On Wednesday, Central Alabama Water approved an operations and maintenance budget and a capital budget. The budgets do not include a rate increase for customers and are expected to decrease in the early part of next year.
The bylaws adopted by the new board, based on the legislation creating the regional board, require the board to adopt an operating budget by December 15 of each year, or the utility will operate on the preceding year’s budget until a new budget is adopted.
Carol Phillips of Warren Averett, an accounting firm, presented data showing that Birmingham Water Works has consistently spent more than its budget. She started her presentation by highlighting two important sections of the new legislation (emphasis hers).
- "A regional board shall assure that the rates for water and other services are reasonable and that industry best practices are followed. A regional board shall assure that the regional board operates its system or systems efficiently, in compliance with applicable laws and regulations, including this division, and exclusively for the benefit of the customers of the regional board."
- A regional board may not make payments to any municipality, county, or other entity except for reasonable consideration in payment for goods or services required in the operation or management of the systems operated by the regional board.
Based on these sections, the staff is working to reduce expenditures that do not comply with the law, thereby lowering the overall budget.
“We want to make sure we’re using the funds our customers have entrusted to us as efficiently as possible before we consider a rate increase,” Tommy Hudson, chairman of the board for Central Alabama Water said in a statement. “These budgets are fiscally responsible based on our current situation. We will continue working to make this system responsive to the needs of our customers.”
The 2026 operation and maintenance budget approved was very similar to the budget that was prepared and discussed in two workshops this fall, before the board hired a new chief executive officer.
The capital budget has been reduced from what was previously presented.
“Due to the fact that I only recently came onboard, we’re proceeding with the previously developed budgets; we absolutely could not have let the 2025 budgets roll over to next year,” explained Jeffrey F. Thompson, CEO of Central Alabama Water. “The utility has overspent its operation and maintenance budget the past several years and the deficit spending must end now. That’s why we thought it was important to pass these budgets as a stop-gap measure.”
“Our team will keep working to make changes that will turn Central Alabama Water into a world-class utility,” Thompson added. “We see the budget passed today as a step in the right direction. We’re actively researching and analyzing each department to find additional savings, but it will take some time before we’re ready to make recommendations. I expect we will have a thorough revision to present to the board in the first quarter of 2026,” Thompson said.
The meeting can be found on the Central Alabama Water Facebook page.
The presentation that showed the proposed budget is below.
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