One Water for America Policy Framework Big Idea 3

Sustain Adequate Funding for Water Infrastructure

Communities’ needs for capital are growing all the time to meet the challenges of water system development and renewal, regulatory compliance, the rising costs of day-to-day utility operations, and more unpredictable weather patterns. Forty years ago, the federal government contributed 63 percent of total capital spending on water infrastructure. Today, the federal government funds nine percent of our water infrastructure spending. A resurgence in federal funding for water is unlikely in the foreseeable future. Therefore, revenue from water, sewer, and stormwater rates and charges will continue to be the primary source of funds. Our focus must be on fully representing the cost of water management, making water services more cost-effective, and continuing to educate the public on our infrastructure needs.

Key Issue: Maintaining the funding programs that work
Programs like the Clean Water and Drinking Water State Revolving Funds (SRFs) face unreliable and decreasing capitalization from Congress and new programs such as the Water Infrastructure Finance and Innovation Act (WIFIA) are augmenting funding for “regionally significant” projects, but more is needed to fill the gap, especially for small and medium­sized systems. From time to time, proposals are also made to eliminate or restrict the tax-exempt status of municipal debt, devastating public financing for water infrastructure.

Key Issue: Understanding the full cost of service
As a basis for setting rates and charges, we have to understand the full costs of providing service. That includes not only all the costs associated with day-to-day utility operations, but also needed investments in system renewal and rehabilitation—costs that many utilities have historically underrepresented.

Key Issue: “Finding money” through best practices
A utility’s operating efficiency can significantly affect the cost of service and the availability of funds for system investment. Improving project delivery performance can control the cost of implementing capital infrastructure projects.