How COVID-19 could affect states & municipalities
After months of home isolation under the coronavirus guidelines, I am happily yet cautiously emerging into the outside world. My home in southwest Washington state is gradually reopening under a phased approach common to many areas around the U.S.
Though federal relief funding has provided some assistance, the coffee shops and restaurants that have remained open have largely reduced their workforce. The private sector is not alone in absorbing the impacts of one of the largest economic contractions in modern history. I have been thinking about the effects that the economic downturn will have on the jurisdictions and organizations that manage our storm water runoff. These outcomes are not yet known. I am qualified as an engineer, not an economist, but using examples from my home region, there are some factors that will shape the future of these programs.
Phase I and Phase II municipalities are responsible for meeting the requirements of their National Pollutant Discharge Elimination System (NPDES) permits and, thus, bear the bulk of the costs associated with storm water management. Funding models for these programs can generally be split into two categories: Those with storm water utilities and those without. The University of Western Kentucky publishes an annual survey which, as of 2019, listed 1,716 storm water utilities throughout the country, up from 1,681 the previous year. The average monthly single-family residential fee was $5.85. Programs without storm water utilities are more vulnerable to economic fluctuations, often financially dependent on other municipal departments, which are suffering from their own reduced funding. With a delay in construction projects across the country, the associated drop in permit fees is likely to compound this issue. Additionally, losses of tax revenue are likely to result in staff furloughs or reduction in hiring.
The state level shows some of the highest degrees of variability in funding mechanisms. Washington state’s NPDES permits are administered by the Washington State Department of Ecology and are among the most progressive in the country. The state plays a large role in supporting municipal programs. A share of these funds come from federal sources, such as the Clean Water State Revolving Fund, but the Department of Ecology also generates a substantial portion of its budget through the Hazardous Substance Tax under the state’s Model Toxics Control Act (MTCA). This tax directly supports storm water programs by charging a fee on liquid petroleum products, currently set to $1.09 per barrel. While this specific tax structure shields these funds from large-scale state budget shortfalls tied to losses in sales tax revenue, the direct impact of the coronavirus on petroleum sales presents a unique vulnerability with road travel greatly diminished and the Transportation Security Administration showing declines in air travel of 80 to 95% since late March.
Contrast this scenario with Oregon, where the NPDES permits are administered by the Oregon Department of Environmental Quality. With no state sales tax to generate revenue, Oregon’s second largest source of funding is its lottery program, behind personal income taxes. With a prolonged shutdown of facilities, such as bars and restaurants that feature video gambling equipment, the state is expecting up to a 40% drop in budget contributions. Of these, 7.5% go directly to watershed enhancement programs, including storm water projects.
Impacts on Supporting Industries
There are a host of organizations that support storm water programs that will feel the effects of coronavirus-related economic losses. While the final toll of the COVID-19 pandemic on the storm water industry is a long way off and impossible to accurately predict, examples of its influence ripple outward in all directions. We can only hope that the people who administer and support these important programs survive both the medical and economic impacts of the virus.