I had an opportunity to speak on a very distinguished panel of experts today at the Colorado Contractors Association. The topic was funding of water and sewer infrastructure in the US and the panel was presented by WIN Colorado (http://wincolorado.org/). Other panelists included Ann Terry (Colorado Special District Association), Sam Mamet (Colorado Municipal League), and former state senator Jim Whitehead.
I didn’t have any prepared comments, but a summary of what I said is included here:
- There are no utilities that we’ve ever seen who can claim that they are truly out in front of the aging infrastructure issue.
- The problem aging infrastructure can be defined by a 3-S framework:
- Systemic – the problem hasn’t emerged overnight, it has been building to this level for 50+ years. That doesn’t happen without systemic problems with addressing infrastructure issues as they occur. Delayed and deferred maintenance happens for reasons and those reasons can be tracked to the local governments who own these utility systems.
- Subsidization – a big part of the problem today is a result of large subsidization of the initial infrastructure to begin with. After passage of the Clean Water Act and Safe Drinking Water Acts, federal and state governments provided lots of grants to put infrastructure in the ground. Local governments had no “skin in the game” so to speak and therefore never recognized the value of the assets they were charged with maintaining. Rates could be kept artificially low so long as the bulk of the required capital was coming from other people’s money.
- Serious – The ASCE pegs our 5-year funding shortfall at 108 billion; the US Conference of Mayors estimates a 20-year gap of 2.5 trillion. These are big dollars. The consequences of infrastructure failure are becoming more common and that means that local governments will be forced to spend more on the problem in the future.We are reaching a point where the problems cannot be deferred or delayed much longer.
- Federal and State funding is part of the solution with respect to the treatment side of the business. Where federal agencies create rules that cause local governments to come up with funds for compliance, then there is a nexus between the public policies at the federal level and the money that is needed to perpetuate those policies into the future.
- Local governments are at the forefront and are primarily responsible for addressing the issues. Even if state and federal agencies have a philosophical nexus to the problem, the reality is that waiting on federal or state funding is only going to make the problem worse.
- Local vision, ownership, and control of local utilities means that local governments have to take charge.