California’s Unspent Water Funds: An Instinct for the Capillary

Drinking Water Revolving FundThe AP reports today that California has failed to spend $455 million of federal money for improving the state’s water infrastructure, even though many of the state’s communities suffer from unclean water.

The state has received more than $1.5 billion for its Safe Drinking Water State Revolving Fund over the past 15 years, but has failed to spend a large part of it in a timely manner, according to a noncompliance letter from the U.S. Environmental Protection Agency to the state’s public health department. The amount is the program’s largest unspent sum in the nation, the EPA said.

The fund gives out loans to public and private water systems for drinking water infrastructure improvements, including treatment facilities, pipelines and other projects. California gets an estimated $80 million in federal money annually for the fund. The state provides a 20 percent match and manages the loan repayments which helps replenish the fund.

“It’s really unacceptable,” EPA’s regional administrator, Jared Blumenfeld, said of the unspent funds. “It’s not like there is a lack of projects. It’s a lot of money in this day and age.”

Okay, that’s really bad.  It’s a deserved black eye for the state and its regulatory agencies.

And yet, the AP really buried the lede.  The story’s last paragraph reads:

According to federal regulators, California needs $39 billion in capital improvements through 2026 for water systems to continue providing safe drinking water to the public. That includes both updating old infrastructure and building new infrastructure to deal with water contamination problems.

Got that?  It’s $455 million out of $39 billion needed.  It’s a little more than 1% of what the state needs.  The danger of exposes like this is that they really miss the overall story, and feed into a dangerous narrative that “if only the government weren’t so inefficient, we’d have plenty of money for what we want.”  It is fodder for unscrupulous or ignorant politicians who claim that they can make up budget shortfalls by eliminating “waste, fraud, and abuse.”

It reminds me of the “scandal” I blogged about last year when everyone went crazy upon discovering that the California State Parks Department was missing $54 million in funds.  Meanwhile, the backlog of needed improvements in the system is $1.3 billion.

Obviously, government must spent public funds wisely.  And obviously, if there are bureaucratic or (as appears to be the case here) political hurdles to efficient spending of these funds, they should be identified.  But it is really missing the issue.  Neither alleged “scandal” found that the departments in questions were incapable of spending money efficiently; it’s just that they had made errors.  They should be criticized and if necessary, punished for it.  But let’s keep in mind what the real scandal is: the state and the nation is suffering from a massive shortage of public investment necessary for public health and safety, and the press is focused on the capillary.

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Reader Comments

7 Replies to “California’s Unspent Water Funds: An Instinct for the Capillary”

  1. The Legislative Analyst’s Office (LAO) has relatively recently assessed the administration and performance of the Safe Drinking Water State Revolving Fund, administered in California by the California Department of Public Health (DPH): http://www.lao.ca.gov/laoapp/pubdetails.aspx?id=2706. Based upon the reported underperformance of California’s Safe Drinking Water SRF, compared to California’s Clean Water SRF currently administered by the State Water Resources Control Board (SWRCB), the U.S. EPA and other stakeholders have suggested consolidating the programs under a single state agency. To that end, Assembly Bill 145 (Perea) (http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml) would move the Drinking Water Program to SWRCB. The LAO has assessed the potential implications: http://www.lao.ca.gov/laoapp/pubdetails.aspx?id=2709.

    Setting aside the particular proposal of AB 145, getting current funds out the door more quickly, charging a service fee, and leveraging SRF funds might help improve the return on federal investment in drinking water infrastructure. Yet program adjustments or consolidation will not be a complete solution. As Professor Zasloff points out, the problem is much larger than the unspent $455 million. In 2007, the U.S. EPA did indeed estimate the cost of meeting the state’s drinking water infrastructure needs over the next 20 or so years at $39 billion. (Shortly thereafter, U.S. EPA also estimated California’s wastewater infrastructure needs over roughly the same time period at $30 billion.)

    As the AP article highlights, some of the most chronic drinking water problems in California are experienced by small, disadvantaged communities who rely upon groundwater containing unsafe levels of contaminants such as nitrates and arsenic. 1.3 million residents in the Salinas Valley and the Tulare Basin alone have been affected by nitrate contamination exceeding the Maximum Contaminant Level. Small, impoverished communities are the least able to afford construction and operation of new drinking water infrastructure on their own, and they may face additional barriers to utilizing the SRF for such purposes. The LAO and U.S. EPA seem to have different views of how the State is addressing these communities. Regional Administrator Blumenfeld stated that DPH has concentrated too much on large and medium water systems whose projects will not be shovel-ready for years to come. He suggests that this results in inadequate available funding for smaller communities with more immediate contamination problems. In stark contrast, the LAO stated that California’s underperformance may be attributed in part to DPH’s focus on smaller water systems. According to LAO, smaller systems may require additional assistance in preparing applications while ultimately requiring less funding. Under this potential theory, the reasonable result would be fewer agreements of smaller amounts of money.

    Without resolving the debate over how we got to this point, what administrative structure would be best, or what to do about the other $38.5 billion needed for future drinking water improvements, I will say this: the State must find a way to improve the performance of the Drinking Water Program and the Safe Drinking Water SRF, while also concentrating on serving communities who most need state and federal assistance to obtain safe and clean potable water.

  2. The Legislative Analyst’s Office (LAO) has relatively recently assessed the administration and performance of the Safe Drinking Water State Revolving Fund, administered in California by the California Department of Public Health (DPH): http://www.lao.ca.gov/laoapp/pubdetails.aspx?id=2706. Based upon the reported underperformance of California’s Safe Drinking Water SRF, compared to California’s Clean Water SRF currently administered by the State Water Resources Control Board (SWRCB), the U.S. EPA and other stakeholders have suggested consolidating the programs under a single state agency. To that end, Assembly Bill 145 (Perea) (http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml) would move the Drinking Water Program to SWRCB. The LAO has assessed the potential implications: http://www.lao.ca.gov/laoapp/pubdetails.aspx?id=2709.

    Setting aside the particular proposal of AB 145, getting current funds out the door more quickly, charging a service fee, and leveraging SRF funds might help improve the return on federal investment in drinking water infrastructure. Yet program adjustments or consolidation will not be a complete solution. As Professor Zasloff points out, the problem is much larger than the unspent $455 million. In 2007, the U.S. EPA did indeed estimate the cost of meeting the state’s drinking water infrastructure needs over the next 20 or so years at $39 billion. (Shortly thereafter, U.S. EPA also estimated California’s wastewater infrastructure needs over roughly the same time period at $30 billion.)

    As the AP article highlights, some of the most chronic drinking water problems in California are experienced by small, disadvantaged communities who rely upon groundwater containing unsafe levels of contaminants such as nitrates and arsenic. 1.3 million residents in the Salinas Valley and the Tulare Basin alone have been affected by nitrate contamination exceeding the Maximum Contaminant Level. Small, impoverished communities are the least able to afford construction and operation of new drinking water infrastructure on their own, and they may face additional barriers to utilizing the SRF for such purposes. The LAO and U.S. EPA seem to have different views of how the State is addressing these communities. Regional Administrator Blumenfeld stated that DPH has concentrated too much on large and medium water systems whose projects will not be shovel-ready for years to come. He suggests that this results in inadequate available funding for smaller communities with more immediate contamination problems. In stark contrast, the LAO stated that California’s underperformance may be attributed in part to DPH’s focus on smaller water systems. According to LAO, smaller systems may require additional assistance in preparing applications while ultimately requiring less funding. Under this potential theory, the reasonable result would be fewer agreements of smaller amounts of money.

    Without resolving the debate over how we got to this point, what administrative structure would be best, or what to do about the other $38.5 billion needed for future drinking water improvements, I will say this: the State must find a way to improve the performance of the Drinking Water Program and the Safe Drinking Water SRF, while also concentrating on serving communities who most need state and federal assistance to obtain safe and clean potable water.

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About Jonathan

Jonathan Zasloff

Jonathan Zasloff teaches Torts, Land Use, Environmental Law, Comparative Urban Planning Law, Legal History, and Public Policy Clinic – Land Use, the Environment and Loc…

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