Albuquerque utility approves FY27 budget, eyes new fees and debt term extensions to close structural CIP gap

Albuquerque utility approves FY27 budget, eyes new fees and debt term extensions to close structural CIP gapThe Albuquerque Bernalillo County Water Utility Authority passed its $285.7 million operating and $92 million capital budget for FY27 on May 20, while preparing long-term strategies to tackle a mounting backlog of rehabilitation needs.

The FY27 capital improvement program (CIP) budget of $92.01 million targets asset rehabilitation, system reliability, and critical replacements.

Despite no rate adjustment for FY27, staff warned of a structural gap where rehabilitation needs continually exceed available revenues.

Future funding strategies under consideration include a new capital investment fee, rate revenue adjustments, and extending debt repayment periods from 12 to 15 years.

The board approved a revenue-neutral credit card convenience fee to recover $1.6 million in annual processing costs.

A $512,320 EPA grant was accepted to expand the Arroyo de los Ojos Aquifer Storage and Recovery project, enhancing drought resilience.

The Albuquerque Bernalillo County Water Utility Authority (ABCWUA) unanimously approved its fiscal year 2027 operating and capital improvement program (CIP) budgets on May 20, keeping rates flat in the near term while acknowledging the need for structural financial changes to fund long-term infrastructure rehabilitation. The FY27 operating budget totals $285.7 million and includes a $40.9 million transfer to the CIP fund—a $12 million increase over FY26. It also allocates $82.3 million to the debt service fund, including an additional $2 million to pay off smaller loans early. Outstanding principal will drop by nearly $68 million to $517.9 million, freeing up future borrowing capacity. The $92.01 million FY27 CIP budget will fund water line rehabilitations, reservoir and well upgrades, interceptor force main improvements, and IT modernization. However, presenting the 2027-2036 decade plan, Susan Lander warned the board of a structural CIP gap. "Our rehabilitation needs have consistently exceeded the available funding," Lander said. "Rehab is structural and ongoing and it's not caused by one-time factors. So funding increases help, but will never fully close the gap." To manage the shortfall, ABCWUA will explore several long-term funding strategies in the coming months. Options include a potential capital investment fee, rate revenue adjustments, and altering the utility's debt-to-cash mix. Staff are also considering extending the debt repayment period from 12 years to 15 years to lower annual payments and increase debt capacity. In a move to immediately recover costs, the board approved an ordinance establishing a credit card convenience fee. Customer service division manager Henrietta Mendez noted the utility currently absorbs about $1.6 million annually in vendor processing costs. The new revenue-neutral structure will charge residential customers a $1.95 flat fee per transaction and non-residential customers a 2.95% fee on the total transaction. The board also approved the acceptance of a $512,320 grant from the U.S. Environmental Protection Agency, backed by a $239,000 local match, for the Arroyo de los Ojos Aquifer Storage and Recovery (ASR) project. The funds will cover planning, design, and permitting to expand the site from one well to three. Commissioner Eric Olivas noted the expansion is critical for banking San Juan-Chama surface water during winter months to offset peak summer demand, providing operational flexibility amid tightening surface water supplies and regional drought conditions.