How to direct money for drinking water and sewage improvements to the communities that need it most
ByUniversity of Wisconsin-Milwaukee and University of Wisconsin-Milwaukee, The Conversation
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When storms like Hurricane Ian hit, many people then have to deal with the loss of water service. Power outages mean that pumps cannot process and treat potable or sewage water, and high stormwater flows can damage water pipes.
Ian’s effects echoed a similar disaster in Jackson, Mississippi, where rising river waters overwhelmed pumps at the main water treatment plant on August 29, 2022, following a record rain. The city had little to no running water for a week and more than 180,000 residents were forced to find bottled water for drinking and cooking. Even after the water pressure returned, many Jackson residents continued to boil their water, wondering if it was really safe to drink.
Jackson had already been on a boil water advisory for more than a month before the crisis, which arrived like a slow motion bullet through the city’s decaying infrastructure. Now, Jackson and his contractors face lawsuits and a federal investigation.
We study water policy with a focus on providing equitable access to safe drinking water. Our research shows that disadvantaged communities have suffered disproportionately from underinvestment in clean and affordable water.
However, a historic increase in federal water infrastructure funding is coming over the next five years, thanks to the Infrastructure Investment and Jobs Act that was signed into law in 2021.
If this funding is managed intelligently, we believe it can begin to right those wrongs.
A complex financial mix
The water infrastructure has two parts. Drinking water systems provide people with clean water that has been purified for drinking and other uses. Wastewater systems remove wastewater and treat it before discharging it into rivers, lakes or the ocean.
The money to build and maintain these systems comes from a mix of federal, state and local sources. For the past 50 years, policymakers have debated how much each level of government should contribute and how much should come from the most valuable source: federal money that doesn’t need to be repaid.
The Clean Water Act of 1972 created a federal grant program, administered by the Environmental Protection Agency, to help states and municipalities build wastewater treatment plants. Under the program, federal grants initially covered 75% of project costs.
In the 1980s, the Reagan administration challenged this arrangement. The Tories argued that the main purpose of the subsidy program – addressing the need for more municipal wastewater treatment – had been achieved.
In 1987, Congress replaced wastewater subsidies with a loan program called the Clean Water State Revolving Fund, which still operates today. The EPA uses the fund to provide seed capital to states, which provide low-interest loans to local governments to build and maintain wastewater treatment plants. Congress created a corresponding program, the Drinking Water State Revolving Fund, in 1996 to fund drinking water infrastructure.
As a result, US water infrastructure is now financed by a combination of loans that must be repaid, capital rebate awards and grants that do not require repayment, and royalties paid by local users. The larger the share that can be transferred to grants and principal rebates, the less local taxpayers are forced to foot the bill for long-term infrastructure investments.
What is in the infrastructure law
The Infrastructure Investment and Jobs Act authorizes more than US$50 billion for water infrastructure over the next five years. That won’t close the gap in funding needs, which the EPA estimated at $472.6 billion from 2015 to 2034 just for drinking water systems. But it could support tangible improvements.
When water systems that serve low-income communities borrow money from government programs, even at low interest rates, they have to repay the loans by raising rates to already struggling customers. to pay their bills. To reduce this burden, federal law authorizes state programs to provide “disadvantaged communities” with additional subsidies in the form of principal rebates and grants. However, states have wide discretion in determining who qualifies.
The Infrastructure Act requires that 49% of federal funding for drinking water and sanitation infrastructure be allocated as supplemental grants to disadvantaged communities. In other words, nearly half of the money states receive from federal funds must be given as principal rebate or outright grants to disadvantaged communities.
Who is considered “disadvantaged”?
In March 2022, the EPA released a memorandum that called the infrastructure law a “unique opportunity” to “invest in communities that have too often been left behind — from rural towns to struggling cities.” The agency is committed to working with states, tribes and territories to ensure that the 49% additional funding pledged reaches communities where the need is greatest.
This is a question where the devil is really in the details.
For example, under Mississippi’s definition of “disadvantaged community,” Jackson’s 2021 award for the principal’s pardon was capped at 25% of the original principal. In its March 2022 memorandum, the EPA identified these caps as barriers for underfunded communities.
Mississippi appears to have responded by using a new standard for funds from the Infrastructure Act. Starting this year, communities with a median household income below the state’s median household income — including Jackson — will be given a 100% primary rebate, making the funding a grant.
In addition, the EPA discourages the use of population as a factor in defining “disadvantaged communities.” Sparsely populated communities struggle to cover the operating costs of water supply systems, so it is important to consider this challenge. But using population as a determinant penalizes large cities that might otherwise be disadvantaged.
For example, in 2021, when determining the primary rebate, Wisconsin assigned a higher financial need score to communities with populations below 10,000. This penalized Milwaukee, the state’s largest city. , with nearly a quarter of its population living in poverty.
In September 2022, Wisconsin updated its definition to take into account additional factors, such as county unemployment rate and percentage of family poverty. With these changes, Milwaukee now qualifies for the maximum main discount.
Mississippi and Wisconsin previously relied on factors that were too narrow to reach many disadvantaged communities. We hope that the steps they have taken to update their programs will inspire similar actions in other states.
spread the word
In our view, the Infrastructure Investment and Jobs Act is a unique opportunity to correct decades of underinvestment in disadvantaged communities, especially with the EPA pushing states to do so.
Historically underfunded communities may not be aware of these state program funds, or know how to apply for them, or make infrastructure improvements. We believe the EPA should direct states that receive federal funds to help underfunded communities apply for and use the money.
Recent events in Jackson and Florida show how natural disasters can overwhelm water supply systems, especially older networks that have been declining for years. As climate change amplifies storms and floods, we view investment in water systems as a priority for public health and environmental justice in the United States.
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Featured image: Wastewater (Photo credit: GLN)