I served as the New Mexico State Director for Rural Development at the USDA during the Obama administration and ran the USDA WEP program. I’ve seen firsthand its positive impacts on thousands living in rural communities – many of whom have never had running water in their homes.
In his budget proposal eliminating the program, the president suggests instead that “rural communities can be served by private-sector financing or other federal investments in rural water infrastructure, like the Environmental Protection Agency’s State Revolving Funds.” This statement demonstrates a true lack of understanding as to how the program works and the realities on the ground in places like rural New Mexico.
The USDA WEP program is designed to provide funding in the form of loans, and some grants, to rural community and municipal water systems serving 10,000 people or less. Water systems that apply to the program must show that credit was not available through traditional lenders at reasonable rates.
The USDA plays a vital role for water systems as the “lender of last resort.” Most water systems can’t afford loans at commercial rates of 7 percent or higher, thus USDA lets them borrow from the government at rates that currently stand at about 2.8 percent with terms up to 40 years. Raising the cost of borrowing ultimately forces water systems to raise consumers’ rates. Water-rate increases are the last thing we should be encouraging in the poorest state in the union.
Some attack government programs as giveaways, but this program is anything but a giveaway. Federal government loans have to be paid back – with interest. The government actually earns money from this program. With a federal loan come other requirements that improve the overall quality of these water systems. USDA requires that water systems be properly engineered, that they charge fair rates and that the water being delivered to customers is clean.
The president’s suggestion that we rely on the EPA Revolving Loan Fund Program alone leaves New Mexico water systems woefully underfunded. The American Society of Civil Engineer’s 2017 report card on America’s Infrastructure reports that New Mexico needs approximately $1.1 billion in water improvements over the next 20 years. The New Mexico EPA fund stands at $14.8 million this year. At that funding level, it would take 70 years to relieve New Mexico’s water funding deficit. However, with regular USDA funding supplementing the EPA’s funding, we can easily triple the amount devoted to small water systems annually and make a real dent in our water funding needs.
I will never forget the dozens of water systems I met with during my time at USDA. Many of those systems were run by locally elected community boards who showed real pride in their operations and took seriously their responsibility to deliver clean drinking water to their neighbors. As a society, we should be encouraging those efforts. Instead the president proposes to gut a valuable program and leave rural New Mexicans high and dry.