Our public water systems are in crisis.
Every person and business in every city and town in the U.S. will face increasing competition for water, more and more repairs, improvements, and replacement of crumbling infrastructure or preventing illness or pollution. They will also face the wild card of increased frequency and intensity of rainfall and flooding, like Houston and Puerto Rico, or at the opposite extreme drought, high temperatures and winds like those that fueled have fueled the fires and destruction across California this past year. There’s simply no way out, and the stakes, threats, and costs are rising faster than the waters along our coastlines from melting glaciers on Greenland. For years, professionals, towns and cities, policy and science organizations, neighborhoods, citizens, and businesses have pleaded for a new federal plan to redesign, rebuild, and improve America’s public water infrastructure, one that continues to provide safe, clean, affordable water for all in this Country. Except for a few wealthier states and areas of the country, the federal and state governments have not been able to agree on laws that will address this now close to insurmountable crisis.
On February 12, 2018, President Trump unveiled his water infrastructure plan to make “America great again.” The Trump plan pegs the cost of rebuilding the country’s water infrastructure at $600 billion. To pay for this, he wants to reduce the federal government’s share from 75 to 80 percent level to 20 percent; this will quadruple the state and local share from 20 percent up to 80 percent. This means state and local governments will have to compete for a share of the $120 billion a loan application process that appears to reward those states and cities who demonstrate innovative funding partnerships with private investors.
The plan would leave it to each state and local government to figure out how to pay for their remaining 75 to 80 percent share of the costs of a project. Without the larger federal grant or even loan share, states and local governments will have to find ways to finance the $600 billion for water infrastructure. Historically, this has meant tax-based bonds or revenue bonds tied to increased fees by users. Most users are already maxed out with what they can afford. Stagnant cities and rural areas struggling for population will become prey to private investors who promise to fix the system in exchange for a purchase or long-term lease of infrastructure. In short, President Trump’s plan will convert our public water infrastructure systems into private water infrastructure systems. His vision to make America “great again” is to encourage and speed up the private ownership and control of our public water commons, so fundamental and essential to the health, well-being, and liberty of every American.
Two weeks earlier, Michigan’s Governor Snyder announced his roll out of a water infrastructure plan for rebuilding the pipes, and pumps, and facilities for water supplies, delivery, and treatment of wastes. Governor Snyder puts the tab at $13 billion. But he proposes only $110 million annually from the state, paid for out of a fee to all users of water systems in Michigan. According to the Governor’s 21st Century Infrastructure Council, the real cost to upgrade and fix Michigan’s pipes and systems is closer to $1 billion a year. The plan does not explain where the additional 90 percent will come from, but the answer is obvious: local governments. So not only will there be a state user fee, local governments will be forced to seek revenue bonds to make up the difference, all of which will come out of the fees of their users. In effect, costs will rise even more steeply, and small towns and our cities will not be able to afford the plan. Instead, there will be increased risks of safety, pollution, disease and health threats, and continuing rises in patches and repairs, that will at some point in time result in another Flint or Detroit with illness, health risks, and water shutoffs because people will not be able to pay what will be disproportionately high-water fees.
The combined effect of the Trump and Snyder plans is to remove obstacles and encourage private funding and investment and markets to rebuild, control, and operate public water and infrastructure. Private firms are already vying to rebuild the federal highway system in exchange for private control and profit. Privatizing prisons has been a disaster. Governor Snyder recently ended a privatization of food service in schools. The track record of privatized municipal water systems has been somewhere between checkered and a failure. The most tragic was the transfer of Cochabamba, Bolivia’s water system to Bechtel through strings imposed on the financing by the World Bank. When Bechtel took over and placed meters on peasants’ wells, a massive protest forced Bechtel to leave the country.
Here in the U.S. on a less dramatic but equally compelling scale, privatization has not worked. Promised upgrades are not made or fall short, leaks and failures continue, and the price of water for residents and businesses rise. In 2012, Pittsburg entered into an agreement that promised the French water giant Veolia one-half the money saved by conservation measures as an incentive to fix the system. Water prices soared, some inflated by as much as 600 percent, and thousands of billing errors resulted in turmoil with little access to correct them except protest. Worse lead in pipes and water increased, and by 2016 Pittsburg terminated Veolia’s contract and sued for abuse and breach of trust, gross mismanagement, and maximizing profits over the interests of the city and its citizens. From Bayonne, New Jersey, to Atlanta, Georgia, Missoula, Montana, the story has been the same. In Missoula, after great promises and public support of the city’s sale of its water system to Carlyle Group, the City had to file a condemnation lawsuit to get its water system back before the corporation unloaded its water infrastructure asset for a cool $327 million. The court ruled in favor of the city, transferring the water system back into public hands and oversight.
There is a bitter irony in all of this: Water is public, held by each state as sovereign in public trust to assure health and access to safe water for each person. While a homeowner, farmer, or business does not own the water, each has a right shared in common with others to reasonable use of water from a stream or lake bordering or the groundwater moving beneath the land. In order to protect public health and pay for these new water utilities and their infrastructure, state law prohibits homeowners or occupants from using or installing private water wells or septic systems in areas served by public systems. People will pay even higher and higher costs for the public water they are already entitled to use under our laws and federal and state constitution.
But there’s another twist to this irony. Governor Snyder’s plan for Michigan sets aside the first $110 million to inspect and put a value on our water infrastructure as “assets.” Assets generally refer to property on a balance sheet. If our water is public. If our water is public and sovereign, and our water infrastructure is public and sovereign, backed by users and taxpayers under full faith and credit of our state, how can it be treated by Governor Snyder merely as an “asset?” One clue is the push to create what are called 3Ps—Public Private Partnerships—which denote any combination of ways to provide for private investment and profits or a rate of return from water systems’ customers. In order to attract investors and maximize value and gains, water infrastructure must be inventoried and appraised as an “asset.” When the words “3Ps” pop up, proceed with caution.
Water and our public infrastructure has always been public. Citizens, businesses, cities and towns should take a serious pause before jumping on the privatization train. It is not all gravy, if at all. The link between our public water and public infrastructure to our health, life, and enjoyment of our homes and communities is to close, too tied to public accountability and transparency, for us to hand over to innocuous acronyms like 3Ps, a nicely spun phrase intended to turn your tap over to private profiteers.
Jim Olson, President and Founder
No matter how we as states and local governments or neighbors solve our public water crisis, one thing is constant: We must vigilantly protect and maintain our water and infrastructure public. There are some things that are common and public by nature, which leads to a question: President Trump and Governor Snyder, where are the interests of the “people” and “public” and “public sovereign water” in your water infrastructure plans?
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