Federal Budget Deal Slashes Key Community Water Funds

Steven Meade doesn't hide his frustration. As treasurer of the Atlanta Water Association in Atlanta, Idaho, he has the unenviable task of coming up with money to fix his community's water-quality problems. And Atlanta has had its share. A century of gold mining that ended in 1963 leached heavy metals into the nearby Boise River. Then runoff from a 2001 forest fire clogged wells with toxic ash. Now the water agency's antiquated treatment system no longer cleans water to modern standards: Four times in the last five years it has run afoul of state law.

"The Idaho Department of Environmental Quality says our water has to have more contact time with our chlorine chamber," Meade says, his voice rising in volume and tempo. "We've got to go out and get an engineer to do plans for a valve downstream." Idaho DEQ's Monty Marchus says Atlanta's water system needs a number of other fixes as well, including larger storage tanks and better filtration. Meade figures the upgrades will run around $250,000. That might not seem so steep, except that "we've only got a community of 50 people to share the burden," he complains.

Meanwhile, those people, whose water bills report that Idaho DEQ considers their water substandard, have threatened revolt. "They're on the verge of saying, 'I'm not going to pay your bill because you can't provide us with potable water,' " Meade says. "If I go to them and say I have to increase their rates to bring us into compliance, they'll say, 'Screw this, I'll go stick a pipe in a stream and get my water for free!' "

So Meade has turned to a 14-year-old federal loan program, the Drinking Water State Revolving Fund. One of two water infrastructure loan funds the Environmental Protection Agency extends to states, it provides low-or-zero interest loans for projects that help local communities meet water-quality standards. The fund and its progenitor, the Reagan-era Clean Water State Revolving Fund, have sent out more than $74 billion to states, which have in turn extended credit for 24,688 projects.

Last year, Meade would have had a pretty sure shot at that loan. After a decade of starving the funds of cash, Congress under Obama appropriated $2.1 billion to the Clean Water fund and $1.38 billion to the Drinking Water Fund and then made another $157 million available for direct grants to water infrastructure projects. On top of that, the American Recovery and Reinvestment Act put $6 billion into the combined funds. It was the most generous infusion of federal cash the programs received in their history. But the stimulus funds had an expiration date; eligible projects had to be under way by Feb. 17, 2010. And now the future of the whole enterprise looks grim: The continuing resolution that passed the House and Senate on April 13 axes nearly $1 billion from this year's federal contribution to the combined programs -- almost 30 percent.

Last year's money was dispersed like manna, two-thirds of it to rural communities with fewer than 3,500 residents. In 2009, $1.5 million went to Tonopah, Nev., so the public utility there could irrigate parks with reclaimed wastewater. Another $2.5 million helped Electric City, Wash., meet new federal limits on arsenic, one of several new standards that have so strained Western water agencies that Sen. James Risch, R-Idaho, has authored legislation to give them a reprieve. In urban Maywood, Calif., where for several years residents stockpiled bottled water even as Los Angeles County authorities assured them that the brown-tinted fluid running from their taps was drinkable, a $2 million loan jump-started the onerous process of cleaning up the city's two manganese-polluted wells.

But even last year's funding boost was not enough for communities to catch up with water repairs. Patricia Sinicropi, legislative affairs director for the National Association of Clean Water Agencies, says the tally of projects awaiting Clean Water funds alone tops $28 billion. "These aren't abstract quality-of-life projects," Sinicropi says. "And they can't wait. If you put Band-Aids on pipes, you end up paying more to fix them later."

Given that, the revolving funds would seem like a solid investment. While some debt forgiveness has been built into the program, the remaining money does in fact revolve -- as borrowers pay back their loans into the state funds, the states pay the money out again -- allowing communities to get ahead of repairs that would only cost more in the future. Congress, however, sees it differently, and the attack on the revolving funds has been strangely out of proportion.

"The SRFs are one-tenth of 1 percent of the budget," says Mitch Jones, senior legislative analyst with Food and Water Watch. "But they're 2.6 percent of the total cuts." Even considering the super-charged politics of environmental regulations, "it doesn't make any sense," says Jones. "This is not about the jack-booted thugs of some people's fantasies going out to enforce the Clean Water Act. It's money going out to communities to make capital improvements."

Atlanta, Idaho, has few other options. A U.S. Department of Agriculture Rural Development Loan supplied the emergency funds to deal with  the ash in 2001, but that fund is tiny, and caps loans at $100,000. While he waits to hear the status of his loan application, Meade hopes he can persuade his 50 consumers that upgrades are worth paying for. "Mostly the quality of water we're drawing from is very high," he says; only summer tourist crowds push it over the edge. "But I'm under a consent order to go forward and fix the treatment system. So I've got to do something. If I don't, they'll shut me down."

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