The Pagosa Area Water and Sanitation District (PAWSD) Board of Directors discussed its 2026 budget at a Nov. 13 meeting, including changes from the prior draft and planning for future expenses.
The board previously reviewed the 2026 budget at its Oct. 15 special meeting, which was covered in the Oct. 30 issue of The SUN.
PAWSD Interim Comptroller Cyndi Foster opened the discussion by explaining revisions to the budget that had been made since the last meeting, including adding a comptroller and assistant comptroller position to the budget and slight changes to the cost of workers’ compensation insurance, which remained the same as its 2025 cost.
Foster added that the general pumps and lift stations line item was increased from $60,000 to $120,000 due to the district losing a critical spare pump during the recent flooding event when a pump at the Mockingbird Place lift station was lost due to a lightning strike.
She then explained that the sludge removal and processing line item was increased from $100,000 to $120,000 since PAWSD plans to haul sludge year-round instead of storing it in the winter months.
PAWSD Operations Manager Andrew Connor stated that, since the construction of the biosolids greenhouse at the district’s Vista wastewater treatment plant, the district has stored sludge at the greenhouse over the winter until the Archuleta County landfill allows it to dump the sludge in the spring.
However, Connor indicated that the district had spoken with Archuleta County Public Works Director Mike Torres and he is willing to allow PAWSD to dump the sludge year-round.
Connor commented that this would cause the dumping fees to increase due to the sludge being heavier, but that this would be beneficial to the district due to the reducing odors from the accumulated sludge.
PAWSD Programs Manager Renee Lewis commented that the greenhouse is beneficial in that it allows the district to store sludge instead of having to haul it to another landfill.
Following a discussion of the origins of the greenhouse project and the issues involved with it, the board heard a public comment that highlighted the potential risks for farmers using sludge as fertilizer since shifting government regulations could lead to their land being condemned.
PAWSD board member Bill Hudson asked if the increase in the general pumps and lift stations line items put any strain on the budget.
Foster replied that it did not, and Connor added that there is a possibility that the district could receive some amount of flood damage reimbursement for the loss of the pump.
Hudson questioned the changes in the district’s insurance costs, which increased substantially in 2025 but are expected to go down in 2026.
Foster explained that the district had a large number of insurance claims in 2025 due to vehicles colliding with animals and other issues, and that the costs are expected to go down in 2026.
In response to a question from Hudson, Connor explained that the district plans to replace a section of older pipeline that supplies water to the Snowball water treatment plant.
PAWSD District Engineer/Manager Justin Ramsey explained that the new pipe will also be able to transport more water due to the pipe creating less friction with the water than the present pipe.
He added that this change is included in the district’s capital improvement plan.
PAWSD board chairman Gene Tautges asked Connor why the cost of water treatment had increased by 58 percent.
Connor explained that the costs have increased due to the new Snowball plant requiring more chemicals to operate, and because the district has to be prepared to cover costs of expensive equipment breaking down at this plant while it files a warranty claim.
PAWSD board member Bruce Jones asked what the district’s accountants believe would be an ideal reserve for its various accounts and if the district is meeting those.
Lewis explained that the reserve levels are partially driven by the district’s rate study and that the reserve levels have varied over her time with the district.
PAWSD board member Alex Boehmer and Tautges noted that the district’s auditor stated that its general fund reserve is at a healthy level and that the district is above its reserve obligations for its various loans.
Jones asked if any funding is included in the budget for establishing a pipeline from Stevens Lake to Lake Hatcher to improve the district’s water supply.
Lewis stated that no funding is included in the 2026 budget for this project, but that the district might want to investigate adding funding since she recently submitted a grant application to help with funding this project.
Ramsey added that he hopes that the owner of Dutton Ranch, where Stevens Lake is located, will pay the grant matching costs for the project in exchange for the benefits of the project to their ranch.
Tautges commented that he expects negotiations on this issue to extend “well into 2026.”
Ramsey added that no construction is likely in 2026, but the district would have engineering and surveying costs for the project.
In response to a question from Tautges, Lewis added that the budget could absorb the approximately $303,000 cost of the engineering for the project if the district does not receive a grant.
The board agreed that the district should add a line item in the 2026 budget for this project.
PAWSD board member Glenn Walsh asked for “clarity” on how the district plans to handle the chief financial officer, comptroller and business manager positions.
He explained that he did not understand how the district’s administrative staffing budget increased by $224,000.
Walsh added that he is not a “big supporter” of increasing the number of administrative positions and that he would like to receive additional information about the administrative staff and their wages outside of the meeting.
Jones added that he would not want this to be a public communication since he did not feel the public knowing the individual wages of PAWSD staff is appropriate.
Walsh noted that this is a public record.
Tautges noted that he tended to agree with Walsh’s concerns, but that he was also concerned about having a backup in case the leading financial officer is incapacitated.
Walsh commented that he had questions about the district’s mill levy calculations since he did not see how property tax collections in PAWSD District 1, which covers the areas where customers are connected to both the PAWSD water and wastewater systems, could be up by 16 percent while valuations dropped by 0.6 percent.
He added that he was also unclear how tax collections were not rising in PAWSD District 2, which covers customers only receiving water service, since valuations rose by 16.45 percent in that district.
Walsh commented that, without further explanation, he likely would not vote for a 16 percent increase on property tax collections in District 1 even if it is legal.
Walsh proposed that the board transfer $330,000 from its general fund to the wastewater fund to help reduce the increases in sewer rates.
“I just don’t think it’s fair to the wastewater, because the people who pay a wastewater bill pay the majority of the property taxes,” Walsh said, referring to the large increases in sewer rates.
He added that the transfer could also be put in as a placeholder and the district could decide at the end of 2026 how large of a transfer to do based on its grant revenues.
Walsh added that he would also like a breakdown of how much of the district’s legal expenses are for its litigation with the San Juan Water Conservancy District over the sale of the Running Iron Ranch and how much are not.
Foster stated that she would be able to do this.
Jones asked if there would be additional expenses when the case goes to trial in 2026, which Foster indicated is correct.
Walsh commented that he sees this year as a placeholder year until the district completes a new rate study.
“I think all the things that you’ve asked for, we can deliver,” Lewis said.
Walsh then spoke on his objections to the rate study, explaining that he would want to exclude potential costs for meeting upcoming regulations to reduce the amount of nitrogen and other compounds in wastewater outflows from the rate study since these costs would severely impact the district whether it tried to accumulate money for them or not, and he would rather have more customers when these costs hit by encouraging development.
Boehmer expressed agreement with Walsh’s comments, adding that the costs would “devastate” the district with either approach.
The board then heard a public comment from Carl Young, who questioned why the income from treating wastewater from the Pagosa Springs Sanitation General Improvement District (PSSGID), which serves downtown Pagosa Springs, had not increased despite growing development in the downtown area.
Ramsey explained that PAWSD has a court-arbitrated agreement with the PSSGID that determines the fees PAWSD can charge for treating wastewater from downtown.
“It’s not a good deal for PAWSD,” Ramsey said.
Walsh commented that the PSSGID recently passed a sales tax increase to help fund its operations, meaning it will be “extremely well funded” in the future.
He added that the PSSGID pursuing building its own water treatment plant could help PAWSD with meeting upcoming regulations and serving its customers outside of the PSSGID.
Lewis commented that the PSSGID is planning on pursuing its own plant and has indicated that it is planning to provide the contributions to the PAWSD Vista wastewater treatment plant upgrades as required by its agreement with PAWSD.
Ramsey noted that the agreement between the PSSGID and PAWSD requires the PSSGID to help pay for expansions to the Vista plant, with the contribution amount set by the amount of wastewater coming from the PSSGID.
Hudson commented that he believes that the PSSGID included $25,000 in its 2026 budget to pay PAWSD, adding that the district might be planning to make these payments over “10 years.”
Lewis added that the district requests frequent updates from the PSSGID about when this payment will be made.
Tautges asked when payment is expected.
Lewis stated that the Vista plant upgrades would be completed in June or July 2026 and that PAWSD had discussed a payment in the spring of 2026 with the PSSGID.
Lewis noted that the payment was not included in the draft version of the budget due to uncertainties about if the PSSGID would be able to pay in 2026 prior to the passage of their sales tax increase.
However, she added that this contribution would be added to the final budget.
Walsh commented that he did not expect the PSSGID to pay the approximately $2.5 million it owes in one payment and expects it to instead ask to pay its portion of the costs as a regular contribution to PAWSD’s repayment of its loans for the project.
He added that the board could agree to this or not, but that he would support the idea as long as the PSSGID understands that it may have to still pay this cost even when it has its own sewer treatment plant.
Lewis commented that the PSSGID had “made it seem like they cut a check.”
Tautges commented that he would want to ensure that PAWSD stays in the “driver’s seat.”
He stated that PAWSD has loaned the PSSGID money before and went through litigation related to that loan.
He added that, now that the PSSGID passed its sales tax increase, PAWSD would expect it to repay the costs it owes to PAWSD.
Walsh commented that the sales tax increase would place the PSSGID in a position of power with its expanded funding.
“We will talk to them at the beginning of December and I will echo the board’s concern and request for clarification,” Lewis said.
Tautges noted that PAWSD has made the obligation to pay for the Vista upgrades and now has a “reasonable expectation” that the PSSGID pay its share of the costs.
Walsh noted that the PSSGID has stated its intent to pay these costs and that he does not expect the issue to be contentious.
Lewis commented that the meetings have been going “extremely well” and that the PSSGID and PAWSD have a good working relationship.
“Jed Clampett was real nice after he took that shot,” Walsh said.
josh@pagosasun.com
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