Underground Construction - February 2020 - 6

EDITOR'S LOG

Robert Carpenter | Editor-in-Chief

Municipal Funding, Reality and Candidates

This issue of Underground Construction
contains our exclusive Sewer & Water
Municipal Survey and Forecast.
Information for the annual article came
from our own survey and research
combined with data from industry
consulting expert FMI and our Washington
D.C. correspondent Stephen Barlas.
While overall the report is basically
good news in terms of spending plans
by cities in 2020, there are also some
very interesting twists. First of all, most
cities don't appear to be too concerned
about 2020 being a presidential election
year. Historically, that has negatively
impacted spending plans, or at least been
an inhibiting factor. Election rhetoric
combined with reluctance to make any
new or rising spending proposals, is
typically considered risky during such an
important campaign cycle. And on the
surface, that's easy enough to understand.
But in 2020, that doesn't appear to
be much of a bump in the funding
road. For the most part, the economy
is cruising. Rumors of another pending
recession have been greatly exaggerated
- for three years, ever since Donald
Trump was elected. Now that's not to
say the economy won't come tumbling
6

FEBRUARY 2020 | UConOnline.com

down soon, but there have just been too
many people crying wolf over the
past three years to lend much credibility
to that outcome.
Screams of the sky is falling tend to
be justifiably downplayed. Inevitably,
the economic tables will turn, but it
probably won't be an abrupt crash,
more of a slow-down type of pace and
even that shows no real sign of happening
any time soon. In short, that's reassuring
to local and state governments.
Another reason for cities to feel
confident with their capital spending
programs is that while budget cuts
are always being discussed at both
state and national levels, right now
anything affiliated with "infrastructure"
is in vogue. Not only do Senators and
Representatives continue to provide
a steady diet of positive lip service
to the topic, occasionally something
really happens. Such was the case with
the Water Infrastructure Finance and
Innovation Act, which was revised in 2018
and is beginning to have a major impact.
The program is designed to accelerate
investment in water infrastructure
by providing long-term, low-cost
supplemental loans for regionally and
nationally significant projects.
Also, Congress maintained levels of
funding for the State Revolving Loan
Funds for 2020. The Clean Water State
Revolving Funds received $1.64 billion
and the Drinking Water State Revolving
Funds netted $1.13 billion.
Public awareness and sympathy for
infrastructure needs - even sewer and
water - have made tremendous strides
in recent years. Basically, the people
are concerned enough that our national
"infrastructure crisis" has become a
campaign issue. That new-found public
concern has not been overlooked by
the large field of Democrats vying for
their party's presidential nomination.
Several have outlined grand plans
for general infrastructure.

Of course, what is rhetoric and what
is reality are two different things.
President Trump has also tried his hand
at the infrastructure issue, but the jury
is still out on how much has/will be
accomplished under his administration.
Further, cities are understanding
the funding game better, realizing the
limitations of Federal infrastructure
funding - the spigot is being turned off.
That's been the trend for decades and the
intent going forward. There simply isn't
enough government money to go around.
Cities created their funding problems,
now they have to live with them. The
survey revealed that more and more
municipalities are making the always
tough decision to increase user fees
more frequently. Because of the political
ramifications at the local level, city
councils and mayors are reluctant to
raise rates, always an unpopular move.
But understanding that Federal dollars
will continue to be constricted, while
pipes steadily fail, is a strong motivator.
Plus, waiting several years between rate
increases is simply poor stewardship
when operational costs are going up
(in essence, simple inflation), growth
is overpowering older systems and the
life cycle expectation of many products
expired more than 25 years ago.
Too many cities - even tiny towns -
are having broken systems and failing
pipes disasters. The long-time caution
from the EPA that "it can happen to
you" is becoming a reality. Consent
Decrees prevail.
As mentioned previously, a consistent
and strong economy for several
consecutive years also brings confidence
that local tax coffers will remain full.
If there ever was a time to aggressively
attack infrastructure woes, now is it. *
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Underground Construction - February 2020

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