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Tue, July 16

Feds and old stats hurt WIFA money

PRESCOTT VALLEY As Arizonas towns and cities build more pipes and pumps to prevent sewage from reaching precious groundwater, politicians such as Gov. Janet Napolitano find themselves fighting budget cuts for a state water financing program that they think does not receive enough money.

In the past two years, the Water Infrastructure Finance Authority (WIFA) has graced the pages of The Daily Courier in articles about the agencys multi-million dollar, low-interest loans to Chino Valley, Prescott Valley, and even a mobile home park in the City of Prescott. Small governments and groups across the state use WIFA money to pay for sewer projects that they could not afford without the loans.

WIFA is an Arizona agency that lends money for drinking water and sewage projects with about 30 years of accumulated state and federal money, while also selling bonds and collecting small percentages of interest on its loans.

Jay Spector, WIFAs executive director in Arizona, now finds his agencys clean water fund (which municipalities use to pay for sewer system construction) facing significant federal cuts. Every year, Congress decides how much money to give to this fund, which it then divides among all 50 states, Washington, D.C., and Puerto Rico. Each state receives its share of the money based on a formula using population statistics from the early 1970s.

Spector noted that federal allocations to Arizona decreased from $8.94 million in 2004 to $7.34 million in 2005. He said he is even more nervous after seeing President Bushs budget proposal, which would reduce Arizonas allocation to $4.9 million in 2006.

These amounts of money may seem large until one considers that in 2005, municipalities and counties submitted 27 applications for $313 million for WIFAs sewer project loans. In 2005, WIFA will have $76 million to give to those cities and towns, which means that WIFAs board of directors will have to turn down many projects.

Steve Owens, the chairman of WIFAs board of directors and also chairman of the Arizona Department of Environmental Quality, said the cuts would have a very serious negative impact on WIFAs ability to provide funding for critical water infrastructure projects in rural Arizona.

He noted that rural communities already have enough financial constraints, and that the reduction of loan money will present another hurdle for smaller towns.

Congressman Rick Renzi, R-District 1, called the 2006 federal budget cycle challenging.

As one of the fastest growing states in the nation, Arizonas water needs are a top priority, he said. The proposed cuts to the Clean Water State Revolving Loan program are just those proposed. I am working with other members of the Arizona delegation to ensure that the needs of the Southwest are met.

Napolitano recently sent letters opposing the cuts to all of Arizonas representatives. According to Spector, the Bush administration has told him that it not only intends to cut spending on domestic programs, but it also intends to phase out the funding in total for the Clean Water Revolving Fund. And for that, there has been no other explanation.


Spector also wants Congress to update the statistics in the allocation formula, and noted that the original terms of the formula date back to 1972 when Congress approved the Clean Water Act. He provided statistics to the Courier showing that Arizona receives substantially less money than other states, such as New York, California, Illinois, New Jersey and many more. (See related story, this page, for statistics.)

It was created based upon Arizonas current population in 1970 and the needs survey done back in 1974, Spector said. What we are asking for is that the formula be updated to reflect current population and current needs in every state. This would be a change that would provide some equity to all the states.

Owens and Spector said that U.S. Sen. Jon Kyl, R-Ariz., has been receptive to the thought of changing the formula and studied the concept. When asked about Kyls specific actions, Spector and Owens did not state what action Kyl had taken. Kyls staff did not provide an answer to The Daily Courier either.

State Rep. Tom OHalleran, R-Village of Oak Creek, agreed that the current system is unfair. He said officials had hoped that federal legislators would change the formula this year, but Congress cut the budget to WIFA agencies instead.

OHalleran said, The Eastern states which are losing population have a lot of votes in Congress, and have not seen any need to change those formulas, which are ridiculous formulas based on todays population.

He said he also disagrees with the concept that federal appropriation formulas and the agencys bonding capacity are still based on statistics from the 1970s. He also noted that the more money that WIFA gets, the more it applies to secure lower rates (for example, 3.4 percent for Prescott Valleys recent 20-year, $9.3 million loan).

The Daily Courier tried unsuccessfully to call many other state and federal politicians about this topic.

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