastewater projects in pre-engineering, design, or construction, 23 were on schedule, or about 79%. Six projects were delayed due to the Greenwood bid overrun, CDBG mitigation grant funding delays, and rescoping/rebidding.
• The proposed FY26 water CIP totals approximately $390 million across 51 projects. Of 53 water projects in pre-engineering, design, or construction, 46 were on schedule, or 87% by project count and 92% by budget. Seven projects were delayed for reasons including additional design needs, property acquisition, subsurface utility exploration, and drought-related delay of the Wesley Seale Boat Ramp.
• The FY26 water CIP includes one new project, the Nueces River groundwater well program supported by state grant funding, and moves three long-range projects into the short-range program beginning in FY28: the Rand Morgan 16-inch water main, citywide highway line crossings, and Upriver Road water line replacement.

Council Discussion and Follow-Up

• Councilmember Hernandez questioned overtime levels, noting wastewater overtime of about $1.15 million, or roughly 9% of $12.9 million in personnel expense, and water overtime of $942,420, or about 5% of $18 million in personnel expense. He also cited a 10% vacancy rate and a 27% increase in FTEs since 2021, and encouraged staff to work toward less than 5% overtime as a management goal. Staff responded that 24/7 operations, emergency response, and consent decree work require overtime, and that in-house work has saved about $29 million compared with contractor costs.
• Councilmembers Roy, Vaughn, and Scott expressed support for charging a fee for reclaimed water, with several saying the fee should be nominal or phased in, because some users are providing paid lawn-watering services and ratepayers currently subsidize the program. Councilmember Paxson cautioned against charging during the drought, since reclaimed water offsets drought restrictions. The city manager said the free service was intended to build familiarity and use, with a possible fee after the program is established. NewGen estimated that a fee of $75.61 per 1,000 gallons would fully cover the seven proposed reclaimed-water positions and make the operation net zero, and a phased fee option was available if directed by council.
• Councilmember Paxson asked about a steep increase in wholesale raw-water usage shown on a chart; staff said they would analyze the cause. Councilmember Scott asked whether wholesale customers must follow the city’s drought contingency plan; staff said contracts require drought plans and CCW works with wholesale customers, but enforcement outside the city is difficult.
• Councilmember Hernandez identified inconsistencies between debt-service figures in the presentation and the budget book, and staff agreed to review the figures with him after the meeting.
• Staff acknowledged that the water conservation plan is two to three years behind schedule. An updated plan is being developed with Plummer Engineering and is expected to be brought to council in fall 2025 or early 2026.
• Staff also acknowledged that reduced water use due to conservation and drought restrictions creates a revenue shortfall that must be recovered through rates because fixed costs remain unchanged.

Public Comments & Testimony

• No public comment was solicited or taken during this workshop. Staff and council referenced previous citizen testimony, including a resident’s remarks about the reclaimed water program and the station closing before opening time.

Key Outcomes

• No motions, votes, or formal decisions were made; the meeting was informational only.
• Staff will follow up on the wholesale raw-water usage increase, debt-service line-item discrepancies, reclaimed-water fee options, and a benchmark comparison with other large Texas cities.
• An updated water conservation plan is expected to return to council in the fall or early 2026.