(TRACY, CA) – A controversial proposal within the City of Tracy could significantly increase the water rate for the City’s residents.
The proposal was put forth after the City conducted what is supposed to be its routine ‘Water and Waste Water Study’ that is to be done every 5 years.
Credit: City of Tracy
The water rate study, conducted by Black and Veatch, serves the purposes of evaluating infrastructure, ensuring compliance of required legal regulations and project future operation and capital costs.
During a city council meeting on Feb. 17, 2026, Assistant Director of Utilities, Stephanie Regina Heistand stated, “The last Water Rate study was conducted in 2017, and increases were approved by the City Council and implemented in 2018 and 2020.”
Photo Credit: City of Tracy
With more than five years having passed since the city last conducted a study, several factors contribute to a steep increase in water rates.
In a statement received from the City of Tracy to OpGov.news, it stated, “ Rising operational costs, aging infrastructure, and new state and federal requirements have outpaced the City’s current revenue, requiring the use of reserves in recent years — a model that isn’t sustainable long term.”
Unlike other cities, Tracy garners its revenue through a self-supporting enterprise fund. Instead of using resident tax dollars to fund water services, funds are generated through monthly water bills by the City’s residents and from development fees that are paid by construction builders during the construction process.
Photo Credit: City of Tracy
While the City of Tracy saw its operating revenue generate some 25.2 million dollars for the fiscal year ending in June 2025, it also saw its operating expenses at 27.5 million dollars.
With a significant 2.3 million dollar shortfall, the City of Tracy fell back on its reserve funds. Disregarding the reserves, the city does not meet the requirement to cover expenses.
These lasting impacts can damage the city’s credit strength and severely tighten its financial flexibility. To combat and avoid this issue, three scenarios were presented before the Tracy City Council to rectify it.
The first scenario, which would be the more immediately beneficial plan for the city, shows a five-year plan where residents would see a massive 35% increase in their water rate for the first year. The second year would show 32% before it would drastically decrease for years three through five, with five being the lowest.
Photo Credit: City of Tracy
The second scenario would offer a more middle-ground approach where residents would see a balanced increase of 31% for years 1 and 2 before again decreasing in years three through five, with five being the lowest.
Scenario three would see a 28% increase for years one and two and a balanced rate of 4% for years three through five.
Regarding this, the City of Tracy also informed OpGov.news that, “If the proposed rates pass through the Proposition 218 process, the average residential customer using 16 ccf (units) per month could see a $24 - $25 increase in their monthly utility bill.”
Credit: City of Tracy
Historically, the City of Tracy has had one of the lowest water rates compared to other surrounding cities. This would move the City from the least expensive end of the spectrum towards the middle.
“As a young homeowner already navigating the realities of today’s economy, the proposed 30% annual water bill increase for the next decade is a serious issue.” Alex, a Tracy resident, told OPGOV.news.
He added, “As I work to build a stable future in this environment, proposals like this make long-term planning more difficult, which is why I felt it was important to submit a protest before the June 2 deadline.”
Credit: City of Tracy
Through Proposition 218, the power local government holds on imposing taxes is limited. Notices regarding the new proposed rates and calculation must be mailed out informing citizens in which voter approval is required.
For low income people who would not be able to afford a rate increase have a customer assistance program and can contact the City of Tracy’s Finance Department.
If the new Water Rates are approved following the hearing, it will launch effective July 1, 2026.
Similar new rates were recently implemented in other cities across the county, including the Town of Gilbert in Arizona and Maui County, Hawaii. Complications with rate increases and rising costs of living have only increased tension in these locations, with a marked increase in division between residents and their respective councils.
If you would like to reach to me contact me at yikaileau.w@lead4earth.com
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