After what seemed to be a more positive year, the water and wastewater utility sector is getting its bearings to face yet another year of continuous cuts to the Clean Water and Drinking Water State Revolving Fund programs—$500 million over 2014 funding levels. As levels of public funding continue to fall, the growing gap between the need to fund our country’s aging water and wastewater infrastructure and available funding is starting to resemble a canyon. But this doesn’t spell gloom and doom for the industry in general.
Last June, President Obama signed into law the Water Resources and Reform Development Act of 2014 (WRRDA)—the first water bill since 2007. While the WRRDA does not offer a complete funding solution to meet the nation’s water infrastructure needs, it authorizes funding for more than $12 billion worth of new water infrastructure projects.
This new source of funding infuses optimism into the industry by promoting new jobs and economic growth, and kick-starting more projects.
The 2014 Water & Wastes Digest State of the Industry Report reflects the sector’s optimistic outlook for 2015 (page 13). ABR Research Inc. conducted the survey online, covering different market dynamics, including professional and business demographics; budget and purchasing involvement and expenditures; and importance of industry issues.
Survey results indicated that average municipal water and wastewater budgets in 2014 for water-related products and services remained stable—$2.8 million—and almost half of survey respondents (47%) are projecting a budget increase for 2015, which likely will come from a jump in service rates.
For a second consecutive year, the largest percentage of respondents’ budgets will be invested in sewer collection systems, pipe and distribution, and monitoring systems over the next 24 months, accounting for a total of 35% of their budget expenditures, up from 31% in 2013. It is likely that we will continue to see this trend as water and wastewater utilities tackle aging infrastructure with much-needed system rehabilitation and upgrades.
Although almost six in 10 (58%) reported a 10% increase in total municipal operating costs in 2014, overall industry optimism continues an upward trend. Eighty percent of respondents rated this year as good, very good or excellent; and even more (86%) expect that 2015 will be a good, very good or excellent business year.
Whether or not this optimism is based on already low expectations from sluggish to non-existent growth in the past few years, if the rise in municipal spending matches survey respondents’ upward projections, the water and wastewater sector might indeed witness a modest upswing in 2015.