Governor proposes increase in water assessment fee to address funding gap for critical water infrastructure repairs

A funding plan to further address critical water infrastructure repairs in Michigan would come at the consumer’s cost.

Gov. Rick Snyder is proposing a plan that would generate $110 million in additional revenue over the next five years for three state grant and forgivable loan programs, which provide communities with funds to address priority water infrastructure needs such as water main repairs and lead service line replacements upgrades.

Ari Adler, the governor’s director of communications, said in order to generate that additional revenue, customers who receive water from public supply systems with 1,000 or more customers would be charged an additional $1 per year, in five phases, on their water bills from 2020 through 2024 to help stimulate needed local investments.

“The state would collect the additional fee annually from the water systems,” said Adler. “We’re giving the systems flexibility on how to collect from their customers. It is likely they would collect it from their customers through the regular billing cycle but that’s a local decision.”

Eighty percent of the additional funds collected would be allocated to the region in which it was generated to use for water infrastructure improvement projects.

Oakland county Water Resources Commissioner Jim Nash said he doesn’t know if this is the right approach in addressing the lack of state funding for underground infrastructure needs.

“If we can get help to the local communities that need economic assistance that’s great, but other than that, we all pay for our own stuff,” said Nash. “The way to go is for everyone to pay for their own services that they use. To me, that’s the longer term solution. Every drain I have has its own enterprise fund. We’re not sure how this proposal would work for each of our funds.”

Nash said he needs to see a lot more before he can fully support the proposal. He’s hoping this additional funding will help repair underground infrastructure in lower income cities that cannot afford to pay for the upgrades on their own.

“If they can help in that way, it would be the best thing the state could do,” said Nash. “I’m not sure where this additional money would go or who would even apply for it. It’s good that the governor is working on these things and we are willing to help in whatever way we can.”

Snyder’s 21st Century Infrastructure Commission’s report estimated that there is an $800 million annual gap in funding to meet the state’s critical water and sewer infrastructure needs.

“Critical updates are necessary to rebuild our state’s failing water infrastructure,” said Snyder. “Investing in our state’s water infrastructure needs is essential to ensure every Michigander has access to safe drinking water, protect our environment and continue our state’s outstanding economic growth.”

FUNDING PHASES

2020: $1/customer

2021: $2/customer

2022: $3/customer

2023: $4/customer

2024: $5/customer

Programs that would use the funds are:

State Capital Investment Program ($75 million)

Provide grants for local infrastructure improvements (such as lead service line replacement)

Provide low-interest and forgivable loans for other local capital improvements

Emergency Infrastructure Failure Fund ($10 million)

Provide grants for communities and systems in financial need with emerging water or sewer failures.

Integrated Asset Management ($25 million)

Fund asset management plans for drinking water wastewater and stormwater systems

Support local data collection, materials inventory, and training needs

WATER INFRASTRUCTURE FACTS https://content.govdelivery.com/attachments/MIGOV/2018/02/01/file_attachments/952201/Water.Infrastructure.Graphic.PDF

2017 MICHIGAN INFRASTRUCTURE REPORT CARD: https://www.infrastructurereportcard.org/state-item/michigan/