Review the Fiscal Year Adopted 2026 Budget – Effective July 1, 2025
Review the most recent Audited Financial Statements
Budget Development
A budget prioritization process was utilized to prepare the requested budget. Each team manager works with staff and submits their budget requests and recommendations for new programs, equipment, and items. All one-time requests for items or services to support the District mission are prioritized by each team, and then compiled into one prioritized list to best serve the District’s mission of delivering safe, reliable water to our customers.
The requested budget was presented to the Board of Directors for review and recommendations. The Board of Directors were presented with the Fiscal Year 2026 requested budget at the April 7, 2025, Board Meeting, to review, discuss, and suggest any changes to be applied to the requested budget. A rate hearing was held on May 15, 2023, where rate and fee changes were approved for three fiscal years including Fiscal Year 2026 with no requested rate changes in Fiscal Year 2026. The requested budget was officially presented to the Board of Directors for a final review and adoption at the May 12, 2025, Board Meeting.
Budget
The Metro Water District Adopted Budget for Fiscal Year 2026 is $36.55 million with $4.13 million budgeted for depreciation and amortization. The budget contains the following:
Revenue
Metered Water Sales (Water Availability Rate, Water Consumption Charges, and Water Resource Utilization Fees) make up 81.92% of the District’s operating revenue. The other revenue sources account for 18.08% of the revenue from operations and consists of various fees, interest earnings, water storage, compensated conservation, penalties/service charges, and the infrastructure rehabilitation fee. Funding this year includes using $1 million of grant funding and $2,099,358 of Water Infrastructure Finance Authority of Arizona (WIFA) loan funding. Other funding sources include $4,511,317 from the Town of Marana and the Town of Oro Valley who are partners on a collaborative capital construction project.
Operating revenue is projected at $29,030,548 and other funding sources are planned with a total of $7,610,675.
Budgeted Operating Expenses – $19,230,991
- Operating expenses include salaries and benefits for employees including 59.78 full-time equivalent positions. Salaries and benefits are budgeted at $6,887,712 which is a 6.65% increase over the prior year Adopted Budget. A $172,090 reduction of engineering staff time spent working on capital projects accounting for 2.66% of this increase leaving a 3.99% increase in wages and benefits.
- Consultants and contracted outside services are lower by 1.62% or $19,199 and general operating expenses are higher by 2.59% or $39,424.
- Electricity costs increased by 23.69% or $382,745. Supply costs are lower by 3.76% or $45,501.
- Other operating expenses have increased 14.15% or $483,940 with Central Arizona Project (CAP) water costs increased by 13.55% or $413,020, regulatory costs increased $44,902, and, new this fiscal year, $24,000 for estimated costs associated with Pima County High Plains water storage. There is a $2,696 reduction in the credit transfer between Metro Main and Metro Southwest and a $4,714 increase in the Avra Valley Recharge Project (AVRP) State Land Easement costs.
- Principal and interest payments on outstanding debt totaling $2,547,695 have been budgeted.
Capital Investments to Support the District Mission – $847,330
- The Service Line Inventory is required by the United States Environmental Protection Agency (USEPA). The District has a two-year plan to complete this requirement with a cost of $473,100 in Fiscal Year 2026.
- A diesel generator costing $77,500 would provide backup power to the server room and the north half of the Administration building including customer service. This will also include the purchase of a small air conditioner that will run to keep the Server room cool in case of a power outage.
- The existing backup application is 6-years old and a replacement unit will cost $75,000 and it will provide additional storage capacity.
- An upgrade to the E&T 23 electrical service costing $15,500 would prevent tripping due to overloads that occur during excessive heat and high demand power usage.
- Installing 900-feet of fence at the Oracle Jaynes Well Site costing $47,054 so aggregate materials and a wash pit can be moved from the Hardy Well Site, and to provide a storage location for dump trailers, vac trailers, and the backhoe to alleviate parking congestion at the warehouse location.
- Two mobile office trailers, one located in Hub and one located in Diablo Village, have animal infestations. The replacement buildings will have metal siding to protect from future animal damage and each building will cost $79,588. These will provide a safe work space for staff at remote work locations.
The District’s Capital Improvement Program – $12,167,598
The Northwest Recharge, Recovery, and Delivery System (NWRRDS) projects will continue construction with a budget of $8.84 million. The Ironwood Blend Well will finish with $0.40 million for final site improvements and well equipping. The advanced metering infrastructure project and WaterSmart customer portal will move forward with an estimated cost of $5.70 million that includes two separate grants totaling $5 million. The galvanized pipe replacement program was funded for construction in the amount of $745,000. If PFAS settlement funding is received, design and planning for Horizon Hills Ina/CDO treatment will begin. Planning and design for the 2nd Reservoir will start along with planning and design for the Pantano Road Transmission Main, and the Hub Well No. 2 replacement.
Depreciation and Amortization of Assets – $4,131,732
Depreciation and Amortization are non-cash funded expenses and are budgeted at $4,131,732, which is an increase of $579,177. This will increase with the completion of the Ironwood Well and the two NWRRDS projects that will be placed into service and start accumulating depreciation.
Outstanding Debt Obligations
The District will start Fiscal Year 2026 with three WIFA loans. A 2009 loan was issued for $4,250,000 with a remaining outstanding balance of $1,792,264.46 with a 2.94% interest and fee rate.
The Ironwood Blending Well project received $902,243 of principal forgiveness with a remaining loan amount of $3,095,780 with a 2.04% interest rate for 10 years and can be paid in full after 5 years. On July 1, 2025, the third year of payments will be completed leaving an outstanding principal balance of $2,231,760.70.
The District planned for and has obtained debt for the NWRRDS project. This project received $1,532,500 of principal forgiveness with a remaining loan amount of $12,665,783 at an interest rate of 1.944% for 10 years. This loan is payable in full after 5 years. On July 1, 2025, the third year of payments will be completed leaving an outstanding principal balance of $9,118,651.94.
The only outstanding bond obligation occurred in October 2020, with a value of $7,937,000, and the WIFA Refinancing Series 2005/2009A loan with an outstanding balance of $5,785,881.28 were refunded. The outstanding balance at the time of the refunding was $13,722,881.28 and this balance was reduced to $9,265,000 with Series 2020 senior revenue obligations with a maturity date of January 1, 2026. The outstanding balance remaining as of July 1, 2025, is $680,000.
The outstanding debt balance on all debt obligations as of July 2025, is $13.8 million.
Bond Rating
On October 21, 2021, Moody’s Investment Service affirmed the District’s senior lien revenue bond credit rating at a strong Aa3 for a U.S. water system with a modest sized system, ample liquidity, a modest debt profile, and a strong debt service coverage.