The Pagosa Area Water and Sanitation District (PAWSD) Board of Directors heard a presentation of the district’s draft budget for 2026 at an Oct. 15 special meeting.
PAWSD Administrative Assistant Cyndi Foster presented the draft budget to the board, explaining that the documents she was presenting went from the broadest look at the budget to covering specific elements in greater detail.
She noted that the district’s projected net revenue for 2026 exceeds its debt service obligations by about $1.3 million.
Foster indicated that summaries of the budget compare the 2026 draft budget for specific line items with the anticipated spending or revenues for 2025, which is a composite of the district’s current financial situation and any changes expected before the end of the year.
The budget information included in the board packet indicates that PAWSD’s revenues for its general fund, which primarily include property taxes, are expected to grow by 6 percent to $1,399,979 compared to the anticipated 2025 revenues, while expenditures are projected to grow by 10 percent to $1,654,507 in 2026 compared to the anticipated 2025 expenditures.
The PAWSD water enterprise fund’s revenue — including service charges, capital investment fees, loan proceeds and other fees — is expected to decline by 67 percent in 2026 to $10,371,950 compared to the anticipated 2025 revenues.
The fund’s expenditures are projected to decline by 62 percent to $12,058,390 compared to the anticipated 2025 expenditures.
According to the budget information, both of these changes are primarily driven by sharp declines in the fund’s loan proceeds and associated capital project costs connected to the completion of the Snowball water treatment plant expansion.
The PAWSD wastewater enterprise fund’s revenues are projected to rise by 6 percent to $6,600,092 in 2026 compared to the anticipated 2025 revenues, while expenditures are anticipated to fall by 23 percent to $10,437,505 compared to anticipated 2025 expenditures.
The projected 2026 ending fund balance for the PAWSD general fund is $1,249,852, down 17 percent from the anticipated balance at the end of 2025, while the fund balance for the water fund is projected to be $3,182,439, down 35 percent from the anticipated 2025 ending balance. The wastewater fund balance is projected to be $5,434,678, down 41 percent from the projected 2025 ending fund balance.
Foster stated that the operating budget considerations for 2026 include that PAWSD will have 44 full-time employees, that wages will grow between 3 percent and 6 percent depending on employee evaluations and merit increases for acquiring additional certifications, and that health insurance expenses will grow by an estimated 8.5 percent.
PAWSD board member Bill Hudson noted that the district had a large amount of training expenses for 2025 and asked if that would cost the district in the future if staff gains additional certifications.
PAWSD Operations Manager Andrew Connor explained that most of PAWSD’s staff are fairly young and need additional training to build their skills.
He added that retaining staff is critical since it can take several years for staff to have enough experience to run PAWSD’s plants and distribution system effectively without extensive supervision.
Hudson commented that these trainings would result in the district having to pay employees more, but commented that it is good for retention.
PAWSD District Manager/Engineer Justin Ramsey commented that having staff with appropriate certifications is critical for the district since certain roles require certain certifications, and PAWSD needs to have staff to fill them if the people occupying those roles leave.
PAWSD Programs Manager Renee Lewis added that employees also have to do large amounts of studying for certifications, which must be done outside of working hours.
Foster noted that capital expenditures would decrease for both PAWSD’s water and wastewater funds due to the completion of upgrades to the Snowball water treatment plant and the Vista wastewater treatment plant.
However, she added that there would be some capital expenses for upgrades to the water distribution and wastewater collection systems.
Foster also noted that the district would be adding four vehicles in 2026 — two that would be used by the two distribution technicians PAWSD plans to add next year, one that would replace an existing damaged vehicle and one that would be added to the truck fleet for PAWSD’s sewer operations.
Following further discussion of the details of PAWSD’s truck replacements, Foster returned to the budget to explain that the assessed value from the Archuleta County Assessor for PAWSD District 1, which includes the areas in uptown Pagosa Springs where PAWSD provides water and wastewater service, was down 0.06 percent from 2025 to $226,466,765 and the assessed value of PAWSD District 2, which includes downtown Pagosa Springs and outlying areas where PAWSD provides only water service, was up 16.45 percent from 2025 to $206,361,000.
She noted that Colorado Taxpayer’s Bill of Rights (TABOR) restrictions limited PAWSD’s mill levy in District 1 to 4.326 mills, lower than the taxpayer-approved levy of 6.090 mills, and limited District 2 levy to 1.334 mills, lower than the taxpayer-approved levy of 1.949 mills.
PAWSD board member Glenn Walsh commented that he would want to know more about the differences in property valuations between the two districts and its impact on district tax revenues due to the substantial differences between districts and between the valuations and the mill levy changes.
Foster stated that the district would likely not need to do a budget amendment in 2025.
Connor explained that the district has relatively few projects remaining to do in 2025, although issues like water line breaks are always possible.
He added that water line breaks downtown will now be more expensive due to the Town of Pagosa Springs imposing a new fee on excavations of streets, with the fee scaling on its rating of how good of condition the street is in.
Walsh commented that such a fee makes sense from the perspective of the town government, but PAWSD should keep this and similar fees “in mind” when local governments request fee waivers from PAWSD and should request waivers of fees in return.
Foster indicated that she had finished her presentation, but that she would welcome questions from the board.
Walsh commented that he had a significant number of questions, but that he would prefer to write them up and forward them to PAWSD staff for further discussion at a later date.
He proposed that other board members could also do this and that this would help refine the list of questions for staff at PAWSD’s next meeting in November.
Walsh added that the district’s recent large projects create a “new budget reality” and that the district needs to determine what this reality is and how to properly address it, which would be the focus of most of his questions.
Hudson stated that he would also send a list of questions to staff.
He noted that the district transferred money from the general fund to the wastewater fund in 2025 but was planning, according to the budget, to transfer money from the general fund to the water fund in 2026.
He commented that the wastewater fund is the most problematic fund for the district and questioned why the district is not transferring funding to it.
Ramsey explained that this transfer was driven by the approximately $1 million that PAWSD will owe the Colorado Department of Transportation (CDOT) for water line replacements as part of its U.S. 160 reconstruction project and that the transfer was designed to “soften that blow.”
Walsh commented that the district’s projections for how much water rates needed to be increased in its 2024 rate study may be less than the increasing costs for water service.
Hudson added that real estate prices appear to be going down, which likely will mean that PAWSD’s revenues will decline and reductions in its budget will be necessary in the future.
The board then contemplated a range of topics, including the inequalities of its arrangement to treat sewage from the Pagosa Springs Sanitation General Improvement District (PSSGID), the potential of raising wastewater fees to match the PSSGID’s rates, which would result in an approximately 65 percent increase in PAWSD’s fees; how treating sewage from the PSSGID may have contributed to PAWSD being required to perform expensive regulatory upgrades to its Vista wastewater treatment plant; how the situation might be different if this agreement had not been made; and if PAWSD had the right board members at the time.
Connor then spoke on the increases in operational costs that PAWSD is experiencing, including requirements from the Colorado Department of Public Health and Environment that PAWSD spend $1 million per year on reducing inflow and infiltration of outside water into its collection system and rising costs of water treatment chemicals.
Ramsey commented that he feels “fixing the sewer lines is a good idea,” but that he has difficulties with the new nutrient outflow standards and heavy metal testing requirements imposed by the state of Colorado.
The board then asked former PAWSD Business Manager Aaron Burns if he had any comments on the budget, which he helped develop.
Burns returned to the transfer of money from the general fund to the water fund, noting that PAWSD expects to get some grant funding for projects in the wastewater fund in 2026 and that the transfer of money to the water was partially intended to balance these grant revenues in addition to helping support the CDOT project costs.
The board then unanimously voted to adjourn the meeting.
josh@pagosasun.com
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