Our Waterworks Conundrum
Every so often the national news media devotes a little space or air time to stories about water main breaks that flood a street or create a sinkhole and mess up traffic royally in some big city. These stories have a lot of sex appeal for journalists in that they come with stunning visuals and create a big headache for thousands of people, along with significant property damage. What often goes unreported, however, is the larger context of these water main breaks, which are becoming increasingly common in large and medium-size cities across the U.S.
Those street floods and sinkholes speak volumes about the state of our waterworks infrastructure. Various studies by government agencies and private interest groups have shown that our nation’s public water systems are crumbling at an alarming rate. Many of our older cities rely on water supply systems that are more than 100 years old, and most of the nation’s sewer pipe network also is reaching the end of its useful life. Moreover, many of our wastewater treatment plants were upgraded in the 1970s to comply with the Clean Water Act. They, too, are aging and will soon need to be upgraded or replaced.
Guesstimates vary widely of the total bill for all of these improvements, ranging from $300-$600 billion over the next 20 years. Suffice to say everyone counts in megabucks. As ominous as this information may be to the public at-large, whose health and First World status are at stake, it’s a godsend to our industry’s waterworks manufacturers and distributors. Many of those megabucks are going to be spent on PVF, pumps, backflow preventers and other products made in an industry sorely in need of a boost.
This scenario involves two catches, however. The first is the all-important question of where is the money going to come from? A clean water trust fund is being considered, and on June 29, 2009, the U.S. Government Accountability Office released a long-awaited report about issues to be considered in designing such a trust fund. The GAO report does not make specific recommendations on how to raise money or administer the fund, but addresses the pros and cons of possibilities that include a tax on water usage, increased corporate taxes and various other options.
One option that would be particularly onerous to this industry is a series of excise taxes on businesses whose products contribute to the wastewater stream. Those so identified include water appliances (dishwashers and disposals) and plumbing fixtures. The GAO report notes, however, that about half of the water utility stakeholders surveyed for its report do not see a strong connection between plumbing fixtures and wastewater infrastructure use. They also point out that taxes on water appliances and plumbing fixtures “would be a disincentive for consumers to buy newer, more efficient appliances that conserved water and helped to lower the burden on wastewater infrastructure.”
It’s still an open question of how we’ll pay for needed waterworks improvements, and that leads inexorably to the second catch: when will the spigots be opened?
So far the situation can be described as paralysis by analysis. The American Recovery & Reinvestment Act has earmarked around $10 billion for waterworks projects out of its $787 billion total of stimulus spending. That’s a small fraction of what’s needed, and at any rate little of that money has yet found its way to the coffers of suppliers and contractors. Bureaucratic inefficiency must be added to death and taxes as the only things in life that are certain.
I write this a few days after the Department of Labor released its June unemployment statistics, which showed an additional 79,000 jobs lost in the construction industry. Over the past year, almost 1 million construction workers have been pushed to the sidelines. As of the moment, the construction unemployment rate stands at 17.4%, almost double the nation’s 9.5% overall rate. On the day this report came out, Associated General Contractors of America CEO Stephen Sandherr issued a statement whose tone verged on panic.
“The Administration and Congress must see today’s figures as a reminder to stimulate new commercial lending and hasten non-transportation stimulus construction projects that have by and large yet to begin,” said Sandherr. “And they must not delay action on a host of other infrastructure work, including … water infrastructure legislation.”
Only thing left to say is, Amen.