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The Louisville MSD Board has approved a reduced rate increase for fiscal year 2026 after its public comment period. The board adopted a 3.9 percent increase for Jefferson County residents, down from the initially proposed 4.9 percent.

“We understand that no one ever wants rates to go up and have heard from the community and are making every effort to reduce the impact on our customers,” said MSD Executive Director Tony Parrott. “At the same time, investment is still needed to support the health, safety, and protection of waterways that are the backbone of our community’s quality of life. We will shift some capital needs to future budget years to lessen the rate increase we ask of our customers this year.”

With the lower rate increase, MSD engineers will re-prioritize a number of capital improvement projects planned across the service area. Under the approved budget plan, MSD will invest more than $302 million to support 181 capital-improvement projects.

The rate proposal adds $3.11 to the average monthly Jefferson County residential bill. For Oldham County residents, the proposal adds $1.57* to the average monthly residential bill. The increases take effect September 1, 2025.

Supporting essential services and infrastructure

MSD’s investments will support three utility services under one organization: wastewater treatment, stormwater management and Ohio River flood protection for the 800,000 people MSD serves. The vast majority – 90% – of the capital budget goes to work required or mandated to meet federal and state environmental standards, including ongoing projects to significantly reduce sewer overflows that pollute local waterways during periods of heavy rain. Other work is upgrading or replacing critical infrastructure and facilities that are well over a century old in the case of some underground sewer lines, and are in urgent need of repair or replacement.

Key capital projects include:

Paddy’s Run Flood Pumping Station: This vital facility protects more than 216,000 people and $34 billion in property. The budget plan invests $70.2 million in fiscal year 2025-26 toward a total $230 million replacement that will double pumping capacity and replace the existing 1953 pump station. Completion is expected in spring 2027.

Morris Forman Water Quality Treatment Center: Kentucky’s largest wastewater treatment facility, in operation since 1958 and now serving two-thirds of Louisville residents, is being modernized to sustainably produce Class A biosolids (nutrient-rich “soil amendments” from wastewater treatment provided to farmers across the region), meet stricter clean water regulations and create renewable energy. MSD is investing $83.5 million this budget year toward the total $285 million project. Completion is expected in 2028.

Odor Control Improvements: As part of the $49 million clAIRity initiative, MSD is replacing hundreds of outdated catch basins in several neighborhoods – each costing between $15,000 and $20,000 – and installing new odor control systems at treatment and pump stations over the next five years.

Keeping rates as low as possible while protecting public health and safety

MSD’s rate-setting process includes oversight from its citizen board.

“This decision reflects the board’s commitment to weighing the financial realities of the vital investments that are needed to protect the community with the concerns of our customers,” said MSD Board Chair Ricky Mason. “Our community deserves an MSD system that is reliable, resilient and ready, and we work hard to balance that with the priority to keep rates as affordable as possible.”

MSD actively pursues federal and state grants, low-interest loans, and innovative financing mechanisms to reduce overall project costs. For instance, the $230 million replacement of Paddy’s Run Flood Pumping Station is supported by a $74 million Kentucky Infrastructure Authority low-interest loan, a $6.2 million forgivable loan through the Clean Water State Revolving Fund and $14 million in Cleaner Water grants. The new fiscal year budget is also supported by a $150 million bond issue recently approved by the Louisville Metro Council. 

Only 6 cents of every rate dollar goes toward administrative expenses. The rest funds the operation, maintenance and improvement of essential infrastructure. Wastewater rates in Louisville remain competitive with regional peer cities, as they are currently lower than Cincinnati, Nashville and Atlanta.

Editor’s Note:

*Why is the Oldham County rate increase so different from Jefferson County?” 
MSD is operating under a previously approved rate schedule set forth by the Oldham County Fiscal Court when it managed wastewater services in the county, prior to MSD’s taking on Oldham County wastewater management in 2020. Oldham County rates are currently higher than Jefferson County, and that long-term rate schedule will eventually equalize with that of Jefferson County.

Grants and loan forgiveness part of MSD effort to minimize ratepayer costs 

LOUISVILLE, KY – The Louisville MSD Board approved resolutions to accept more than $28 million in grants and loan forgiveness to help pay for improvements in sewage treatment in Bullitt and Oldham counties along with flood protection in Jefferson County, at their meeting on October 28. 

“This is the latest example of MSD’s consistent efforts to reduce the costs to ratepayers of infrastructure projects by seeking alternative funding,” MSD Executive Director Tony Parrott said after the board vote. 

A $1.3 million grant from the Kentucky Infrastructure Authority (KIA) will help with work in Oldham County to construct interceptor sewers that will send flow to MSD’s Floyds Fork Water Quality Treatment Center in Jefferson County, allowing for the decommissioning of the outdated Ash Avenue wastewater treatment plant in Oldham. 

For Bullitt County, a $4.7 million KIA grant will fund replacement of an influent pump station at the Hunters Hollow wastewater treatment plant and allow for area wastewater to be treated at MSD’s Derek R. Guthrie Water Quality Treatment Center in Jefferson County. 

The ongoing project to replace the Paddy’s Run Flood Pump Station in Jefferson County receives $5.4 million in principal forgiveness on a $57.6 million KIA loan. 

The Paddy’s Run facility protects 216,000 people and 87,000 structures from flooding when the Ohio River rises. 

The Paddy’s run project previously received $17 million in grants. 

While finding alternative funding doesn’t prevent the need for rate increases, “it does allow MSD to deliver more needed and required projects with the same level of debt,” Chief Financial Officer Brad Good said. And that helps keep rate increases lower than they would be without grants and loan forgiveness.

MSD has published our FY24 Annual Comprehensive Financial Statement.