Copyright 2001 eMediaMillWorks, Inc.
(f/k/a Federal
Document Clearing House, Inc.)
Federal Document Clearing House
Congressional Testimony
March 27, 2001, Tuesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 4200 words
COMMITTEE:
SENATE ENVIRONMENT AND PUBLIC WORKS
SUBCOMMITTEE: DRINKING WATER, FISHERIES AND WILDLIFE
HEADLINE: TESTIMONY WATER INFRASTRUCTURE
TESTIMONY-BY: BRUCE TOBEY , MAYOR,
AFFILIATION: GLOUCESTER, MA
BODY: March 27, 2001 STATEMENT OF THE HONOROABLE
BRUCE TOBEY MAYOR OF GLOUCESTER, MASSACHUSETTS on behalf of THE NATIONAL LEAGUE
OF CITIES and THE
WATER INFRASTRUCTURE NETWORK before the
ENVIRONMENT AND PUBLIC WORKS COMMITTEE SUBCOMMITTEE ON FISHERIES, WILDLIFE, AND
WATER UNITED STATES SENATE WATER AND WASTEWATER INFRASTRUCTURE NEEDS Mr.
Chairman, members of the Subcommittee: I am Bruce Tobey, Mayor of Gloucester,
Massachusetts and a member of the National League of Cities Board of Directors.
I am here today to testify on behalf of the 16,000 cities, towns and villages
that NLC represents, as well as on behalf of the
Water
Infrastructure Network1 (WIN). I am pleased to be here this morning to
discuss the coalition's report -
Water Infrastructure NOW -
which recommends a major new and revitalized federal commitment to the nation's
drinking water and wastewater infrastructure. It outlines the parameters of a
potential federal response to the $1 trillion gap between investments cities are
making in our local infrastructure and the $1 trillion additional needed to
assure protection of public health, the environment and our economy over the
next generation. Before outlining for you the parameters of the Report's
recommendations, it would seem appropriate to address some fundamental
questions: First, why do we have a funding gap of such enormous magnitude;
Second, what have local governments been doing to address the issue; and,
Finally, why and how should the federal government help? 1. WHY IS THERE A
WATER INFRASTRUCTURE FUNDING GAP? A number of factors: - the
simultaneous expiration of the useful life of
water
infrastructure installed at different times; - population growth; -
implementation of new, more costly, and more complex federal mandates which, in
effect, substitute federal priorities for local priorities; and, - a substantial
decline in federal financial participation in meeting wastewater mandates. The
nation's
water infrastructure represents more than a century of
investment, substantially funded by local ratepayers. A significant part of the
nation's
water infrastructure dates from the late 19th century.
More recent expansions of these systems took place following the two world wars.
All of which means the newest systems are over 50 years old. What is more, the
newer the infrastructure, the more likely it is to be deteriorating. Different
materials, with increasingly shorter useful lives leave us in the position where
100 year's worth of infrastructure is being exhausted all at once. As a
consequence, municipalities now face a confluence of deterioration of the
underground pipes, and, in some cases, the treatment facilities, that process
the nation's drinking water and sewerage. Under no circumstances does this
denigrate the substantial $96 billion investment and commitment to wastewater
made by federal and state governments in the l970's and '80's. Without this
assistance we would never have made such incredible progress in cleaning up the
nation's waterways. But, EPA cautions that unless we renew our joint commitment
to maintaining and upgrading our wastewater facilities, within 15 years our
rivers, lakes and streams will again resemble their condition 30 years ago.
Until passage of the 1996 Safe Drinking Water Amendments, local governments have
not had a federal financial commitment to the nation's drinking water systems.
The fact that drinking water in the United States is among the safest in the
world is a significant tribute to the local ratepayers that have financed these
treatment facilities. Another factor contributing to the current funding gap is
that simultaneous with the aging of local water and wastewater infrastructure,
has come a significant increase in population. According to the Association of
Metropolitan Sewerage Agencies (AMSA), municipal wastewater plants served 68.5
million people in 1990. By 1999, the number had increased to 79 million people.
And that 10 million person increase occurred in less than one decade. Systems
designed and built for the population at the time of their construction are now
serving two to three times as many people as their design capacity. In fact, the
Clean Water Act of 1972 precluded local governments from anticipating population
growth in designing wastewater treatment plants built with federal financial
assistance. The fact that local systems serve significantly more people than
their design anticipated contributes to some of their problems - combined sewer
overflows, sanitary sewer overflows - all of which need immediate and costly
attention if we are to protect public health and the environment. Congress
recognized this problem in passing the wet weather provisions in a fiscal 2001
appropriations measure last year, but, we do not yet have any appropriations
from this authorization and, in all honesty, the $1.5 billion, two year
authorization, is only a down payment on problems that alone are expected to
cost well over $120 billion. A third contributing factor is the significant
decline in federal financial assistance for wastewater needs. While once the
federal government appropriated $2.4 billion for
grants cover
75 percent of wastewater needs, we now see instead $1.35 billion annually for
repayable loans. Without even considering aging and deteriorating
water
infrastructure, $1 billion is what one city alone is spending on
remediating its sanitary sewer overflows. While Congress recognized, in passing
the Safe Drinking Water Act Amendments of 1996, the need to provide similar
assistance to municipal drinking water suppliers, this funding is limited in its
use for infrastructure repair and, for the most part, is available largely as
loans. And finally, federal drinking water and wastewater mandates have also
played a role in diverting local resources away from local needs and priorities
and retargeting them to federal priorities. When cities do manage to set aside
funds to address a critical local
water infrastructure need,
along comes a new unfunded - and usually costly - federal mandate that is almost
always accompanied by fines and penalties for non-compliance. And, as you well
know, we are not talking about an occasional new federal requirement. At the
local level there seem to be almost daily - or at least weekly - new burdens. 2.
WHAT HAVE LOCAL GOVERNMENTS BEEN DOING TO HELP THEMSELVES? - local governments -
or rather local tax and ratepayers - invest $60 billion annually in our drinking
water and wastewater systems. Since the Clean Water Act was adopted in 1972,
local governments have invested over $117 billion in their wastewater
infrastructure. We have no similar figures for drinking water investments, but
the 20 cities that have been involved in recent asset management studies
estimate the average per capita replacement value of their systems at $2,400 per
person. - local water and sewer utility rates have been increasing to
accommodate EPA's estimated annual 6% increases in the costs of system
operations and maintenance; - new federal requirements developed by the
Government Accounting Standards Board - on which local government bond ratings
are based - are moving local governments towards managing their infrastructure
assets in a more businesslike manner; and - local governments are applying new
management tools to assess and operate their systems more effectively and
efficiently. While the funding allocated to local governments under the Clean
Water Act has been of invaluable assistance in helping municipalities meet
federal requirements, Congress should not lose sight of the fact that local
governments have invested over $117 billion in our wastewater infrastructure
since the early 1970s. Until recently, our drinking
water
infrastructure was entirely funded by local ratepayers. And, the
deteriorating
water infrastructure that needs to be replaced
because it has maximized its useful life over the past 50 to 100 years was
entirely completed at local expense. In addition, municipal local rate
structures generate the $60 billion annually we invest in maintaining and
operating these systems and cover 90 percent of our costs including those for
construction. In facing the enormous needs of the future, cities also expect to
finance - again through local ratepayers - trillion of the needs for repair,
rehabilitation and replacement of the aging and crumbling
water
infrastructure over the next 20 years. Municipalities have also been
raising their water and sewer rates to accommodate increases in their operating
and maintenance costs, which, according to EPA, are rising at six percent above
inflation annually. Many cities require developers, and subsequently homeowners,
to finance the cost of new connections to municipal systems. My city is directly
billing homeowners who are newly connected to our wastewater system $20,000 per
home - to be paid over the next twenty years - to finance conversion from septic
to sewered systems. In addition, cities are improving their management
practices. Local governments will soon be required to comply with new rules
promulgated by the Governmental Accounting Standards Board in Statement 34 (GASB
34). These rules will require reporting of a municipality's long-term financial
position, quantifying resources and obligations more comprehensively. The
information cities will be required to provide will include an evaluation of the
condition of our municipal infrastructure. Bond rating services and others will
be able to evaluate whether we are "acquiring assets to benefit future fiscal
years or if these assets are being used but not replaced.2" The GASB 34 rule
will, at a minimum, encourage local governments to evaluate their infrastructure
in a more systematic manner. Other asset management tools, such as the "Nessie
Study" are also being implemented by cities to help identify when pipes and
treatment plants were built, how long they can be expected to last, when they
will need to be replaced, and what the cost is likely to be for such
replacement. More efficient operations are also among the tools used to provide
more cost effective operations at the municipal level. As an example, a 1999
AMSA survey3 documents the reduction in personnel from 6.8 employees per 10,000
population in 1990 to 4.7 in 1999. And, some local governments are subjecting
their system operations to competitive bidding to affect cost savings and
generate new and better efficiencies. 3. WHY SHOULD THE FEDERAL GOVERNMENT HELP?
- a sound infrastructure is the foundation of a sound economy; - a sound
infrastructure is essential to the protection of public health; - federal
assistance, as demonstrated by the success of the Clean Water Act, is the
catalyst that ensures environmental progress; - water bodies, like air sheds, do
not respect political boundaries; - infrastructure assistance will benefit the
people whose money created the federal surplus - another way of giving them the
refund they deserve; - at 6%, the interest on $2 trillion in debt is $120
billion; the
Water Infrastructure Network seeks less than half
of the interest avoided in a single year, spread over five years. The
Water Infrastructure NOW report made an eloquent case for a
renewed federal financial partnership in
water infrastructure.
It says: The case for federal investment is compelling. Needs are large and
unprecedented; in many locations, local sources cannot be expected to meet this
challenge alone; and because waters are shared across local and state
boundaries, the benefits of federal help will accrue to the entire nation. Clean
and safe water is no less a national priority than are national defense, an
adequate system of interstate highways, or a safe and efficient aviation system.
These latter infrastructure programs enjoy sustainable, long-term federal
grant programs; under current policy, water and wastewater
infrastructure do not. In light of the staggering costs of maintaining,
operating, rehabilitating, and replacing our water and wastewater system
infrastructure to serve our citizens and the environment effectively, the Clean
Water Act partnership of the 1970-80's needs to be re-established. It is in our
interest as a nation, since virtually all of us live downstream from someone
else, for all levels of government to participate in assuring that our drinking
water and wastewater infrastructure is sound, reliable, protective of human
health and the environment, and affordable. 4. HOW CAN THE FEDERAL GOVERNMENT
HELP? - Re-establish the partnership in the Clean Water Act of 1972 for
wastewater infrastructure and establish one for drinking
water
infrastructure; - Provide more flexibility in the types of assistance
available to municipalities to include
grants as well as loans;
- Restore earlier investments in research and technology development; -
Establish a mechanism to develop a long-term and secure financial partnership
for
water infrastructure needs. The
Water
Infrastructure Network has developed and agreed on the outlines of a
legislative proposal to revitalize (in the case of wastewater) or enhance (for
drinking water) the federal financial commitment to
water
infrastructure needs. The proposal recommends a five-year, $57 billion
authorization beginning in fiscal 2003 for loans,
grants, loan
subsidies and credit assistance for basic
water infrastructure
needs. These funds would be allocated to states to capitalize state-administered
grant and loan programs. The WIN recommendations propose the
creation of Water and Wastewater Infrastructure Financing Authorities (WWIFAs)
in each state to replace the two current State Revolving Loan Funds (SRF) for
drinking water and clean water. As with the SRFs, States would be required to
provide a 20 percent match for any federal revenues. While half the funds would
be targeted to wastewater and half to drinking water needs, States would have
the flexibility to shift up to an additional 15 percent from one purpose to the
other. This flexibility would be available so long as such a transfer did not
adversely affect any project on the state's priority list that was "ready to
go." WIN recommends that Congress require the new state funding authorities to
provide 25 to 50 percent of each year's allocation as
grants
that would fund up to 55 percent of project costs. Up to 75 percent of project
costs would be eligible for
grant funding in economically
distressed communities. Loans and loan subsidies would include interest rate
discounts, zero interest rate loans, principal forgiveness and negative interest
rate loans. The report proposes an additional $4 billion in resources for State
governments to help them meet their drinking water and wastewater
responsibilities. WIN also recommends funding for development of innovative
technology and management techniques to assist local governments in providing
clean and safe water more effectively and efficiently in the future. And
finally, the WIN report recommends that Congress "establish a formal process to
evaluate alternatives for, and recommend the structure of, a longer-term and
sustainable financing approach to meet America's water and wastewater
infrastructure needs."
LOAD-DATE: April 3, 2001,
Tuesday