Communities across Georgia are concerned with securing reliable supplies of clean water for the future, and they are challenged to find the best way forward. To address these issues, Gov. Nathan Deal intends to spend $300 million in state taxpayer money on reservoirs and speculative reservoir planning. While the governor’s approach may sound proactive at first, let’s not mistake just any action on this issue as a step forward. This path amounts to reckless spending of taxpayer money that will leave us no closer to water security than we are today.
As we face an uncertain future, our communities deserve 21st-century solutions, not ones that rely on outdated models from yesteryear. Reservoirs should be the last solution — not the first — that communities reach for to address their water supply needs effectively.
In the wake of the 2008 credit crisis, communities must be more prudent than ever when planning major investments in infrastructure. Financing expensive projects can be the local government equivalent of buying more house than your family can afford. And when a water utility finds itself going under water with reservoir debt, it is the community’s taxpayers and water ratepayers who take the financial hit with rate or tax increases to cover the debt load.
Once locked in to the significant expense of a reservoir and its associated treatment plants, pipes and pumps, a water system loses its financial flexibility. When drought hits, demand forecasts fall short, population projections don’t pan out or other priorities take center stage; adjusting a reservoir plan to accommodate new scenarios and new information is challenging at best.
Reservoirs are expensive, and their costs are consistently underestimated, resulting in significant cost increases. The Atlanta Journal-Constitution reported in October that the city of Canton is so burdened by debt payments on an incomplete reservoir that it is unable to buy firetrucks or complete necessary street repairs. Costs for the Hickory Log Creek Reservoir have risen to five times the original estimate, nearing now $100 million. One city councilman called the municipal debt for the reservoir “a big rock around our neck.”
Unfortunately, it is just this kind of municipal “money pit” that has emerged with several recent water-supply reservoir projects across the Southeast. The trend is a disturbing one for local residents, businesses and government leaders alike.
Nationwide, in fact, reservoirs are risky investments for the public. Just last week, an ongoing effort to convene nationwide water industry experts and public interest groups (including American Rivers) issued a report, “Charting New Waters,” that points out the increasing sensitivity of investors to hidden risks in water-supply systems. Water utilities, which borrow to finance most major projects, are not immune from examination as the financial markets and credit-rating agencies scrutinize various sectors of the economy for previously unseen credit risks. Maintaining financial health and good credit is more important than ever to protect the taxpayers and ratepayers who fund water systems.
Prudent use of taxpayer money demands an honest and rigorous assessment of the full range of water supply options available to a community, including solutions such as conservation, efficiency and interconnections with other water systems. Committing state taxpayer money and Georgia communities to the pursuit of inflexible and financially risky infrastructure is reckless at best and a boondoggle at worst.
Jenny Hoffner is director of the water supply program for American Rivers, americanrivers.org.
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