October 17, 2005

Peter Cook, Executive Director for the National Association of Water Companies, and Judy Sheahan of the Conference of Mayors staff provided background information regarding the history of the federal government’s role in developing the nation’s water infrastructure, and briefed 2005 Urban Water Summit participants about the current status of federal water legislation. Mayoral participants debated the role of the government in infrastructure financing.

Cook posed some questions regarding the current infrastructure debate, asking what is society’s obligation to provide safe water and who should pay, government or customers?

Cook said, “Most people would agree that society has a responsibility to ensure its citizens have access to the essential prerequisites of life, including safe water, sanitation, food, shelter, and clothing.”

“However, nothing is free,” Cook said. “No one argues that food, shelter, and clothing should be free or heavily subsidized to all member of society; however, some argue that safe water and sanitation are human rights and should be free or heavily subsidized.”

“The real question is how best to assure all members of society get the essential prerequisites,” Cook said. He continued, “In a free market economy the most efficient approach is that those who can afford it should pay the market price of each prerequisite with those that cannot afford the market price would get subsidies from society to cover what they cannot pay.”

“We need to address affordability to economically disadvantaged customers,” Cook said, “and we need comprehensive infrastructure planning and continuous investment so utilities remain viable over the long term.”

Briefing meeting participants regarding current legislative policies, Sheahan talked about how Congress has provided record low appropriations for the upcoming fiscal year, with the Clean Water State Revolving Loan Fund (CWSRF) receiving $900 million, down from $1.1 billion in 2005 and an all-time high of $1.3 billion. The Drinking Water State Revolving Loan Fund (DWSRF) faired better, with level funding of $850 million.

Sheahan outlined the Senate bill, S.1400 – The Water Infrastructure Financing Act. The bill authorizes $20 billion to EPA’s CWSRF and $15 billion for DWSRF over the next five years. It also authorizes $3 billion in grants over the next five years for technical assistance to small and rural communities. However, all upgrades using federal dollars need to comply with the Davis-Bacon prevailing wage law, which has caused the bill to stall in past Congresses.

Sheahan told the mayors that Congress has authorized money in the past for infrastructure investment but lacked the political will to appropriate the sums. Sheahan outlined the mayors’ efforts to remove private activity bonds (PABs) for water and wastewater infrastructure from the state volume cap. In doing so, there potentially could be $6 billion for infrastructure investment.

Fayetteville (AR) Mayor Dan Coody commented that he sees the need for multiple tools to assist communities in meeting their infrastructure needs but he also sees an obligation by the federal government. “We send money to the federal government every year,” Coody said, “We deserve to get some of it back to assist us with our efforts.”

For copies of the presentations, please see our website at usmayors.org/urbanwater.