Local governments may have reached the limits of sustainable water infrastructure investment, according to a report from the U.S. Conference of Mayors, which argues that cities and towns may need further help from the U.S. government to meet the needs of a growing population.
Local government investment in public water and wastewater infrastructure and services reached an all time high of $111.4 billion in 2010, the last year covered in the report, issued Wednesday. That compares with spending of $7 billion in 1972, when the Clean Water Act was passed. Public spending on water and wastewater over the decade 2001 to 2010 was $864 billion.
“Public water investments grew through the recent Great Recession period [2008-2010], even though local government revenues declined sharply,” with spending increases on water infrastructure generally outstripping gross domestic product growth and inflation over the same period, the report said.
That growth was necessary because the U.S. population has increased to more than 300 million during that time, inflation has continued, and regulatory compliance costs have risen. Even as many argue that the investment has not been enough to replace aging infrastructure, the report warns that the sector might be approaching the limits of affordability.
“The ability of local government to indefinitely continue making annual investment increases should not be taken for granted,” the report says. “Indicators of ratepayer affordability limits are becoming more clearly recognized, and this is an issue of real fiscal concern.”
Beyond the impact on families, the bond debt financing these investments could threaten the creditworthiness of some communities, according to the report.
“While revenues declined from 2007 to 2010 local government expenditures and long term debt continued to increase by 55% and 75% respectively, from 2001 to 2010,” it states. “This trend suggests declining local government income and higher debt repayment burden, both factors that influence community creditworthiness.”
The report suggests a fresh look at national water policy. A new water bill under consideration in the Senate now features a federal loan and loan guarantee pilot program for water infrastructure, based on a similar program for surface transportation projects.
“We need the federal the government to work as partners with cities to sustain these public benefits by giving local priorities the attention they deserve,” UCM chief executive officer and executive director Tom Cochran said.
