Maine must leverage federal grants to keep water quality and improve infrastructure.
The Clean Water Act’s success was due to the creation of a financial partnership between federal, state and local government. The partnership shared the burden of investment in wastewater infrastructure, which had a direct connection to improving the water quality of Maine’s rivers.
In the 1970s, the Federal Construction Grant Program – in conjunction with the state – funded up to 90 percent of the construction cost of municipal wastewater treatment facilities. In 1989, that program was replaced by the State Revolving Loan Fund. This program required states to match 20 percent of the federal grant as a condition of receiving the funds.
Maine has chosen to fund its 20 percent obligation through issuing general obligation bonds that are administered by the Maine Municipal Bond Bank. The Maine Bond Bank then provides loans to municipalities at 2 percent below the municipal market bonding rate. The program saves homeowners, schools and businesses millions of dollars in interest costs. Today State Revolving Loan Funds bonds are at 2.5 percent interest rate, compared to a typical municipal interest rate of 5 percent and a commercial interest rate of 7 percent.
It is easy to quantify how successful the State Revolving Loan Fund program is in reducing infrastructure improvement costs, which then directly impact the water quality of our rivers. The significance of this program cannot be overstated, with more than $383 million loaned by the Maine Bond Bank to municipalities for wastewater infrastructure since 1990.
The financial partnership is in extreme jeopardy. Federal funding has been cut by 47 percent in the last two years. The likelihood of obtaining state matching funds is beset by political uncertainty because of lack of support by our elected officials.
At this very moment our legislators and governor are not supporting a general obligation bond for just over $1 million that would bring in $5.3 million in a federal grant for the program. Our elected officials should be supporting our communities by authorizing matching funds in a bipartisan manner. A unified message from our governor, state senators and representatives is required if we want to maintain the financial partnership that has served Maine so well. By not issuing a general obligation bond to capture the federal grant, the message they are sending to Washington is Maine is flush with cash and we do not want or need federal grants.
This is not just an environmental bond, but a bond which assists our communities in controlling interest rates by leveraging federal grants. The capital investment supports improvements to critical infrastructure for environmental safeguards, economic development and public health within our communities. The loss of funding will result in higher interest rates that will have to be passed directly on to local ratepayers.
The State Revolving Loan Fund program is an incredibly successful program that must receive the full support of our elected officials.
In Maine, we have witnessed the benefits of the Clean Water Act by the dramatic improvement in water quality of our rivers. I do not believe any of us want to go back to the deplorable water quality we had in the 1950s and ’60s.
Michael A. Grove is government affairs chairman of the Maine Wastewater Control Association and works for the Augusta Water and Sanitary Districts.