La Crosse utilities face surging operational costs as water consumption declines

La Crosse utilities face surging operational costs as water consumption declinesA 2025 financial review of La Crosse's municipal utilities reveals that stricter phosphorus limits, lead pipe replacement mandates, and expanded infrastructure have driven up expenses across the board, forcing the city to seek a rate adjustment.

Water utility operating expenses rose 11% in 2025, resulting in a negative net income as water consumption dropped by 5%.

Wastewater expenses jumped 27% following a $65 million plant upgrade, though a 3% rate hike and a $1.4 million Inflation Reduction Act payment helped offset costs.

The city is awaiting a Public Service Commission rate review by September to address revenue shortfalls and fund the replacement of roughly 1,800 remaining lead goosenecks.

Stormwater revenues surged 59.4% following a multi-step rate increase to cover a 45% rise in expenses, pulling the utility out of a year-end cash deficit.

Municipal utilities in La Crosse, Wisconsin, are grappling with rising operational expenses driven by stricter environmental regulations, advanced treatment technologies, and declining water usage. During a June 29, 2026, Board of Public Works meeting, Utilities Finance Compliance Manager Tina Erickson presented a 2025 financial update detailing the financial squeeze affecting the city's water, wastewater, and stormwater systems. The city's water utility recorded a 1.57% decrease in revenues in 2025, largely due to a 5% drop in consumption linked to high-efficiency appliances and conservation habits. Concurrently, operating expenses rose 11% to $6.4 million, pushing the utility into a negative net income. Cost drivers included well maintenance, higher personnel costs, and a 36% hike in city service charges. To address the shortfall, the city is undergoing a Public Service Commission (PSC) rate review, with a final decision expected by the end of September 2026. Despite the negative net income, Erickson noted that liquidity remains strong enough to cover current obligations. The utility is also preparing to close on Safe Drinking Water loans on July 8, which feature 45% and 70% principal forgiveness to maintain a low debt profile. Regulatory compliance remains a significant cost driver for the water network. The utility replaced 139 lead goosenecks in 2025, leaving roughly 1,800 in the system. Erickson warned that the city will need to accelerate replacements to between 250 and 300 annually to meet EPA requirements, which will demand substantial effort and funding. The wastewater sector experienced an even steeper rise in operational costs, with total expenses jumping 27% to $12 million. Erickson explained this was an expected outcome of a recent $65 million plant upgrade. The modernized, larger facility introduced more complex equipment, higher chemical and lab costs, and stricter effluent phosphorus limits of 0.1 MGL. To manage the highly automated plant, staff mechanics have undergone Programmable Logic Controller (PLC) training. Staff member Jared Greeno noted that achieving the low-level phosphorus compliance required adding sodium hypochlorite post-filtration to settle bacteria. Despite a 5% drop in retail sales, wastewater revenues grew 7% to $16.6 million, aided by a 3% rate increase implemented in 2025 and industrial surcharges. The utility also secured a one-time $1.4 million non-operating income payment from the Inflation Reduction Act for clean energy improvements, which included the deployment of a new methane-fueled cogeneration engine. The city's stormwater utility mirrored the trend of rising costs, with expenses increasing 45% to $2.8 million. This was largely due to the utility absorbing street sweeping costs previously covered by the general fund, alongside higher fuel prices and ADA-compliant concrete replacements at catch basins. However, a multi-step rate increase boosted operating revenues by 59.4% to $3.8 million. The rate hike successfully reversed a year-end cash deficit of $717,000, bringing the stormwater utility to a positive cash balance of over $500,000 by late June 2026.