The Good, The Bad & The Hope: 16th Annual Municipal Survey

Despite Extended Budget Crisis, Majority Expect Accelerated Spending
By Robert Carpenter, Editor | February 2013, Vol. 68 No. 2

Silver lining
Another positive development is that the economic downturn has provided a silver lining scenario for many rehabilitation contractors and vendors. With tight budgets, cities are turning to modern rehabilitation techniques to affect limited, band-aid repairs to their most serious problem areas rather than addressing much-needed system replacement or upgrades. “We know we’re just sticking a finger in a dike that could break at any time, but this gets us by for a few years until our funding situation improves,” stressed this Florida respondent. Whatever the reasoning, cities plan to invest more in rehabilitation in 2013.

muni3.png

Municipal officials have budgeted an overall solid spending increase of 4.4 percent for new underground infrastructure piping construction in 2013 at $8.25 billion. Rehabilitation spending continues to be more aggressive and is anticipated at $6.35 billion for 2013. Of course, those increases are contingent upon the continued economic recovery and municipal bean counters are planning on somewhat stable and/or increasing user fees and tax revenue. It goes without saying that municipal spending plans remain tentative and understandably flexible.

There have been many estimates trying to pinpoint just exactly how much of an investment would be needed to bring America’s sewer/water/storm water piping infrastructure up to date. The survey this year asked municipal employees directly how much money they estimate would be needed to repair or expand their systems. City officials projected those costs at $260 billion for sewer, $85 billion for water and $9.6 billion for storm water.

While it is always politically painful to raise user fees, desperate times call for desperate measures. In 2012, cities bit the bullet and raised their utility fees at a record rate. For the first time in the 16-year history of the survey, the average time between fee hikes for U.S. municipalities has fallen below three years. In fact, 52 percent of this year’s respondents reported raising their rates within the last two years. On the other hand, 29 percent said it has been at least three years since user fees were adjusted. One sizable city admitted it had been more than 13 years since it last boosted utility rates. Several reported five years or more.