Tuscaloosa City Council Meeting: Water and Sewer Budget Discussion – September 1, 2026

The Tuscaloosa City Council met on September 1, 2026, to adopt minutes, approve two district-related items, and receive a detailed Fiscal Year 2027 water and sewer budget briefing. City finance and utility staff presented revenue projections, indirect cost allocations, personnel and consent-decree issues, line-item changes, and debt figures.

Consent Calendar

• The previous meeting's minutes were adopted by unanimous voice vote.
• Councilman Henry presented an agreement made by his predecessor to address drainage on Academy Drive, where houses had been torn down, in order to make the area more usable and add park benches. He said he was glad to honor the request. The item was approved unanimously.
• General Fund Budget Revision No. 20 was approved unanimously. It moved $5,000 from the previous year's fund balance into the current fiscal year's District 3 district improvement funds because year-to-date District 3 spending had exceeded the $15,000 threshold.

Water and Sewer Budget Discussion

• Water sales for the upcoming fiscal year were projected at about $47.5 million; sewer sales were projected at about $35.5 million. Revenue growth was about 9%, slightly below the 10% rate increase. Staff projected the water department as a whole would make budget, but water sales might be slightly under projection and sewer sales were expected to offset that.
• Depreciation expense was budgeted at $12.1 million, up from $11.7 million the prior year. Staff explained that depreciation is included in the proprietary fund budget because of full accrual accounting and affects the net position available for capital reinvestment.
• The AMI meter project was about 72% complete. It covers one-inch-and-smaller residential meters, while large meters are being converted in-house; all meters are expected to be on AMI.
• Utility staffing was about 200-205 employees, with 15-20 vacancies at any given time. Entry-level turnover was common; upper-level retention was better, though some supervisor/manager positions may require outside hiring. The consent decree entered its sixth year on August 17 and may bring recommendations for additional lift-station staff. One new net FTE was included in the budget recommendation because of the consent decree.
• The city's indirect cost allocation methodology, recognized by the Government Finance Officers Association, will transfer $10.485 million from water and sewer to the general fund in FY27. The methodology uses cost drivers for city attorney, human resources, accounting/finance, facilities maintenance, IT, operations, city council, mayor/clerk, strategic communications, and fleet maintenance. Water and sewer accounts for 13% of city employees, used in the HR allocation. Facilities maintenance square footage was identified as a contested factor because of large plant facilities, but it is still charged under the current methodology; the methodology is scheduled to be retweaked in 2027. The transfer has not been below $8 million in the past three years.
• Line-item notes: A $200,000 increase in water/sewer administrative outside services was a placeholder for a potential contract and would be revised after the first quarter if not needed. Lab outside services increased partly because samples are processed in Louisiana and because of UCMR sampling requirements. Fletcher outside services decreased. Auto maintenance increased because 2018-2021 F-150s required transmission and engine replacements and a recall. Meter repair costs are falling as AMI replacements shift spending to the capital side. Interest income is not budgeted because it is hard to project and is treated as a surplus. The lateral assistance program was budgeted at $50,000 but had no applicants; it is now funded from water/sewer funds instead of CDBG, with the same criteria including economic/property value and drainage-basin factors. Public education increased from $0 to $25,000, paired with a billboard campaign. The city pays credit card processing fees by policy to encourage online payments; one council member asked about passing the fees on to customers, and staff said the idea could be explored.
• Total remaining water and sewer debt principal was reported at $169 million. Water and sewer debt is general-obligation debt with no separate revenue pledge; the last non-taxable GO issuance was about $65,000 per million, and budget-based interest cost was about 3.96% of the remaining balance.

Key Outcomes

• Minutes, the Academy Drive agreement, and Budget Revision No. 20 were each approved unanimously.
• No vote was taken on the FY27 water and sewer budget during this portion of the meeting; the budget discussion was scheduled to continue later in the week (Wednesday/Thursday).
• The council adjourned after the briefing.