By Judy Sheahan
September 24, 2007

Conference of Mayors President Trenton Mayor Douglas H. Palmer testified September 19 before the Senate Energy and Public Works’ Subcommittee on Transportation Safety, Infrastructure Security, and Water Quality on the importance of investing in our water and wastewater infrastructure to keep the United States economically viable.

The Subcommittee, chaired by Senator Frank Lautenberg (NJ), is planning on introducing wastewater infrastructure legislation to help finance this critical infrastructure need. The Environmental Protection Agency (EPA) estimates the cost or “Needs Gap” to be approximately $500 billion over the next 20 years.

Palmer highlighted the Conference of Mayors 10–Point Plan entitled Strong Cities…Strong Families…for a Strong America which calls for tax incentives, bonds, and other measures to support local, state, and private sector efforts to improve the nation’s infrastructure. Palmer said, “These incentives and bonds would help create thousands of jobs and revitalize critical infrastructure that is necessary to keep the United States competitive.”

Palmer outlined some of the recent findings from studies conducted by the Conference of Mayors’ Water Council (MWC) including a 2007 report summarizing money spent by local governments on water and sewers.

“In Fiscal Year (FY) 2005, local government spent $82 billion to provide sewer and water services and infrastructure, up from $45 billion in FY 92. Total spending on sewer and water from 1991-2005 was $841 billion,” Palmer said, “We estimate increased spending by local government at $110 billion, annually, by the year 2010.”

“The cost for water infrastructure has been squarely on the shoulders of local government and rate-payers,” Palmer said, “with local government paying for 99 percent of drinking water and 95 percent of clean water services and infrastructure.”

Palmer outlined some potential financing solutions including:

• Providing grants to municipalities, either directly or through states, for water and wastewater infrastructure where there is an affordability issue or when a community faces severe environmental problems including communities that have combined sewer overflow problems;

• Expanding some portion of the current 20-year loan category to include a 30-year no-interest loan category, or a 30-year low-interest loan payback period, under the State Revolving Fund (SRF) loan program for water and wastewater infrastructure investment;

• Modifying current tax law by removing Private Activity Bonds (PABs) used for water and wastewater infrastructure from state volume caps;

• Annually appropriate the Clean Water SRF at $1.355 billion or more, and the Drinking Water SRF at $850 million or more; and

• Extending eligible SRF activities to include more comprehensive efforts to improve water quality including programs to reduce municipal storm water runoff including green infrastructure programs.

The Environmental Protection Agency’s (EPA) Assistant Administrator for Water, Ben Grumbles, also testified and outlined EPA’s approach for sustaining water resources which EPA calls the “Four Pillars of Sustainable Infrastructure.” The Four Pillars include: better management, full cost pricing, water efficiency, and the watershed approach. Grumbles also endorsed removing the State volume cap on the use of PABs for water and wastewater infrastructure.

Senator Lautenberg (NJ) expressed dismay that the Administration’s 2008 proposed budget only asks for $680 million for Clean Water SRF, down from $1.3 billion a few years ago. Lautenberg questioned Grumbles whether progress to meet the “Needs Gap” was truly possible with the Administration asking for half the money.

Grumbles responded that “progress can be made” while Lautenberg retorted “inches are not progress.”

Senator George Voinovich (OH) also questioned the Administration’s priorities. In response to Grumbles saying they were doing what they could given EPA’s ‘budgetary constraints.’ Voinovich said, “We are spending $600 billion in Iraq but things in the U.S. are not getting done.”

Senator Voinovich Asks for EPA Flexibility

Voinovich told Grumbles that he tried to do all the things EPA has outlined in its Four Pillars including full cost pricing. He said that as Mayor he raised rates by 130 percent but his community is still facing problems. He outlined Akron’s combined sewer overflow problem, which is priced to cost nearly $400 million, and could possibly be paid for in 30 years. However, according to Voinovich, Akron is under a consent decree to have it completed in 15 years. Voinovich asked Grumbles why EPA couldn’t be more flexible. Grumbles responded that EPA tries to be flexible but they also need clean water now. Grumbles said that more approaches were needed including an infusion of private sector money.

Palmer reaffirmed Voinovich’s statement. “We are spending billions of dollars in Iraq and that is fine, but as my mother used to say, you have to take care of your own home first. We need to invest in our entire infrastructure – our bridges, steam pipes, roads, and highways – we need to invest in America’s future to stay globally competitive.”

For a copy of Mayor Palmer’s testimony, please check out usmayors.org.