During a contentious meeting and with protestors outside, the board of directors for Alabama’s largest water utility approved a revised 2026 budget Friday that cuts spending 25%, effectively ending a project to stabilize a high-hazard dam and cutting 225 jobs from a workforce of 688.
The board also approved a resolution clarifying gray areas in a state law to give Central Alabama Water’s chief executive sweeping authority to make decisions without board approval.
“We might as well not be here,” said board member Sheila Tyson, who opposed the resolution in a 4-2-1 vote.
After the meeting, she called the utility’s budget and board a joke.
“We’re going to get an Oscar for this right here,” Tyson said. “You will pass a resolution that takes every bit of authority that we have from us to give to someone that has laid people off in a lab that tests our water … and you will put that in his hands?”
The utility has been grappling with financial challenges for years. A state law restructured the utility and its board last year, shifting majority board representation from the city of Birmingham to suburban areas. Due to an ongoing federal lawsuit city officials filed challenging the new law, CAW can’t finance capital projects through the bond market. A global bond-rating agency also downgraded the utility’s rating last month, citing weakening liquidity, aging assets and substantial management reorganization.
The 2026 budget the board approved in December was already constrained, and CEO Jeffrey Thompson said then that senior managers were working on further cuts. Neither the previous budget nor the revised one raises customer rates, which have increased almost every year in the past decade.
Compared to the previous 2026 budget, the revised budget cuts CAW’s capital spending 54%, from $75.8 million to $35 million. The new budget reduces operating expenditures 10%, from $139.9 million to $126 million.
“The staff has worked extremely hard on this more austere budget,” Thompson said. “This is our effort to act in a very responsible financial manner and to hold ourselves to a higher standard than the adopted budget from Dec. 10.”
Cuts made to dam rehabilitation, pipeline replacement projects
The largest cuts in the capital budget are to the Lake Purdy Dam stabilization project and to projects to replace main pipelines — some of which are more than 100 years old. Managers have said these aging pipelines are largely responsible for CAW losing approximately 40% of the water it treats through leaks.
The revised budget reduces spending on stabilizing the 116-year-old dam from $22 million to $7.7 million. A vice president of CAW’s former consulting engineer has said the dam isn’t safe enough and its failure would threaten lives and property in a 40-mile wave stream.
The board voted in July to complete only the first phase of a four-year stabilization project that began in November 2024 with the approval of the previous board. In January, Thompson halted the project before the contractor finished phase one, which the $22 million in the previous budget was supposed to cover.
In a presentation to the board Friday, representatives of CAW’s new consulting engineer said immediate action is needed to address the dam’s vulnerabilities due to the incomplete construction project.
“We’ve recommended that Central Alabama Water design and construct short-term measures to bring the dam as close as possible back to pre-construction conditions,” said Mark Kacmarcik, a dam engineer with Jacobs Engineering.
The current contractor for the dam project could complete the short-term measures by the end of July, said Josh Crowe, a program manager for Jacobs. After that, the utility should compare the dam’s condition against established dam-safety criteria and complete any necessary modifications, Kacmarcik said.
Funding to replace main pipelines dropped from $15 million in the previous 2026 budget to $2.1 million in the revised budget.
The water works began replacing main pipelines on an accelerated schedule in 2020. Even on that sped-up timetable, replacing all the targeted pipelines, which previous managers said make up of 14.1% of the system but account for 67% of leaks, would have taken 40 years.
Ray Sloan, chief reliability officer for CAW, said Friday the small amount of pipeline replacement in the revised 2026 budget won’t make much impact on the amount of water the utility is losing through leaks.
But the budget includes an addition of half a million dollars for a leak survey to determine the location of underground leaks, he said.
“The major impact for reducing non-revenue water will be in that $500,000 for finding leaks that are non-surfacing,” Sloan said. “So that’ll be in the leakiest parts of the system, the oldest parts of the system, the areas where we can make the biggest bang for our buck.”
Personnel decreases lead cuts to operations budget
Managers reduced the operating budget by $13.9 million, mainly through personnel cuts.
The utility laid off 135 employees last week. It previously fired dozens more after adopting a new handbook last month and conducting unannounced drug testing.
According to a CAW press release, the layoffs affected all the utility’s departments. Tyson said after the meeting Friday that only one employee remains in the utility’s laboratory that performs water-safety tests required by the Alabama Department of Environmental Management and the U.S. Environmental Protection Agency.
Protestors outside, allegations public prevented from attending
As the three-hour meeting got underway inside CAW’s administrative building in Birmingham, approximately 45 people gathered outside, some of them protesting as part of an event organized by the Southern Workers Assembly and the Birmingham chapter of the Democratic Socialists of America.
The organizers, who say new water works managers have mistreated employees, urged residents to stand with employees CAW recently dismissed.
State Rep. Juandalynn Givan, D-Birmingham, said residents who wanted to attend the meeting were turned away because CAW managers made sure the meeting room’s seats were filled
“As I stood at the door, I stood with those people,” said Givan, who was admitted to the meeting after board member Jarvis Patton Sr. and Tyson persisted in asking board Chair Tommy Hudson to allow elected officials to enter. “They let me in, but I am here to represent the people, and their voices should be allowed to be heard.”
“What we just witnessed here is that this board literally passed a resolution that said their CEO has all power,” she said. “There is no need for this board. There is no need if he can make policy. I’ve never heard of such, and especially not with a public utility.”
CEO’s authority expanded
The resolution the board approved that outlined the CEO’s authority also ratified the employee-handbook changes Thompson made. At the board’s last meeting, one of CAW’s external attorneys, Shan Paden, said the board needed to review the handbook and take action on policy changes.
On Friday, he said board approval of the new handbook wasn’t necessary because of a provision in the previous version, adopted in May 2024. That provision states management may, at its discretion, modify or eliminate policies in the handbook at any time and without notice, Paden said.
According to the state law that restructured the water works last year, the CEO has full authority to manage the operations of the utility, “subject to policy directives and other governance decisions adopted by the board of directors.”
The resolution the board approved states that:
- The CEO has policy-making authority subject to policy directives and other governance decisions adopted by the board.
- The CEO should advise the board of any policy directives issued by the CEO at the next meeting of the board and make available a copy of such policy directives.
- The CEO may appoint all employees of CAW, subject to the limitations set forth in Alabama law, and remove all employees the CEO has appointed.
- The CEO has authority to contract for all personal property the utility requires, subject to state bidding requirements and provided the purchases are within budget limits adopted by the board.
- The CEO has authority to change the salary administration plan, provided any changes are within budget limits set by the board.
