Lakeway MUD FY2025 Budget Review

Lakeway MUD recently announced their fiscal year (FY) 2025 budget which includes a necessary increase in service rates. At the September 12, 2024 Board of Directors meeting, General Manager Earl Foster presented the final revisions to a rate study prepared in collaboration with NewGen Strategies & Solutions outlining a five-year initiative that aims to keep the utility ahead of capital improvement costs amidst the uncertainties associated with ongoing drought and economic stability. Foster said, “Lakeway MUD strives to, and continues to excel at providing reliable drinking water, wastewater, and recycled water to its customers at affordable rates for essential uses with superior service. Doing so requires well-trained personnel operating well-maintained equipment backed by an adequate budget that supports the utility with not only the needs of our customers today, but into the future.”

FY2025, which begins October 1, 2024, is anticipated to be an increased budget of 6.9 percent over FY2024 at $7,656,232. With the Board-approved rate changes, total revenue is anticipated $7,889,752. This will allow the utility to retain competitive service rates, fund upcoming capital projects (such as storage expansion and system improvements), and replenish reserves for future capital including a reinvestment in the reliability of existing infrastructure.

Chris Ekrut, Partner and CFO at NewGen, said, “From everything I have reviewed during this rate study, Lakeway MUD has demonstrated that they are a fiscally responsible public utility that operates in the best interest of their customers. The proposed [service] rate changes are a necessary component of ensuring their continued vitality.” Service rates and the full rate study can be found at LakewayMUD.org. 

From everything I have reviewed during this rate study, Lakeway MUD has demonstrated that they are a fiscally responsible public utility that operates in the best interest of their customers. The proposed [service] rate changes are a necessary component of ensuring their continued vitality.

Chris Ekrut, Partner and CFO at NewGen

Budget Highlights

• Historically, LMUD decreased their potable water base rate and in-district wastewater base rates in FY2017 from $23.00 to $20.00 on potable water and from $17.00 to $14.00on in-district wastewater respectively, which the utility maintained until FY2023 when rates were increased from $20.00 to $22.00 on potable water and from $14.00 to $16.00 on in-district wastewater, followed by an increase in 2024 to $24.00 on potable water  and $18.00 on in-district wastewater respectively in FY2024. FY2025 will see an increase to $30.00 on potable water rates and in-district wastewater increase to $24.00 base rate. Commercial and wholesale rate increases have also been posted.
• LMUD volume rates increase incrementally to keep essential water use affordable while promoting water conservation efforts. Tier 1 (1 to 15,000 gallons) and Tier 2 (15,001 to 30,000 gallons) remain at the FY2024 rates of $2.50 and $3.25 per 1,000 gallons respectively. The Tier 3 (30,001 to 50,000 gallons) rate includes a $1.00 increase from FY2024 rates: $5.06 per 1,000 gallons. There is an additional $1.00 added for each incremental tier: Tier 4 (50,001 to 80,000 gallons) includes a $2.00 increase from FY2024 rates at $7.08 per 1,000 gallons; Tier 5 (80,001 to 100,000 gallons) is a $3.00 increase at $9.35 per 1,000 gallons; Tier 6 (over 100,001 gallons) is a $4.00 increase at $11.94 per 1,000 gallons. Since January 2023, the majority of LMUD customers are not impacted by these rate increase with 82 percent of LMUD customers remaining under Tier 3 volume rates each bill cycle.
• Drought Rates go into effect for Tiers 3 thru 6 when LMUD Drought Contingency Plan triggers Stage 2 or above watering restrictions. The tiers rates in Stage 2 Drought Rate restrictions add incremental increases over the standard FY2025 volume rates: Tier 3 increases by $1.00, Tier 4 by $2.00, Tier 5 by $3.00, and Tier 6 increased by $4.00. Drought Rates for Tiers 1 and 2 won’t go into effect until Stage 3 Drought Rate restrictions are triggered. Stage 3 Drought Rates increase Stage 2 Drought Rates by an additional $1 to the standard FY2025 volume rates.
• LMUD tax rates have seen a steady decline since FY2013 with the latest decrease at $0.0531 per $100 assessed value in FY2023. There is no change in tax rate for FY2024.
• The wastewater department makes up the highest percent of budgetary considerations at 35 percent with the potable water department following close behind at 30 percent. The administrative department accounts for 19 percent of the total budget and debt payments, including I&I (inflow and infiltration) repair, make up the remaining 16 percent. 40 percent of the total budget is employee salaries.
• The majority of LMUD’s revenue is generated by the sale of potable water at 44 percent, followed closely by wastewater service at 41 percent. The remaining 15 percent is generated by miscellaneous revenue (14 percent) and penalty fees (1 percent).

LMUD Water & Wastewater Rate Study Presentation

Below is LMUD’s 5-Year Rate Plan presentation developed in partnership with NewGen Strategies & Solutions:

RateStudyPresentation_09-09-2024

FY2024 – FY2025 Rate Summary Comparison

WATER:  (In District and Out of District)
		FY2024	FY2025
	BASE RATE – monthly
	Standard Meter	$24.00	$30.00
	1-inch meter	$40.80	$51.00
	1.5-inch meter	$79.20	$99.00
	2-inch meter	$127.20	$159.00
	4-inch meter	$400.80	$501.00
	VOLUME RATE – per 1,000 gallons					Drought Stage 2
	0 – 15,000 gallons	$2.50	$2.50
	15,001 – 30,000 gallons	$3.25	$3.25
	30,001 – 50,000 gallons	$4.06	$5.06			$6.06
	50,001 – 80,000 gallons	$5.08	$7.08			$9.08
	80,001 – 100,000 gallons	$6.35	$9.35			$12.35
	Over 100,000 gallons	$7.94	$11.94			$15.94
WASTEWATER:
	BASE RATE – monthly
	Standard Meter – In District	$18.00	$24.00
	1-inch meter	$30.60	$40.80
	1.5-inch meter	$59.40	$79.20
	2-inch meter	$95.40	$127.20
	4-inch meter	$300.60	$400.80
	Standard Meter – Out of District	$78.00	$84.00
	1-inch meter	$132.60	$142.80
	1.5-inch meter	$257.40	$277.20
	2-inch meter	$413.40	$445.20
	4-inch meter	$1,302.60	$1,402.80
	VOLUME RATE – per 1,000 gallons	$2.50	$2.50
	Based on the lower of the prior Dec/Jan or Feb/Mar water volume
	GRINDER PUMP SERVICE FEE	$5.00	$5.00
TAXES:
	Per $100 Assessed Valuation	$.0531	$.0531
WHOLESALE RATES: – per 1,000 gallons
	Water	$5.03	$6.65
	Wastewater #11	$4.97 + $18 base rate	$8.53 + $24 base rate
	Wastewater #17	$8.17 + $18 base rate	$11.58 + $24 base rate    in volumetric
REUSE RATES: – per 1,000 gallons
	Retail	$2.50	$2.50
	Wholesale	$1.50	$1.50