|A Matter of Trust
Our roads and airports have dedicated funding sources, why not do the
same for water with a national clean water trust fund?
By Ken Kirk
Americans demand that their water be safe and clean. And polls and
surveys find that Americans are willing to pay their fair share to
guarantee the quality of their water. The message to the U.S. Congress
is both new and compelling -- if highways and airports are worthy of
multi-billion dollar trust funds, so are the nation's waterways. The
problem is no longer someone else's; it belongs to each and every one of
us -- just as the nation's rivers, lakes, streams, beaches, bays and
estuaries belong to us all.
Water infrastructure needs in our country are comparable in scope and
importance to those facing our nation's highway and aviation
infrastructure. While these transportation programs have received
federal funding in the hundreds of billions of dollars over the years,
there is no permanent federal contribution to build or sustain water and
wastewater infrastructure. Clean water is essential to our public health
and economy and is the second largest infrastructure program on our
local government balance sheet (see Graph 1). In
fact, local government expenditures for water and wastewater
infrastructure exceed local expenditures for highways and aviation
According to the U.S. Environmental Protection Agency (EPA), water
quality in America will return to pre-1972 Clean Water Act levels absent
a massive infusion of funds for America's clean water infrastructure. To
achieve this, all levels of government -- federal, state and local --
must develop a lasting partnership to meet this challenge.
Water infrastructure needs in
our country are comparable in scope and importance to those
facing our nation's highway and aviation infrastructure.
As the graphs and pie charts in this article detail, local
governments have done the heavy lifting on behalf of clean and safe
water as federal investment has ebbed to under five percent of total
clean water infrastructure funding (see Graph 2). The
solution is clear: if dedicated funding sources have made the nation's
roads and airports the best in the world, certainly we should do the
same for water. As the dialogue regarding solutions to meet the nation's
clean water infrastructure needs progresses, we should ask ourselves one
question: if it's important enough for roads and airports, why not
The Growing Funding Challenge
Cities and communities nationwide need to repair, replace and
rehabilitate their aging and failing pipes and plants and build new
infrastructure to comply with increasingly complex regulations to
protect public health and safeguard the environment. The funding gap
between what is now being spent and what is needed for capital projects
in our communities -- and the potential consequences of further inaction
-- is in the hundreds of billions of dollars. This gap is well
documented in recent reports issued by EPA, the Water Infrastructure
Network (WIN), the Congressional Budget Office (CBO) and the U.S.
General Accounting Office (GAO).1 The Association of
Metropolitan Sewerage Agencies' (AMSA) most recent survey data shows a
$17.6 billion current annual capital investment need for publicly owned
treatment works (POTWs) (see Graph 3). Simply
stated, there is an unprecedented consensus that the nation's rivers,
lakes and streams will face irreparable harm if we fail to act now.
The U.S. Congress made a landmark decision in 1972 when it passed the
Clean Water Act (CWA), instituted to clean up and ensure the safety of
the nation's waters for public use. The CWA was, and continues to be, a
success -- in large part because of the Construction Grants Program
(CGP) and Clean Water State Revolving Fund (SRF), which have provided
$61.1 billion and $43.5 billion, respectively, to build and upgrade
wastewater treatment facilities. In 1987, Congress eliminated the CGP
and amended the CWA to include the SRF loan program.
Graph 4 best demonstrates the marked decrease in federal funding and
the increased share of local funding from 1977 through 2000.
Costly Regulatory and Enforcement Challenges
Despite this drastic decrease in funding from the federal government,
the nation's POTWs continue to face increasing regulatory challenges and
mounting federal mandates. EPA is in the process of reviewing and ruling
on several water treatment mandates that could potentially cost the
nation hundreds of billions of dollars. The agency is currently
reviewing nearly 100,000 comments received in response to its blending
guidance, initially published in the Federal Register on Nov. 9, 2003.
The proposed guidance would clarify the agency's longstanding acceptance
of this practice used by POTWs to cope with high flows during periods of
wet weather. If this guidance does not move forward, and blending is
prohibited as a de facto matter, the estimated cost to the nation
could be over $200 billion.
In a pending sanitary sewer overflow rule, if EPA moves forward with
its proposed "zero-discharge" standard -- an absolute prohibition on any
sanitary sewer overflow -- POTW collection systems would need to be
significantly upgraded at an additional cost of billions of dollars
nationwide. EPA continues to bring wet weather enforcement actions
against POTWs, which also come with a multi-billion dollar price-tag.
Implementation of additional regulatory requirements associated with the
total maximum daily load program, mercury-related issues and nutrient
removal are adding escalating costs to POTWs. Graph 5
shows EPA's estimate of the infrastructure funding needs for wet weather
and other related clean water challenges, such as nonpoint source
It has become increasingly difficult for wastewater treatment plants
to fund the growing number of federal regulations without the federal
government's full financial commitment. Utilities must take on expanding
debt burdens to address capital needs, while also having to continuously
raise rates to service the debt load and comply with growing regulatory
requirements. AMSA's data show that POTWs have increased residential
charges by more than 2 percent above inflation over the past 15 years
(see Graph 6) to deal with these challenges.
Given the trends of increasing municipal expenditures and decreasing
federal funding, it should come as no surprise that, according to the
latest figures from the U.S. Census Bureau, local government
expenditures for water and sewer service rank second -- only behind
education. More significantly, water and sewer expenditures exceed all
other categories of local government spending, including police,
hospitals, fire protection, housing and community development, highways
and air transportation. As seen in Graph 1, this municipal
investment in water infrastructure has escalated sharply in the last few
The Watershed Perspective
In many ways, the looming national clean water crisis is most easily
understood when viewed not in the abstract financial context, but from a
regional watershed perspective. This article only touches on some of the
more public examples of imperiled watersheds to illuminate the growing
national clean water funding challenge.
As the dialogue regarding
solutions to meet the nation's clean water infrastructure needs
progresses, we should ask ourselves one question: if it's
important enough for roads and airports, why not water?
The Great Lakes contain one-fifth of the world's fresh water and
provide water to 40 million people in the United States and Canada, yet
they face serious challenges that range from extensive urban
development, invasive species, altered water flows, nutrient loadings
and agricultural/nonpoint source pollution. The Great Lakes support over
$8 billion annually for the fishery and boating industries alone.
Demonstrating the symbolic nature of federal involvement in clean water
issues, the administration has dedicated $45 million in its fiscal year
2005 budget to clean up sediment in the Great Lakes, despite its own
estimate of a $7.4 billion need to clean up 26 "Areas of Concern"
located on the U.S. side of the Great Lakes Basin.2
Similarly, the Chesapeake Bay, despite benefiting from a
multi-stakeholder voluntary cleanup initiative, has experienced growing
problems due to increasing nutrient loads. These loads lead to increased
algal blooms and hypoxic conditions in which abnormally low levels of
oxygen in the water result in fish kills and shellfish bed losses.
According to recent estimates, the Chesapeake Bay provides $1.3 billion
annually to the bay watershed's economy. If the health of the bay
continues to decline, so will the economies of the various states that
rely on it.
The Chesapeake Bay Foundation estimates that $4.4 billion will be
needed just to pay for nutrient removal technology for the bay's POTWs
alone. This estimate is enormous, despite the fact that nonpoint source
pollution, not POTWs, is the dominant polluter of the bay. Of interest
is also the Maryland Assembly's recent adoption, and Republican Governor
Robert Ehrlich's decision to pass, a Maryland "flush tax" on residential
water bills. The nearly $80 million raised will go primarily to upgrade
POTWs to further improve the quality of the bay. This shows, at least on
a state level, the type of bipartisan support that the trust fund
concept should garner at the national level.
The Gulf of Mexico has suffered similar hypoxia problems, also known
as "dead zones." The gulf's hypoxic zone is an expanse of
oxygen-depleted water, located off the coast of Louisiana, which cannot
sustain most marine life due to excessive amounts of nitrogen pollution
entering the gulf via the Mississippi River. The hypoxic zone reached a
record of 7,728 miles in 1999 and puts at direct risk the livelihoods of
thousands of people who rely on the gulf. The fisheries provide more
than $5 billion per year to the region and contribute 200,000 jobs.
Together, the cities, suburbs and farms in the Mississippi River
watershed contribute an estimated 90 percent of the nutrient flow into
the Gulf of Mexico. The Mississippi River has contributed three times as
much nutrient loading to the gulf since the 1950s, yet, without
significant new funding, little will be done to reverse this trend.
Long Island Sound, the Colonias region where the United States and
Mexico share their borders, Narragansett Bay and many other areas face
similar clean water challenges. The record of receiving significant
federal funding on a region-by-region basis is extremely poor, and
mobilizing congressional support for high-cost regional projects
competes for all-too limited clean water funding dollars. National,
regional and municipal organizations must act now and act together to
refocus the federal government on its clean water obligations.
A Clean Water Trust Fund
Perhaps most important is what the above financial and water quality
information means to the American public. Simply stated, the American
people perceive clean water as a federally protected right rather than a
privilege. They also believe a trust fund is a fitting solution to
ensure a steady and reliable source of funding to keep our waters clean.
AMSA commissioned the services of Frank Luntz, a prominent pollster and
communications expert, to conduct two surveys, one in May 2003 and the
other in February 2004, to gauge the public's support for a national
clean water trust fund.3 The results are enlightening:
- 91 percent of Americans are concerned that the nation's
waterways will not be clean for future generations.
- 90 percent of Americans agree that if the nation is willing to
invest billions annually in highways and airports, the same should
be done for our waterways.
- 90 percent of Americans support a dedicated funding source for
clean and safe water.
- 84 percent agree that "when it comes to clean water, the federal
government has an obligation to do a lot more."
- 83 percent would support a bill introduced in the U.S. Congress
that would create a long-term, sustainable and reliable trust fund
for clean water infrastructure.
- 80 percent of Americans agree that if we can invest billions to
help bring Iraq clean water, we should invest at least as much in
the United States.
- 75 percent of Americans disagree with the statement "clean water
is a local problem that requires a local solution. There is no need
to spend more money on this issue."
- 70 percent of Americans would support a 1 percent tax increase
if they were assured that 100 percent of those funds would go to the
clean water trust fund.
- 66 percent believe it is unfair and unjust that the federal
government pays for just 5 percent of the cost to maintain clean
water in America.
- 62 percent believe clean water is in the greatest need of a
dedicated trust fund, as opposed to only 25 percent for highways and
5 percent for airports.
- 54 percent believe clean water is a right, not a privilege.
The Benefits of a Trust Fund
While Americans support the concept of a trust fund and are prepared to
pay for it themselves through higher taxes and/or fees, it is also the
best way to guarantee that Americans get their money's worth. According
to the Aug. 5, 2003, independent economic analysis titled A National
Clean Water Trust Fund: Principles for Efficient and Effective Design,
there are a number of reasons why clean water infrastructure deserves
its own trust fund: 4
- Clean water infrastructure is a national priority that provides
the fundamental underpinning to the entire domestic economy, which
relies on clean water not just for survival, but for manufacturing
processes, tourism and the fishing industry, to name but a few
- Investment demands are of federal proportion, meaning that
although they may appear daunting at the local or state level,
funding requirements can appear small in comparison to the total
- The federal government has a unique financing position because
fiscal and tax policies position the federal government uniquely to
act on behalf of the nation as a whole, rather than on behalf of one
region or group.
- The federal government has a long investment horizon, which
allows a federal program to invest today and wait for that
investment to accrue broadly to the nation.
- Federal investment can enhance local revenue-raising capacity by
requiring a state matching component or enhancing the political
viability of further rate increases at the local level.
- A trust fund is more secure in difficult economic times than the
annual appropriations process -- where priorities change on a whim
and surpluses quickly turn into deficits, as we have recently
- A trust fund also does not require robbing Peter to pay Paul.
This means that money for clean water need not compete, for example,
with money for the space program or veterans affairs because
specific funds outside the general revenue stream are set aside for
a trust fund.
- For every billion dollars spent for infrastructure investment,
approximately 47,000 long-term jobs are created.
Why Not Water?
Like highways and airports, which enjoy multi-billion dollar trust
funds, our nation's water infrastructure provides individual, local,
state and national benefits. If the funding mechanism is constructed
carefully, with the principles of equitable distribution fully adhered
to, Americans nationwide would benefit greatly on virtually all fronts,
from public health, the environment and natural beauty to economics and
job growth. But if the federal government continues its path of zeroing
out funding for clean water infrastructure, and refuses to be a full
partner with local and state governments, then the nation's clean water
funding gap will only continue to escalate.
As communities struggle to address their aging infrastructure needs,
the national debate must focus on a full, national re-commitment to a
long-term, sustainable funding source for clean water infrastructure.
The federal government decided our highways were important enough for a
dedicated funding source. The same decision was made for the nation's
airports. Yet no single resource is as critical to every American as
clean water. It is time to make sure this most fundamental resource is
secured for generations to come and to ask ourselves one question -- why
1. See the U.S. Environmental Protection Agency's report The Clean
Water and Drinking Water Infrastructure Gap Analysis at
www.epa.gov/safewater/gapreport.pdf, the Water Infrastructure
Network's report Water Infrastructure NOW at
www.win-water.org/win_reports/pub2/winow.pdf, the Congressional
Budget Office report Future Investment in Drinking Water and
Wastewater Infrastructure at
www.cbo.gov/showdoc.cfm?index=3983&sequence=0, and the Government
Accounting Office report Water Infrastructure; Information on Federal
and State Financial Assistance at
2. See the Northeast-Midwest Institute Web site,
3. See the 2003 Luntz Survey at
www.amsa-cleanwater.org/advocacy/co/2003-05luntz.pdf and the 2004
surveyed public included approximately 800 individuals with a near-even
breakdown between those who voted for George W. Bush and Al Gore in the
2000 presidential election and those who did not vote.
4. A National Clean Water Trust Fund: Principles for Efficient and
Effective Design is available at
5. The Why Not Water publication can be accessed at
This article originally appeared in the May/June 2004 issue Water
& Wastewater Products, Vol. 4, No.3.
Graph 1. Federal Investment Declines... Local Government
Spending Rises on Water and Wastewater
According to the U.S. Census Bureau's latest statistics on local
governmental spending, water and sewer expenses ranked second behind
education in total outlays in 2000. Annual local government spending for
water and sewer exceeded all other categories of spending. Large
increases in capital needs and expenditures for water and sewer
infrastructure could hamper local government's ability to provide other
critical services and could threaten the 30 years of progress that have
been made in ensuring safe and clean water for the public and the
SOURCE: U.S. Census Bureau
Graph 2. Over The Last Decade... Federal, State and Local
Contributions to Wastewater Infrastructure</>
AMSA's data showed that its member utilities have collected more than 95
percent of their capital investment and operating funds from local
sources for the past seven years. The General Accounting Office
estimated a flat level of federal and state funding from 1991 to 2001
for wastewater investment at $2 billion to $2.5 billion per year.
However, as local expenses continued to escalate, the percentage of
costs covered by federal assistance has dropped to well under 5 percent
for surveyed AMSA utilities.
SOURCE: 1990-2002 AMSA Financial Survey
Graph 3. Costs Continue to Escalate... Estimated Annual Capital
Investment Needs -- $17.6 Billion
There is little disagreement that the national needs for sewer
infrastructure are high. Data from the 140 respondents to AMSA's
Financial Survey estimated a national average annual capital investment
need of $17.6 billion. The needs reported in AMSA's Survey represent
committed projects, projects underway and projects scheduled to begin
during the next five years. Data also indicated that needs for combined
sewer overflow mitigation, as well as repair and rehabilitation of
treatment plants and sewers, have risen sharply.
Graph 4. Municipalities Shoulder a Growing Share... Local vs.
Federal Wastewater Expenditures
Federal government spending on wastewater peaked in the late 1970s, and
rapidly diminished during the early 1980s. While federal spending has
remained flat during the past 10 years, local costs have escalated well
beyond the rate of inflation.
NOTE: Chart shows figures in 2000 dollars.
SOURCE: 1999 Cost of Clean, U.S. Census, Government Accounting Office
Graph 6. Utilities Continue to Raise Rates... Household User
Fees Rise Above the Rate of Inflation
Over the past 17 years, the AMSA Index has shown that while the
consumer price index (CPI) has risen at an average rate of 3 percent per
year, the AMSA Index (the average residential user service charge) has
risen at an average rate of 4.9 percent per year, or 1.9 percent above
the rate of inflation.
Ken Kirk is executive director of the Association of Metropolitan
Sewerage Agencies (AMSA). From 1978 to 1990, he worked with a
Washington, D.C.-based private consulting firm, where he had
responsibility for the management of several associations, including
AMSA. From 1973 to 1975, Kirk worked in the U.S. Environmental
Protection Agency's Office of Legislation and from 1975 to 1977 he was
the Water Pollution Control Federation's (now the Water Environment
Federation) Public Affairs Manager. Kirk has degrees from New York
University, the Georgetown University Law Center and the George
Washington University Law Center, where his specialty was environmental
law. He is a member of the District of Columbia bar. In June of 1996
Kirk was designated Certified Association Executive (CAE), the highest
honor of professional achievement available from the American Society of
Association Executives. He can be contacted at
or (202) 833-2672.