Water Infrastructure Woes: Drowning in Red Ink

The fluid most on the minds of stakeholders currently dealing with the future of the U.S. water infrastructure appears to be not water, but rather, red ink.

In September 2002, the U.S. Environmental Protection Agency (EPA) issued a report entitled "The Clean Water and Drinking Water Infrastructure Gap Analysis," in which it estimated the funding gap over the next 20 years would be a staggering $535 billion. This amount is the agency's estimate of what it would cost over the next two decades for upgrades and operation and maintenance of wastewater and drinking water treatment systems. Congress typically appropriates about $2.1 billion annually for wastewater and drinking water state revolving funds (SRFs) that are used to pay for infrastructure improvements and other programs. These SRFs also emphasize providing funds to small and disadvantaged communities.

In January 2003, EPA held a forum aimed at discussing options that could be used to close the funding gap without requiring a large funding increase from the federal government. Rate increases, more efficient water use, better asset management, focusing more on the watershed approach and exploring the possibility of privatizing some areas of operations were suggested as possible solutions. The question of privatization can be a sensitive topic, however, especially to representatives of public utilities who argue that unless it is done carefully, the outcome would be higher rates and less accountability with no guarantee of improvement in service or efficiency. On the flip side, representatives of privately owned utilities emphasize that they are able to conduct a more efficient operation than public utilities, which ultimately can mean lower costs and more opportunities for innovations.

Critical of the EPA report, the Association of the Metropolitan Sewerage Agencies (AMSA) responded in July 2003 by issuing a white paper, "EPA's Solutions Leave Large Wastewater Funding Gap." AMSA takes exception to EPA's position that the solution to the clean water and drinking water infrastructure-funding gap rests solely on local government. AMSA's position is that other critical U.S. infrastructure sectors, such as highways and airports, receive the benefits of dedicated federal trust funds and it is time for the nation's water to receive equal treatment. The AMSA white paper's conclusion is that while municipalities must continue to do their part concerning water infrastructure funding, so too must the states and the federal government by implementing a long-term sustainable financing program to invest in the U.S. clean water and drinking water infrastructure.

Two bills concerning water infrastructure funding currently are under consideration in Congress. In January, Reps. Sue Kelly (R-NY) and Ellen Tauscher (D-Calif.) introduced The Clean Water Infrastructure Financing Act of 2003 (H.R. 20). It would provide grants to financially distressed communities to pay 25 percent of the costs of projects on states' priority lists that exceed $1.4 billion. At press time, the bill had been referred to the House Subcommittee on Water Resources and Environment.

The other piece of legislation under consideration now is S. 170, which was introduced in the U.S. Senate by Sen. George Voinovich (R-Ohio). The bill would authorize $15 billion over five years for the clean water state revolving fund. At press time, the bill had been referred to the Senate Committee on Environment and Public Works.

On July 25, the full House of Representatives passed the appropriations bill (H.R. 2861) that includes funding for EPA for FY 2004 at a total level of $8 billion. This amount is $375 million above the President's request and $74 million below FY 2003. As part of the total appropriation to EPA, $1.2 billion is authorized for the clean water revolving fund for FY 2004. The $1.2 billion authorization is a $350 million increase from EPA's FY 2004 request, but that amount still falls $150 million below the FY 2003 amount of $1.35 billion that was approved by Congress last year. The House agreed to maintain the FY 2004 funding for the drinking water state revolving fund at $850 million, the same level as FY 2003. Now the bill will move to the House and Senate Conference Committee where the committee members will attempt to resolve the differences between the House and Senate versions so that a final bill can be passed to the President seeking his approval.

Clean water is of paramount importance to this nation -- both to the continued well-being of our citizens and our economy -- and should be funded accordingly. Congress needs to demonstrate leadership this session by increasing the budget allocation for drinking water and wastewater infrastructure funding to prevent a future crisis involving clean water shortages.

This article originally appeared in the 09/01/2003 issue of Environmental Protection.

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