Originally published in WRWA’s Fall 2025 Journal
Getting Ready for 2026: Budget and Funding Insights for Wisconsin Water & Wastewater Utilities
Andrew Kurtz, Vierbicher
Good budgeting is a year-round exercise.
Planning ahead for the 2026 fiscal year is more than simply good practice for Wisconsin municipalities and utilities-it is essential to ensure that funding, permits, and approvals are in place when they are needed. While most local governments will not finalize their 2026 budgets until November 2025, the decisions that shape those budgets are already happening. Updates to equipment inventories, capital improvement planning, preparations for Public Service Commission (PSC) rate adjustments, and Wisconsin Department of Natural Resources (DNR) applications for State Revolving Fund (SRF) loans often start up to a year or more in advance. Thinking of November as the final step in a 12- to 18-month funding process helps ensure that money is available when it is time to start construction.
Key Financial Planning Considerations
Before starting any budget process, utilities need to determine how projects will be paid for-whether through revenue bonds, loans, grants, or a combination of these. Utility leaders must understand their rate schedule and how those rates impact customers and how they align with broader community affordability. Affordability is not just about the utility bill. Households face rising taxes, energy, and housing costs, so utilities must be mindful of how rate changes pair with other financial pressures. The goal is to identify a rate structure that gains public support while still covering necessary costs. If revenue bonds are part of the funding plan, utilities must also begin preparing for a PSC rate case – a formal process required to raise water rates. Without PSC approval, a utility cannot increase rates to support capital investments or expanded operations. Because this process takes time, starting early is critical to meeting construction timelines and community expectations.
Understanding funding eligibility is also vital. Many communities can benefit from Wisconsin DNR’s State Revolving Loan Funds, USDA Rural Development loans and grants, or Community Development Block Grants (CDBG). Each program has different criteria, and a community’s median income, population size, or infrastructure age can affect eligibility. Smart planning means combining these sources effectively – layering loans with grants to lower the financial burden on ratepayers. To do this well, utilities need a clear Capital Improvement Plan (CIP) that maps out projects, timelines, and costs. A good CIP serves as a roadmap that ties together financial planning, regulatory approvals, and funding applications. It is the foundation for sound budgeting and strategic decision-making.
Combining Multiple Funding Sources
No single funding source will fully cover most projects. To lower the burden on local ratepayers, utilities should build a successful funding strategy that layers grants, low-interest loans, and principal forgiveness options. For example, federal funds for PFAS or lead removal may cover significant portions of project costs based on economic criteria. USDA or CDBG programs can add to this support, depending on community eligibility. State Revolving Loan Funds may also provide principal forgiveness (effectively a grant), reducing long-term debt. The goal is to build a funding stack that minimizes local costs while meeting all program requirements and maintaining project timelines.
Mapping Out the Timeline
Planning ahead is critical. The first major deadline is October 31, 2025, the last day to submit an “Intent to Apply” for SRF loans through the Clean Water Fund or Safe Drinking Water Loan programs. Missing this deadline means waiting another year for key funding opportunities. Final applications are due between January and June 2026. At the same time, draft rate cases and budget requests are typically prepared in August and September to coordinate with loan schedules. By the time public hearings and final budgets are held in November and December, most of the hard work should already be complete.
Prioritizing Projects
Since funding is always limited, projects must be prioritized carefully. Top priorities include those required by regulations, such as removing lead water lines or meeting new water quality rules for PFAS, phosphorus, or disinfection. Other factors include the condition of equipment and potential consequences of failure – fixing aging equipment is often more urgent than building new office space. External funding opportunities also influence priorities: grants and loans from USDA Rural Development, SRF Loans, and CDBG can make certain projects more attractive. It is also important to document priorities clearly in case new leadership takes office and needs continuity in decision-making.
Building a Smart Budget
When it is time to create the budget, there are five key questions to answer:
- Is a rate increase required and will the projected rate increases cover required loan payments without overburdening ratepayers?
- Does each project have a clear and realistic funding plan?
- Are any old loans eligible for refinancing, and has the budget been tested for possible interest rate hikes?
- Does the staffing budget account for pay increases tied to certifications and extra work from new regulations?
- Have construction cost estimates been adjusted for inflation using reliable industry benchmarks?
Good budgeting is a year-round exercise. Identifying and scheduling future capital projects is a proactive approach that enables planning for design, funding, and execution. Utility budgeting is more than just capital budgeting. Utility revenues, operating costs, personnel costs, and maintenance costs are all critical components of the utility budget that must be reviewed and included. Again, the November approval of the budget closes the loop on the budgeting cycle.
Planning for the Unexpected
Even with a solid plan, surprises happen. By developing several budget scenarios-basic, moderate, and optimistic-utilities can adapt if bids come in high, new regulations take effect, or other conditions shift. Regularly updating the capital improvement plan and securing formal approval helps ensure that future leadership inherits a clear, actionable roadmap. Clear communication also matters; explaining costs in everyday terms (e.g., “$1.25 per 1,000 gallons of water”) connects better with residents than raw budget figures.
Final Takeaways
Before wrapping up the next budget planning session, leadership should ensure these questions are answered:
- Which upcoming projects have regulatory deadlines?
- Could new regulations change project priorities?
- What funding sources are available for the projects?
- What are the application cycles for the funding sources for the projects?
- Have all necessary funding applications been submitted?
- Where can state and federal funding help reduce local costs?
- How much borrowing capacity does the utility or community have?
- Are there opportunities to refinance existing debt?
- What impact will the project have on user rates and budget limits?
- Are inflation adjustments included in project estimates?
- Does the wage plan support staff retention?
- Is there a clear plan to communicate budget impacts to the public and future leadership?
Wisconsin utilities operate in a complex environment of budget limits, debt caps, evolving regulations, and economic uncertainty. Treating budget adoption as the final step in a year-round planning process helps ensure safe, affordable utility services while minimizing surprises and unexpected costs. By combining funding sources, ranking risks honestly, and communicating clearly, communities can turn good planning in 2025 into solid results for years to come.
Learn more about how your project can benefit from Vierbicher’s public funding services by visiting here.