Closing the Infrastructure Funding Gap

Earlier in the year, it seemed there was movement in Washington to close the enormous gap that exists between the cost of upgrading and repairing our nation’s aging water infrastructure and the limited financial resources available. Has it lost momentum?

Sep 1st, 2018

By Paul Ravelli

We are all well aware of the enormous gap that exists between the cost of upgrading and repairing our nation’s aging infrastructure and the limited financial resources available. Earlier this year, I think many of us in the water and wastewater industry were encouraged by the activity in Washington associated with closing that gap. It appeared, at least to me, there was increased focus on addressing this problem.

In an effort to keep his campaign promise, President Trump introduced the 2018 Infrastructure Initiative earlier this year. This plan was advertised to provide one trillion dollars in federal funding in order to upgrade the United States’ aging infrastructure systems. The proposed plan is intended to renovate, improve, and develop our existing resources in the areas of power, transportation and roadways, waterways, the Department of Veteran’s Affairs, and water infrastructure.

However, should you read the fine print, you will see that of the proposed one trillion dollars advertised, the federal government is only committing to provide $200 billion in “seed” money — or only 20 percent of the actual cash infusion. The Administration appeared to want to encourage public-private partnerships, using local funding and private equity to provide the other 80 percent of larger infrastructure projects across the country. They expected that the tax breaks would incentivize private investment, which would allow public companies to negotiate tax breaks. For smaller municipal projects, the funding would likely come from traditional financial sources for municipalities in the form of rate income, bonds, and other low interest loan models. In my experience, alternative project delivery and financing tools like construction-management-at-risk, public-private partnerships, and design-build-operate are reserved for larger projects and might exclude some smaller projects (less than $10M).

At first sight, the proposed plan seems innovative; that is, the Feds aren’t just throwing money at the problem. The bill would involve all parties, comprising state, local and private entities, investing in a project, sharing risk, all with “skin” in the game.

Critics of the bill, however, state that the language is vague and lacks specific direction. There was also concern that private entities would negotiate disproportionate terms in their favor. Assumptions aside, it’s not a perfect solution but probably a good start nonetheless.

In March of this year, the Omnibus Appropriations Bill was signed, which provided $1.16B for water upgrades and another $1.69B for wastewater upgrades, both through the Drinking Water and Clean Water State Revolving Funds program. This was a welcomed increase from the $2 billion allocated in 2017. So, it appeared that we were seeing some momentum toward resolution.

In reality, the likelihood that we will see an infrastructure bill passed this year is slim as it has appeared to have lost momentum with both Congress and the White House. You would think that this piece of legislation would be a politically strategic opportunity for a congressperson to attach his or her name to a directive that would actually benefit their constituents. On the contrary, it is partisan politics at play as usual. One side of the aisle is focused on questions regarding election integrity, unscrupulous personal failings, and other unworthy news items that continue to dominate our airwaves. The other side fears that possible tariffs to fund the proposed Infrastructure bill would offset the perceived tax savings celebrated earlier this year.

Altogether, appropriate and adequate investment in water and wastewater infrastructure will enable us to continue to protect the quality of public health and maintain and protect our water supply and the environment while contributing to the growth and health of the economy. This necessity should be a non-partisan opportunity to serve the United States population, as virtually all U.S. citizens would benefit. Our government needs to do better; if not, it will just be a matter of “when” the system fails. It is time for action, direction and leadership from all branches in Washington; a “do nothing” strategy never works. We need and expect more. WW

About the Author: Paul A. Ravelli is northeast municipal regional business manager for Suez – Technologies & Solutions, NA. He is on the Board of Directors for the Water and Wastewater Equipment Manufacturers Association (WWEMA), a non-profit trade association founded in 1908. WWEMA’s vision is to be the “voice of water and wastewater technology providers” and its mission is to promote the advancement of technology solutions for clean water that ensures a future sustainable environment and to improve its members’ economic viability. For more information, visit wwema.org.

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