Federal Tax Could Fund Infrastructure, Utility Manager Suggests to Conference

A federal trust fund is one possible solution to funding repair and replacement of drinking water and wastewater infrastructure, a manager of a water utility told a conference March 30.

Money for the fund could be provided through an excise tax on some entity, according to Buddy Morgan, general manager of the Water Works and Sanitary Sewer Board in Montgomery, Ala.

Because utilities resist the idea of a tax on water, however, "we've got to figure out where the money will come from," he told the annual legislative and regulatory conference of the Association of Metropolitan Water Agencies.

Possible funding sources could include polluters or money collected from environmental enforcement actions, Morgan said.

In 2001, the Water Infrastructure Network estimated that needed infrastructure upgrades over the next 20 years would cost about $1 trillion, or about $23 billion annually (31 DEN A-10, 2/14/01).

However, since then, utilities have examined their assets more closely and found much more than previously thought is needed, he said. The true figure is probably closer to $2 trillion, according to Morgan.

Federal Investment Has Decreased

Federal investment in infrastructure has decreased 75 percent since 1980 and a federal grants program ended in 1982, he said.

As this federal funding dried up, though, utilities did not raise their rates in accordance with depreciation, Morgan said. "We're in the dilemma we're in today because we did not do that," he said.

State revolving loan funds under the Clean Water Act and Safe Drinking Water Act intended to fund infrastructure upgrades will not cover total infrastructure needs.

In its fiscal 2004 budget request, EPA requested $850 million for the clean water state revolving loan fund, $500 million less than was enacted for fiscal 2004. The agency requested $850 million for the drinking water state revolving loan fund, the amount enacted for fiscal 2004 (23 DEN A-2, 2/5/04).

A federal trust fund would provide short-term help only to utilities, Morgan said.

"Once we get to the point to where our systems are stable, then it is our responsibility as managers and directors of utilities ... to ensure that we maintain those assets," he said.

By Patricia Ware