Although no single “official” rate-hike figures have been floated for the coming years , officials recently discussed scenarios that will double the water budget by FY29 and potentially require proportional rate increases if usage remains the same.
The Board of Public Works (BoPW), Finance Director Brian Keveny, and consultant Matthew Abrahams started taking a deeper look into FY25 budget outcomes and projections for operating expenses, revenues, and water rates for FY26 and beyond in the May 20 meeting. According to Abrahams’s model, those costs could be fully passed on to ratepayers to cover the annual expense of delivering approximately 40 million cubic feet of water.
Abrahams’ rough estimate suggests a 10% across-the-board rate hike would be needed in the short term to fully fund the FY26 budget if it includes a $200,000 contingency line item. He clarified that these increases assumed no changes to the base service fee of $60 or the 7.5 % PFAS surcharge and no use of retained earnings.
However, any multiyear percentage increase will depend on usage trends, contingency planning, and whether the town chooses to shift a percentage of the expenses to the tax base. Nearly everyone in Wayland buys water from the system. Of the 320 wells permitted by the Board of Health, approximately 20 are used for private drinking water and the rest are used for irrigation or heat pumps.
The BoPW planned a follow-up meeting on June 11 to clarify the details further, and the formal public rate hearing is set for June 17. The Finance Committee and Select Board plan to meet with the BoPW later this summer to discuss how best to pay for the looming capital costs.
Financial Forecast Model & Enterprise Fund Basics
The Water Enterprise Fund established at the Annual Town Meeting in 2012 tracks the full cost of running the Water Department — direct costs (personnel, operating, capital outlay, debt service) and indirect costs (health insurance, pension, central services). The fund operates like a standalone utility, with the BoPW proposing budgets and setting rates, the Town Manager and Finance Director internally certifies the budget, and the Annual Town Meeting voting for the final funding authorization.
In FY24, residents overpaid for water, resulting in a larger-than-expected turnback of $149,807. The primary reasons for the unspent funds were unused contingencies and lower-than-anticipated water usage.
Based on the model’s current revenue and expense projections, the Water Enterprise Fund is on track for a modest FY25 operating surplus of $15,086. According to Abrahams, the fund balance now totals $1.1 million, exceeding the board’s FY25 target of $800,000 in the fund balance by $300,000. An amount comfortably above the longstanding goal to keep cash reserves near 20% of annual expenses, which would be $920,000 on a projected FY25 budget of $4.6 million.
George Uveges, the newly elected BoPW chair, noted that with upcoming MWRA capital expenses, that target would need a larger cushion. BoPW member Michael Wegerbauer argued that the board had effectively hit its target and could consider using a portion of the surplus to offset FY26 rate hikes.
Rate-Setting Deliberations
Several years ago, to streamline budgeting, the Department of Public Works collapsed the small contingency buffers in each cost center into a single $200,000 contingency line item to readily handle emergencies in operations.
Keveny cautioned that the state Department of Revenue had repeatedly flagged Wayland’s projected water revenue increases as unrealistic compared to previous years’ actual revenues collected. The FY24 budget assumed collections of 16.6% above FY23 actuals. He said the state wants water rates set to meet the target revenue budget amount approved at the Annual Town Meeting without the expectation of using retained earnings to cover a potential revenue gap.
Keveny commented that the extensive back-and-forth between town staff and the DOR over justifying the Water Enterprise Fund rates has delayed the town’s certification by the state of next year’s property rates in December by several weeks.
Wegerbauer pushed back, asserting that the board’s long-standing practice of adjusting water rates to maintain the 20% reserves in the fund balance by retained earnings was valid and responsible. “We’ve done this for years,” he said. “Our goal is not to make money — it’s to break even and return any overages to the ratepayers over time.” He added that the state suggests using reserves to cover fluctuations in usage/revenue and emergency events.
Uveges supported using retained earnings to cover unexpected losses rather than as a planned budget-balancing mechanism, aligning with guidance from the town’s finance director. He also endorsed holding a contingency amount in the budget.
Budget & Rate Increase
The Annual Town Meeting in April authorized an FY25 Water Enterprise budget of $4.726 million and an FY26 budget increase of $4.883 million. Under today’s Tier 1–4 rates, the FY26 plan would run a shortfall of $196,000 to $396,000, depending on whether the board keeps a $200,000 contingency.
Capital Project, Future Csts
Once Wayland begins purchasing Massachusetts Water Resources Authority (MWRA) water in FY31, operating costs will jump by an additional $515,759. Including that new projected cost, Abrahams flagged that the planned dual-source connection to the MWRA could push the Water Enterprise budget from roughly $4.7 million to $8.2 million by FY31, effectively doubling overall costs.
Approximately $3.29 million in new annual debt service expense could be incurred in FY29 if the water enterprise fund absorbs the full cost of the capital improvements for the dual source MWRA construction ($2.09 million) added on to the capital allotted to MWRA design funds, water mains and tower ($1.21 million) that will start in FY27.
Uveges pointed out that most of that spike stems from new borrowing, lifting the total budget from $4.69 million to $7.76 million, a 67% increase in just three years. Without the dual-source expenses, the rise would be closer to 21%.
The board agreed to Abrahams’ modeling of two funding paths: one in which water rates absorb the full capital burden, leading to steeper future hikes, and another that shifts part of the cost onto property taxes, a move that hinges on potential legislative changes expanding tax-deduction limits.
Usage Projections
Water demand at Alta Oxbow Apartments (formerly Rivers Edge) totaled 691,978 cubic feet, well under the 850,000-cubic-foot forecast. However, the board chose to keep its conservative usage assumptions intact. Members noted that aging meters can under-register flows by up to 12% and pledged to revisit projections only after data from scheduled replacements confirm the actual impact.
For FY24, the town achieved the MassDEP performance standard of less than 10% of unaccounted water in the distribution system. Maximum available water usage is moderated by weather-related water bans and the town’s MassDEP permit under the Water Management Act regulations.
