Survey Examines Impact of Economic Crisis on Municipal Projects

The National League of Cities (NLC) has warned that the national banking crisis was curtailing the ability of municipal governments — even those with AAA credit ratings — to borrow funds for ready-to-go projects.

Nov 1st, 2008

By Patrick Crow, Washington Correspondent

The National League of Cities (NLC) has warned that the national banking crisis was curtailing the ability of municipal governments — even those with AAA credit ratings — to borrow funds for ready-to-go projects.

Cynthia McCollum, NLC president and a member of the Madison, AL, city council, said, “Projects like roads, bridges, schools, hospitals, sewage treatment plants and libraries, the bedrocks of any community, are now at risk of being indefinitely delayed or cancelled because the cost of borrowing is too high.”

She said housing foreclosures remain at an all-time high in many communities, triggering a decline in property values and the property taxes that fund civic services.

“For the first time in recent history, local government finance officers are reporting in a NLC survey that all three primary sources of revenue for local communities — property, sales and income taxes — are in distress.”

The association said its annual report on city fiscal conditions found that the decline in property tax revenues (3.6% from the prior year, in inflation-adjusted terms) is hurting the fiscal health of local governments.

“Unlike the previous economic downturn in 2001, when property tax revenues were able to buffer the effects of declining income and sales tax receipts, the weak housing market is likely to affect city budgets until 2010,” NLC said.

The report said sales tax receipts were expected to fall 4.2% and income tax revenues 3.3% in inflation-adjusted dollars in 2008 compared to 2007.

As a result, 64% of city finance officers surveyed expect cities to have a harder time meeting fiscal needs in 2008, and 79% forecast even bigger problems ahead in 2009.

Separately, city and state leaders urged the next presidential administration to give them more input in national policymaking. The plea came from NLC, the National Governors Association, the National Conference of State Legislatures, the Council of State Governments, the National Association of Counties, the United States Conference of Mayors, and the International City/County Management Association.

They urged the incoming president to establish an Office of Intergovernmental Affairs in the White House to serve as a conduit for suggestions from state and local leaders.

EPA Accepting CommentsOn Perchlorate Ruling

The Environmental Protection Agency has decided against regulating perchlorate, a component of solid rocket fuel that has been found in drinking water across the nation.

The agency said perchlorate was not at levels of public health concern in more than 99% of public drinking water systems and, under Safe Water Drinking Act criteria, regulation would not result in a “meaningful opportunity for health risk reduction.” EPA will accept public comment on the preliminary determination.

It pledged to work with states and localities to ensure public health in areas where perchlorate is a problem.

Jack West, Chairman of the Drinking Water Research Foundation, said the decision “means continued exposure of some public drinking water systems to a chemical that poses unacceptable health risks for many Americans. A recent large study by the Centers for Disease Control has identified adverse thyroid effects from perchlorate in women, and the Food and Drug Administration notes that ‘pregnant women and their fetuses and newborns have the greatest potential risk of adverse health effects following exposure to perchlorate.’ ”

The Environmental Working Group claimed, “EPA has been under pressure from the Pentagon to overlook the potential health threats posed by perchlorate in order to help defense contractors avoid spending hundreds of millions of dollars to clean up sites … in at least 22 states, contaminating drinking water for millions of Americans.”

Sen. Barbara Boxer (D-CA), chairman of the Environment and Public Works Committee, said, “EPA’s failure to set a standard for perchlorate … is outrageous and I will do everything in my power to reverse it.”

Senate Holds HearingsOn Bottled Water Safety

Senate Subcommittee on Transportation Safety, Infrastructure Security and Water Quality held a September hearing on the quality and environmental impacts of bottled water.

Mae Wu, a Natural Resources Defense Council (NRDC) attorney, said Americans have the right to be informed what toxic chemicals and other contaminants are in their bottled water — just as they are about the tap water supplied by utilities.

“The public should not assume that water purchased in a bottle is better regulated, more pure, or safer than most tap water. Water utilities are required to tell the public more about their tap water than bottled water companies are. We need better standards and stronger reporting requirements for bottled water,” she said.

Joe Doss, president and CEO of the International Bottled Water Association (IBWA), said the Food and Drug Administration regulates the product as a packaged food.

“Bottled water is subject to the same general prohibitions against adulteration and misbranding as other beverage products, and is subject to the same general requirements for ingredient labeling, nutrition labeling, and product claims.”

He added, “If a bottled water product’s source is a municipal water system and it does not meet the FDA standard of identity for purified or sterile water, it must indicate the public water system source on the label.”

Sen. James Inhofe (R-OK) said, “Both the NRDC and the Centers for Disease Control note that illness from bottled water has only been the result of rare and isolated incidents, which suggests that the current framework works and further regulation is unnecessary.”

Separately, IBWA said as of Sept. 22, its members had donated more than 1 million bottled water servings to aid Hurricane Ike relief efforts in Texas and Louisiana.

In other Washington news:

  • EPA’s Total Coliform Rule/Distribution System Advisory Committee has recommended a rule revision to require systems with positive total coliform and/or E. coli monitoring results to conduct an assessment to identify whether a sanitary defect is present and to correct defects found.
  • As time dwindled for the 110th Congress, legislation to expand the state water revolving funds (SRF) appeared unlikely to pass. The House economic stimulus bill, which had $6.5 billion for the Clean Water SRF and $1 billion for the Drinking Water SRF, apparently died in the Senate.
  • Rep. Bart Gordon (D-Tenn.) filled a bill, dubbed the National Water Initiative, to coordinate and bolster federal water research. Gordon, the chairman of the Committee on Science and Technology, is expected to refile the bill in the next Congress.
  • EPA has issued a final strategy outlining 44 actions that its Office of Water will take to respond to climate change. The goal is for EPA to take the steps without increases in program funding.
  • EPA has awarded Ottumwa, IA, $382,000 for ongoing construction of a multi-phased combined sewer separation project to eliminate combined sewer overflows on the Des Moines River by 2013.
  • EPA announced a $13.9 million grant to Virginia to further capitalize its revolving loan fund. The state will leverage the funds to issue bonds, which combined with the grants, will make $252 million available for water quality project loans.
  • The Awwa Research Foundation has issued a report on strategies to help drinking water utilities retain the critical knowledge of their personnel. It includes specific strategies, tools, and techniques that water utility managers can use in a changing workforce environment. WW

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