Running on Empty
The Obama Administration released its FY2015 Budget request, and all signs point to utilities tightening yet another notch on the proverbial municipal budget belt.
The request proposes $500 million in cuts to the Clean Water and Drinking Water State Revolving Fund programs (CWSRF and DWSRF), with funding for the CWSRF and DWSRF estimated at $1.018 billion and $757 million, respectively. This comprises a $350-million cut to the CWSRF and a $150-million cut to the DWSRF over last year’s funding levels.
While not surprising, the news of the proposed budget further exposes the growing gap between the need for funding: $300-plus billion needed for sewage collection and treatment infrastructure, and $384 billion for drinking water infrastructure improvements over the next 20 years, according to the U.S. Environmental Protection Agency (EPA).
A closer look at EPA’s FY2015 budget proposal reveals that, while some water-related issues will deal with cuts, other will receive increased funding.
The FY2015 budget request includes $7.5 million and 64 staff members to expand existing community-based efforts, providing green infrastructure technical assistance for up to 100 communities to help them employ cost-effective and sustainable approaches to water management.
EPA also is directing $8 million and 10 staff members to protect the nation’s water for the long-term benefits of healthy waterways, which are vital to local economies, public health, property values, tourism, fishing and hunting.
Unfortunately, levels of public funding continue to fall. In recent years, less than half of total public funding for transportation and water infrastructure in the U.S. has been devoted to capital spending for activities such as construction and equipment purchases. State and local governments have accounted for about 60% of those expenditures, and the federal government has accounted for about 40%. More than half of total public spending for such infrastructure has been used for operation and maintenance, of which state and local governments have provided about 90%, according to a Congressional Budget Office report.
As we squeeze every last drop out of municipal budgets, and federal funding for water infrastructure continues to dry up, we will need to determine where the money is going to come from. One step utilities will have to take is to carefully evaluate the full cost of providing a safe supply of drinking water and sanitation services to their customers and determine how to set rates that truly reflect those costs. Because infrastructure funding cannot rely on rate hikes alone, municipalities may have to warm up to private dollars to bridge the gap.