Beaumont eyes industrial water rates as Water Fund outperforms budget expectations
City of Beaumont Water Department, Texas · Meeting date: June 3, 2026 · Published: June 4, 2026
As Beaumont faces general fund deficits and dwindling reserves, officials are looking to the city's robust Water Utilities Fund, proposing reviews of outside-city industrial rates and adjustments to unpaid account fees.
Key points
- The Water Utilities Fund is projected to generate $72 million in FY26 revenue, beating the budgeted $65 million.
- Fund expenditures are projected to come in under budget at $67 million, leaving the water utility in a strong financial position.
- To help address citywide budget challenges, staff proposed reviewing industrial outside-city water rates.
- The city is also considering converting existing fees on unpaid water accounts from deposits into retained city revenue.
- Council members raised concerns that a proposed non-public safety hiring freeze could exacerbate overtime costs in the water department, which is reportedly short 15 positions.
Full report
During a June 3, 2026, budget workshop, City of Beaumont officials revealed that the Water Utilities Fund is significantly outperforming budget expectations, providing a stark contrast to a general fund that is rapidly depleting its reserves.
Budget Manager Amy Schmidt reported that the Water Utilities Fund is projected to bring in $72 million in revenue for fiscal year 2026, well above the budgeted $65 million. Concurrently, the fund's expenditures are projected to be $67 million, coming in under the $72 million budgeted for expenses. Schmidt noted that the water fund is "doing really well," highlighting a favorable $6.4 million revenue variance and a $4.5 million favorable expenditure variance.
The strong performance of the water enterprise fund comes as the city grapples with a projected $6.2 million deficit in its general fund and a dwindling fund balance that threatens to drop below the recommended 16.5% minimum reserve. To bridge this gap, city staff presented several potential financial solutions that leverage the water system's operations.
Among the proposed revenue-generating measures is a review of all city rates and fees, specifically targeting "industrial outside city water rates." Additionally, staff suggested altering the fee structure for unpaid water accounts. Currently, a fee is charged but held as a deposit; the proposed change would retain this fee as direct city revenue.
However, efforts to curb city spending could impact water operations. Staff proposed a hiring freeze for non-public safety personnel to save approximately $3.5 million. A council member questioned the efficiency of this strategy for the water department, noting that the department is currently short 15 people. Because water utility work cannot be halted, officials acknowledged that leaving these positions vacant could drive up expensive overtime costs, particularly as on-call work is frequently covered by higher-paid foremen.
This summary was generated by AI based on the source document and may contain errors.
Source: City Council, City of Beaumont Water Department