North Texas advances $986m budget and 8.7% water rate hike to fund sweeping CIP

North Texas advances $986m budget and 8.7% water rate hike to fund sweeping CIPBalancing aggressive cost-saving operational measures against the relentless capital demands of regional growth, the North Texas Municipal Water District is proposing a 36-cent increase in wholesale water rates for FY27 to support major pipeline, pump station, and PFAS treatment projects.

The proposed FY27 all-systems budget totals $986 million, with debt service comprising 57% of the total expenditures.

Wholesale treated water rates will increase by 8.7% to $4.50 per 1,000 gallons, while solid waste transfer station gate rates will rise from $75 to $80 per ton.

Major water projects include expanding the Texoma Pump Station to 330 MGD and adding granular activated carbon (GAC) at the Tawakoni plant for PFAS compliance by 2029.

The district is utilizing Extendable Commercial Paper (ECP) programs and has applied for $92 million in emergency contaminant grants to mitigate rate impacts.

Operational savings initiatives include a $3.5 million reduction in chemical costs by switching to aluminum chlorohydrate and $1.5 million saved through trenchless pipeline repairs.

The North Texas Municipal Water District (NTMWD) is preparing to adopt a $986 million all-systems budget for fiscal year 2027, driven by an expansive capital improvement program (CIP) designed to manage rapid regional growth and impending regulatory mandates. During a July 30, 2026, board work session, district staff outlined a financial plan that will increase the wholesale treated water rate by 8.7%, jumping from $4.14 to $4.50 per 1,000 gallons. Solid waste transfer station gate rates will also rise from $75 to $80 per ton. The primary driver of the budget increase is capital investment and the associated debt service, which accounts for 57% of the total FY27 budget. In the regional water system alone, the FY27 CIP totals roughly $1.1 billion, with 80% of projects dedicated directly to growth. Key water infrastructure investments include mechanical improvements at the Texoma Pump Station, which will boost ultimate capacity from 94 million gallons per day (MGD) to 330 MGD by 2029. This will coincide with the completion of the Texoma Raw Water Pipeline No. 2, a 27-mile, 84-inch pipeline. To address new federal regulations, the district is also advancing a PFAS treatment project at the Tawakoni Water Treatment Plant, adding granular activated carbon (GAC) contactors to maintain 30 MGD of capacity and comply with a 2029 regulatory deadline. On the wastewater side, the district is prioritizing peak flow management to avoid upsizing downstream conveyance systems. Major projects include a phase two peak flow expansion at the Rowlett Creek Wastewater Treatment Plant to 95 MGD and the addition of 11 million gallons of peak flow storage at the Preston Road Lift Station. To fund the sweeping infrastructure buildout, the district is utilizing a mix of Extendable Commercial Paper (ECP) programs, subsidized bonds from the Texas Water Development Board (TWDB), and open market sales. NTMWD currently holds $6.6 billion in outstanding debt, 47% of which is backed by the TWDB, saving the district an estimated $571 million in interest over the life of the loans. For FY27, staff noted the district has also applied for $92 million in TWDB emergency contaminants grants to help offset the capital costs of PFAS compliance. Recognizing the burden of rising rates on member cities, district staff highlighted several aggressive stewardship initiatives designed to curb operational expenses. The district expects to save $3.5 million annually in chemical costs by transitioning its water treatment coagulant from ferric sulfate to aluminum chlorohydrate (ACH). Additionally, the use of carbon fiber reinforced polymer (CFRP) for trenchless pipeline rehabilitation recently saved the district $1.5 million and avoided significant traffic disruptions. Fleet maintenance optimization and targeted equipment deferrals have also helped keep operational cost increases modest. Despite these savings, board members acknowledged the difficult reality of funding mandatory infrastructure. During the discussion, it was noted that the district is contractually obligated to meet the surging demands of its member cities, leaving little flexibility to slash the capital budget without risking service limitations. "These projects are not going away," one staff member noted during the session, emphasizing that while project timelines can occasionally be optimized to spread out debt issuance, the underlying infrastructure needs driven by regional population growth remain constant. The board is scheduled to consider the final adoption of the FY27 budget in September.