Zone 7 Board Meeting: Two-Year Budget Workshop
The Zone 7 Board of Directors held a special workshop on May 12, 2026, with all seven directors present. President Kathy Narum called the meeting to order at 6:02 p.m. and adjourned at 7:40 p.m. The agenda had a single item: the proposed two-year operating and capital budget for fiscal years 2026-27 and 2027-28.
This was a workshop, not an adoption. No vote was taken. The purpose was to review the proposal in detail before the formal adoption vote scheduled for June.
What staff presented
Treasurer and Assistant General Manager Osborn Solitei, along with Financial Analysts Lizzie Foss and JaVia Green, walked the board through the proposal. Staff described a budget built to support the agency's 2025-2029 Strategic Plan, keep all reserves compliant with board policy, and maintain Zone 7's AAA credit ratings from Fitch and S&P.
The headline numbers:
- Projected revenues rise from about $174 million in FY 2026-27 to $184 million in FY 2027-28, driven by grant funding and water rate increases.
- Projected expenditures rise from about $190 million to $216 million, largely due to major capital projects including the Mocho PFAS Treatment Plant and the Regional Groundwater Project.
- The budget assumes 4.5% treated water rate increases in each of the two years and a conservative 2.5% investment earnings assumption.
On the flood side, staff reviewed $32.2 million budgeted for 2023 storm repair projects across up to 99 repair sites, and noted that the agency secured roughly $26.7 million in federal assistance for storm repairs.
Where the board pressed
Director Sarah Palmer asked whether staff planned to increase the fixed portion of water rates beyond the current 45%. Staff said it intends to evaluate that during the upcoming rate study but currently anticipates holding the 45% fixed and 55% variable structure to balance revenue stability with affordability.
Director Laurene Green asked about the 4.5% rate assumptions and future Sites Reservoir funding. Staff explained that Sites Reservoir costs are not in this two-year budget because those expenditures are expected to begin in FY 2028-29, and General Manager Valerie Pryor said more information on Sites costs and participation levels is expected later in 2026.
Director Dennis Gambs asked about the agency's conservative investment assumptions and budget sensitivities. Staff confirmed that water sales revenue remains the most significant revenue sensitivity. On capital funding, staff discussed the agency's application for a $25 million forgivable loan tied to the Mocho PFAS Treatment Plant, and said it would return to the board with alternative funding options if the loan is not awarded.
President Narum confirmed that nothing in the proposed budget would negatively affect the AAA rating, and expressed support for moving the budget forward.
What happens next
Following discussion, the board concurred with forwarding the proposed two-year budget to the June Board meeting for formal adoption. The adopted budget takes effect July 1, 2026.
Source: Zone 7 Water Agency Board of Directors, special board meeting minutes of May 12, 2026.
