United States
       Environmental Protection   Office of Water      EPA 812/R-92-002
       Agency          (WH-550)         January 1992
&EFA  OBTAINING DRINKING WATER
       FUNDING: A REVIEW OF
       EIGHT STATE CAPACITY EFFORTS

-------
Introduction
Many State governments are currently facing serious fiscal problems. Preliminary budget
estimates predicted a total state-revenue shortfall of nearly ten billion dollars for Fiscal Year
(FY) 1991.1 A total of 33 States were forced to cut previously passed budgets in order to
balance the books for FY ‘91.2 State drinking water programs have not been immune to the
effects of the recession. Consequently, drinldng water administrators must now face the
burden of meeting heightened regulatory demands with a diminishing supply of General Fund
Revenues. 3
The implementation of the Safe Drinldng Water Act (SDWA) Amendments of 1986 is
placing an increasing funding burden on State drinking water programs. A 1988 survey by the
Association of State Drinking Water Administrators (ASDWA) found that the Amendments
would cost States an additional $150 million per year after 1992. Many States have addressed
their funding needs by appropriating additional general revenues or by enacting user fees. In
other States, attempts to secure additional resources have failed as a result of budget deficits
and opposition to new taxes and user fees. More problematic is the fact that a few States have
lost funding, sometimes after making initial gains.
This report examines eight States’ efforts to obtain additional revenue to fund their drinldng
water programs, activity that the U.S. Environmental Protection Agency refers to as State
capacity building. EPA’s State Capacity Initiative bolsters the State efforts to increase
funding. EPA contractors have assisted a number of states in generating support for funding
proposals.
The experiences of the States profiled in this report suggest the following lessons for
building a successful State capacity effort (these lessons are also outlined in Exhibit A):
• Educate Constituency I Public Outreach. Conduct an education campaign
directed toward utilities, legislators, interested public interest groups to highlight the
need for additional resources. Education of the general public should also be
undertaken to increase the visibility of drinking water issues and increase broad
based support.
• Consensus Building. Develop broad consensus within State government and
among interest groups, or set-up an advisory committee. An advisory committee
should be composed of representatives from the water industry, as well as other
key interest groups in the state, to build consensus on key funding issues.
1 Susan Hansen, “State Fiscal Strategies for the 1990s: Balancing Budgets in a Recession,”
Publius, 21:155-168 (summer 1991).
2 Estimate by National Conference of State Legislatures, July, 1991.
3 For more information on the current State fiscal crunch see Larry Tye, “Less than Great
Expectations,’ Boston Globe, June 12, 1991.

-------
Exhibit A: Keys to Successful State Capacity Building
Successful
State
Educating Constituency
Public Outreach
Consensus Building
Understanding
Political Process
Outcome
Montana
Well argued report and
presentation quality
executive summary
Task Force Endorsement
Elicited support of Senate
President and Speaker of
House
Gained revenue from
user fees
Florida
Position paper prepared
for Legislature
Not emphasized
Drinking water fees
overshadowed by other
DER fee proposals
Introduced in
non-election year, less
constituent backlash
Gained revenue from
user fees
Kentucky
Citizen participation in
biennial planning
process
Fostered support of utilities
through programs that help
systems stay in compliance
Biennial plans increased
program’s accountability
to Legislature and
Governor
Gained revenue from
General Funds
Louisiana
informal meetings with
interest groups
Plans for State to stop
providing water sampling
prompted owner /
operators to lobby
Governor and Legislature
New drinking water
coalition formed in 1991
Not emphasized
Gained revenue from
legislative authorization

-------
( glizki gW 2rFunthng 3
Understand the Political Process. Recognize the pressures influencing key
actors, such as agency heads, the governor, and legislative leaders. It is critical that
proposed solutions be politically palatable, especially in an election year.
The eight States profiled have been divided into groups of States that have:
1. Gained resources (4);
2. Failed in capacity-building efforts (1);
3. Lostallorpartofininal gains (2); and
4. Lost resources overall (1).
The profiles highlight key elements to each State’s success or failure in obtaining additional
revenues. Since every State’s situation is different, an approach that works in one State may
not necessarily work in another. Each State must devise an approach tailored to its specific
needs.
1. States That Have Gained Resources
Montana - - User Fee Increase
Overview. Montana has recently enacted S.B. 407, which establishes a fee of $2 per
service connection. The fees are expected to generate over $600,000 per year for the drinking
water program.
History. In the spring of 1990, at the request of the Water Quality Bureau (WQB), the
Governor appointed a Task Force to review and make recommendations on options for the
Montana drinking water program. The Task Force was composed of representatives from the
utilities, State agencies, local health deparLxnents, interested groups, and the general public.
At the time of the Task Force’s creation, the drinking water program was severely
underfunded and faced the prospect of losing primacy. Six options for the drinking water
program were evaluated:
• Fully-funded State program with retention of Primacy;
• Minimal State program with retention of Primacy;
• Fully-funded State program with return of Primacy;
• Minimal State program with return of Primacy;
• NoStatepmgrainandreturnofPrimacy; and
• Repeal of all drinking water programs.

-------
gh nkthgWEerFundi zg 4
The Task Force concluded that the expansion of the drinking water program and the retention
of Primacy would best protect public health. It recommended that an additional 34.5 full-time
equivalents be added to the drinking water program, to be funded through connection and plan
review fees.
In addition to addressing the funding issue, the Task Force recommended two other ways
to strengthen the State program, both of which were enacted. The first provision helps ensure
the viability of water systems by expanding DRESs oversight authority. DHES now has the
ability to review the financial viability of new or expanding public water systems, in the hope
that DHES can prevent nonviable systems from becoming established in the first place. The
second provision strengthens program enforcement activities via the granting of administrative
penalty authority to DHES.
Keys to Success. Clearly, the endorsement of the Public Water Supply Program Task
Force was the most important factor in getting fee legislation passed. The presence of all of the
key players on the Task Force carried a lot of weight in the Legislature. In addition, the panel
produced a well-argued report and a presentation-quality executive summary for the
Legislature.
The WQB showed political acumen in working with the legislature. For example, it
persuaded the Senate President and Speaker of the House to co-sponsor the legislation. Their
presence carried a lot of influence among rank-and-file legislators.
Florida -- User Fee Increase
Overview. The Florida Legislature enacted Senate Bill 1120, which gives the Florida
Department of Environmental Regulation (DER) the authority to assess both construction and
operating permit fees up to $7,500.
History.
1990. In 1990, DER proposed legislation to institute annual license fees for public
water systems. The fees would have ranged from $100 to $2,000 per annum,
based on system size and compliance status. A system that maintained compliance
during the year would have received a reduction in its fee of 10 percent or $50,
whichever was greater. The license fees would have generated $2.1 million per
year for the DER and approved county public health units.
In addition, the legislation contained a provision assessing non-compliance fees
against systems failing to comply with monitoring, reporting, and licensing
requirements. The proposed fees ranged from $50 to $500 per violation,
depending on the type.
DER also proposed that collections from both fees be deposited into a newly-
created Drinldng Water Trust Fund within the Department. Revenue from this
Fund would have been used to create new Drinking Water Program compliance
positions and to provide other necessary resources to manage the Drinking Water
Program.

-------
u Thww terFund 5
The bill ran into considerable opposition, especially from municipally-owned
systems, which were generally reluctant to pay new fees but also felt that the
proposed fees were too high. As a result, the legislation was amended, deleting the
annual license fee and replacing the non-compliance fee provision with a weaker
one. Non-compliance fees were capped at $1,000 per compliance period for
bacteriological monitoring and $2,000 for monitoring of other contaminants.
The Legislature recognized that the non-compliance fees were inadequate to meet
DER’s expanded workload, so it appropriated $1 million from a general water
quality trust fund to establish 18 new drinking water positions. Because several
programs are dependent on the mist fund’s revenue, however, it may not provide
sufficient resourtes for future appropriations.
1991. In its 1991 session, the florida Legislature enacted Senate Bill 1120, which
authorizes DER to establish operating permit fees up to $7,500. The legislation
also increases the maximum fee authorization for construction permits from $1,000
to $7,500. Thus far, DER has only assessed fees for construction permits, not for
operating permits.
Depending on the exact fee schedule adopted by DER, the permit fees could
generate over $1 million per year. However, under current law all Department
permit fees must be deposited into a permit fee mist fund which benefits all DER
programs. Due to the growing number of programs that are dependent on the
revenue from the water quality and permit fee trust funds, and the shortfall in State
general revenues, the Drinking Water program is still in need of a reliable, dedicated
source of funding for future program needs.
Keys to Success.
• Drinking water fees packaged with other larger DER fees.
• Position paper prepared for the legislature.
The successful 1991 legislation was a comprehensive environmental bill, whereas the 1990
bill was limited in scope to just drinking water. A major factor that enabled passage of
drinking water fees in 1991, was that they were packaged with other proposed DER fees.
The drinking water fees seemed relatively minor compared to much larger assessments in the
area of hazardous waste management.
The most important component of DER’s outreach program was a position paper prepared
for the Legislature in support of its 1990 license fee legislation. The paper argued that staff
levels were not keeping up with the DER’s expanded workload. As a result, compliance rates
in Florida were below EPA goals and the lowest of the States in EPA Region IV. Despite the
rejection of the license fee, DER feels that this paper put considerable pressure on the
Legislature to act and increased the chances for success the following year.
Another reason for the relative success of S.B. 1120 compared to the 1990 legislation was
that it was introduced in a non-election year. Legislators feared a constituent backlash in the

-------
Jt nkŕzgWWerFundkzg 6
1990 election if they supported the license fee package. It was more politically palatable to
pass a short-term solution that did not involve new fees and re-visit the issue after the election.
DER did not use an advisory committee to help formulate either fee package. It is difficult
to predict whether the florida legislature would have enacted fee legislation in 1990 if it had the
endorsement of an advisory committee.
Kentucky -- General Fund Appropriation Increase
Overview. The Kentucky drinking water program is administered by the Division of
Water in the Kentucky Department of Environmental Protection. During the 1990 budget
cycle, the General Assembly appropriated an additional $1.4 million for the Drinking Water
Branch (DWB) and authorized the creation of 26 additional positions. The Division of Water’s
general fund appropriation has increased from $2.7 million in FY 1986 to $8.7 million in FY
1992, with a large part of the additional resources having been allocated to the drinking water
program.
History. The 1986 General Assembly mandated that the Division institute biennial
planning as part of the budget process. The planning process used by the Division of Water
has five phases, each described briefly below:
Present Situation. The Division establishes its objectives by interpreting State
and Federal statutes. It then compares the current activity level to the estimated
activity level required to achieve the defined objectives. The result is a percentage
score that indicates the extent to which its objectives are being met.
• Projected Future. This stage involves making general budget assumptions and
identifying any changes in emphasis in federal and State programs. The Present
Situation’s budget figures and effectiveness scores are adjusted to account for the
changes. The Division identifies activities that will change during the next planning
period.
• Issue Development. Through public meetings and staff involvement, the
Division identifies program deficiencies. Proposed changes in activities and
resource needs are incorporated into a plan to remedy each deficiency.
• Alternative Future. This stage reconciles proposed changes in activities
identified by the Issue Development stage with the Projected Future. The result is
an alternative scenario which addresses the deficiencies at a realistic funding level.
• Implementation. During Implementation, the Division works to achieve
consensus among the executive and legislative branches and the public so that the
plan’s objectives will be met.
The planning process has now been adopted by the entire Department of Environmental
Protection.
Keys to Success. The biennial plans have been instrumental in securing additional
funding for the drinking water program. Specifically, they have increased its:

-------
ir ,gtMnkingw.derFun&ng 7
• Credibility with utilities, industry representatives, environmental advocates, and
other agencies;
• Accountability to the Legislature and the Governo i’s office; and
• Efficiency in monitoring, pennitting, inspection, and enforcement activities.
Because the planning process relies on citizen participation, another outgrowth has been public
support for additional spending on the drinking waxer program.
Another major reason for the Division’s success in implementing the planning process, and
in securing additional revenues, has been the vocal support of the utilities. DWB has fostered
this support by putting a lot of effort into helping systems stay in compliance. For example,
DWB has implemented a comprehensive program to notify utilities of their monitoring
requirements prior to testing deadlines and assisting utilities with some of the new monitoring
and analytical requirements.
Although the planning process has been very successful in Kentucky, transferring it to
other States would require considerable effort. A high level of commitment by all levels of
management is required. The process is time-consuming and requires a great deal of effort,
especially the first time it is attempted. The payoff in increased resources, staff morale and
productivity, public awareness and involvement has been well worth the effort in Kentucky.
Louisiana -- Legislative Authorization Increase
Overview. The Louisiana Legislature authorized an additional $2.8 million for the
drinking water program in its 1990 session.
History.
• 1988. In response to cuts in its annual appropriation, the Office of Public Health
(OPH) in the Louisiana Department of Health and Hospitals (DHH) implemented
management fees for the Safe Drinking Water Program in 1988. The fees for
community water systems were based on the number of service connections. Non-
community systems paid a flat fee of $25. The fees had been expected to generate
$680,000 in revenue, but because the Department did not have adequate collection
authority, only 60 percent of the assessed fees were obtained. Recognizing that its
revenues were not adequate to meet the expanded requirements of the SDWA
Amendments, OPH proposed shifting most of the responsibility for collecting and
testing water samples to Public Water Systems. It instituted a program to train
treatment plant operators in sampling and began certifying private laboratories.
• 1990. In opposition to OPH’s cost-shifting plan, system operators, especially
from municipalities, lobbied the Governor and the Legislature for an increased
appropriation for the drinking water program. The Legislature responded by
authorizing an additional $2.8 million for the program in its 1990 session. The
management fees were repealed because they were no longer necessary.

-------
nkthgWWerFwzdi zg 8
1991. In January 1991, OPH formed a Safe Drinking Water Coalition composea
of the Louisiana Municipal Association, the Police Jurors Association (a group
comparable to county commissioners in other States), the Louisiana Rural Water
Association, as well as Federal/State agencies, grass roots organizations, regulated
water utility organizations, funding agencies, training organizations, and
environmental groups.
The Coalition has been instrumental in the passage of two sets of new State
regulations (the promulgation of the Total Coliform Rule and the Surface Water
Treatment Rule). Additional resources will be needed in FY 1993 to implement
these new statutes as well as other new requirements (i.e. mandatory disinfection
and corrosion control). The Coalition will be a major factor in OPH attaining the
needed resources.
Keys to Success. According to an OPH official, its plans to change the longstanding
practice of providing water sampling and testing for system operators was instrumental in
prompting operator groups to lobby the Governor and Legislature for additional funding.
OPH’s role in obtaining additional revenues was minor compared to that of the regulated
community. OPH had been conducting an internal review of funding options for its new
Director when the climate toward additional funding changed in the Governor’s office due to
pressure from municipalities.
At the time, OPH did not have a formal advisory committee to consider funding options
and did not emphasize consensus-building activities. OPH did meet informally with interested
groups, including the Louisiana Municipal Association, the Police Jurors Association, and the
Louisiana Rural Water Association to coordinate their activities. As noted previously, the Safe
Drinking Water Coalition was formed in 1991.
Louisiana’s initial success in obtaining additional funding for its drinking water program is
unusual because it came largely through the utilities’ efforts. The State’s experience
demonstrates the importance of the drinking water industry in state capacity building. In
Louisiana’s case, system operators were unified in their opposition to assuming the cost of
water testing. In other States, utility support is likely to require an outreach campaign and/or
the creation of an advisory committee.
2. States that Have Failed in Capacity Building Efforts
Idaho
Overview. The Idaho drinking water program has been unsuccessful in repeated attempts
to secure additional funding.
History. The Idaho Department of Health and Welfare’s (IDHW) Water Quality Bureau
(WQB) is responsible for administering the State’s Drinking Water Program. In 1986, an
internal study by the WQB estimated its staff would have to be increased from 16 to 32
positions to implement the SDWA Amendments. Since then, the WQB has attempted to secure
additional funding during each budget cycle. Unfortunately the drinking water program has

-------
afriingDtinkb Water FundL’ g 9
not consistently been a high-priority program within the IDHW, and has not always received
the Director’s support for additional funding. This year, the WQB was successful in getting
the Director’s approval, and its request was forwarded to the Governor’s office.
Acconling to a WQB official, the argument for additional resources was strengthened by:
• an increased emphasis on outreach;
• the support of the Idaho Drinking Water Advisory Committee; and
• a 1990 ASDWA report which examined the program and documented the need for
additional funding.
The WQB devised an educational campaign for system operators, the Legislature, and the
general public. More than 40 public meetings were held around the State, including an
informational meeting for legislators in Boise at the beginning of the legislative session.
The Drinking Water Advisory Committee produced two reports which summarize the
expanded requirements of the SDWA Amendments, the additional resources required to
implement them, and funding options for the program. The Committee was created by the
1DHW Director in 1989 to advise the Department on drinking water policy and funding issues.
It is composed of individuals from the Legislature, utilities, local health departments, groups
that work with water systems, and professional engineers.
The Governor, facing a tight budget situation, recommended funding only 4 of the 16
additional positions that the WQB had requested. The Legislature, as part of an overall budget
reduction, declined to fund any additional positions for the program.
Reasons for Failure. A problem for Idaho has been that system operators have not
been outspoken in their support for additional program resources. Although the program
conducted an outreach campaign during the most recent budget cycle, it might have been more
successful if it had begun these efforts earlier. It is very important that State drinldng water
programs educate key interest groups, especially when they compete against high priority
programs in large agencies.
The WQB’s early outreach efforts emphasized the negative aspects of losing primacy. It
argued that the EPA would have an enforcement-based program centered around the issuance
of notices of violations, administrative orders, and fines. System operators would have to
work with a “centralized” program based in Boise or Seattle. Its recent outreach efforts have
stressed the public health consequences of maintaining an inadequate drinking water program.
WQB has found that the new approach has been more effective in getting the public’s attention.
Despite the WQB’s outreach efforts in 1990, some observers feel that the it did not
adequately justify the need for doubling the program’s staff to the Governor or the Legislature.
In a tight budgetary situation, a weak case for additional funding became a prime target for
budget cutting.
Future Action. Idaho debated returning the program to EPA, but has decided to keep it
one more year while they gamer support for increased funding next year. The Advisory
Committee has identified returning primacy as an option for the program in light of the

-------
(h ThüthingWaterFwidii 10
Legislature’s rejection of additional funding. A Task Force within the WQB has determined
that Idaho could keep primacy at current funding levels if the program changed its priorities,
stressing enforcement and ceasing activities such as technical assistance. The program
Administrator has stated a preference for funding the program with appropriations from the
General Fund, with the exception that technical assistance could be financed through user fees.
It is generally thought that system operators prefer to have an enforcement-oriented State
drinking water program over Direct Implementation by EPA. Operators have shown some
willingness to explore the use of fees for technical assistance.
3. States That Have Lost All or Part of Initial Gains
New Hampshire
Overview. In 1990, New Hampshire enacted legislation which established Permit-to-
Operate fees for its public drinking water program, which is administered by the Water Supply
Engineering Bureau (WSEB) of the Department of Environmental Services. Amendments to
the Permit to Operate law were adopted by the New Hampshire Legislature in the last session.
The net effect of these amendments is a reduction in fee revenue of approximately $135,000.
Three or four of the seven positions that New Hampshire planned to create with revenue from
the Permit-to-Operate fee will remain vacant under the amended legislation.
History. As originally enacted, the annual fee was $10 per household unit for community
water systems serving more than 40 units and 100 persons with a cap of $600. Non-transient
non-community systems paid a flat fee of $200. It was initially estimated that the fee would
generate approximately $375,000 per year.
The recent amendment repealed the exemption for systems having less than 40 units or 100
people and reduced the maximum fee from $600 to $300. The repeal of the exemption closed
an unintended loophole in the original legislation. The lower cap means that most community
systems will now be charged the maximum fee. For those systems that have already paid fees
in excess of the new $300 cap, the WSEB must refund the difference. The fee for non-
transient non-community systems was reduced from $200 to $150.
Reasons for Failure. The rollback of New Hampshire’s Permit to Operate fee can be
attributed largely to constituent pressure on individual legislators. This type of reaction is to be
expected during poor economic times. Some of the pressure might have been avoided if the
WSEB had provided more notification prior to issuing the fee bills. The first fee bills were
issued in September 1990. Since most municipalities in New Hampshire use the calendar year
as their fiscal year, many of them had not included the fees in their budgets.
Meanwhile, the New Hampshire Municipal Association had pledged to fight any legislation
which shifted costs to the municipalities. The Association had argued that the fee was a new
fiscal responsibility passed on to a local government, in contravention of Part I, Article 28-a of
the New Hampshire Constitution. This issue will ultimately be decided in the courts.
Future Action. Since the fee rollback occurred very recently, the WSEB has not yet
determined its next action to obtain additional resources.

-------
k abth, 4 gDrirJth WWerFundiJW 11
Virginia
Overview. The 1990 Virginia General Assembly authorized the addition of 64 new
positions for the drinking water program. These positions were intended to be created in FY
1991 and FY 1992, but only 19 additional positions have been funded for those years. With
the current budget crunch in the State, it is unlikely that additional general funds will be
available for the foreseeable future.
Given the State’s fiscal difficulties, the Virginia General Assembly has continues to
explore alternative funding mechanisms for the drinldng water program. However, legislative
attempts to enact fees have failed during the last two sessions. The program continues to face a
funding shortfall which if left unabated, will prevent the State from implementing the SDWA
Amendments and places the Department of Health in danger of losing primacy.
History.
House Bill 1115 was introduced in the 1990 Session and was carried over to the 1991
Session before being defeated when it was not acted upon in subcommittee. The legislation
would have:
• Created a Drinking Water Protection Fund within the Virginia Water Supply
Revolving Fund;
• Imposed a fee on community water systems at the rate of ten cents per 1,000
gallons of water pmduced and
• Allocated 80 percent of the revenue for loans and grants to water systems for capital
improvements and 20 percent to the Department of Health for enforcement and
technical assistance activities required to maintain Primacy.
The chairman of the Virginia Water Commission, a legislatively-mandated panel charged
with studying water supply problems and coordinating the legislative recommendations of
agencies responsible for water supply, appointed a Task Force to review HB 1115 in the
summer of 1990. The panel was composed of individuals from utilities, the Department of
Health, groups that work with water systems, and county and local governments. The group’s
assignment was to develop recommendations for financing the drinking water program.
In its report, the Task Force recommended rejection of HB 1115, concluding that General
Fund appropriations were the most appropriate source of revenue for funding loan/grant
programs and the enforcement of the SDWA. They also concluded that technical assistance, a
service that is “of particular benefit to the water systems as distinguished from the general
public,” should be funded, in whole or in part, by an annual operating fee on water systems.
The operating fee recommendations of the Task Force were incorporated into SenateBill
in the 1991 Session. The bill proposed annual operating fees ranging from $250 to
$160,000, based on population served. The revenue was to be used exclusively for technical
assistance. With the backing of the Virginia Rural Water Association and many system
operators, the legislation was reported out of committee to the full Senate, where it was
defeated.

-------
g gWaterFunding 12
Reasons for Failure.
• Lack of support among system owner/operators.
• “No new taxes” sentiment.
• Original bill not endorsed by Virginia Water Commission.
There are a number of reasons for the rejection of fee legislation in Virginia. HB 1115 did
not have much support among system operators because they thought that the fee would
primarily fund capital improvements for undeserving, ill-managed, non-viable systems.
Comments received by the Task Force indicate that the fee would have meant as much as a 16
percent increase in wholesale water rates in some communities.
The importance of the “no new taxes” sentiment cannot be underestimated in analyzing the
failure of these bills. Many legislators cited the regressive nature of a water usage fee as a
reason for their opposition. Opponents of S.B. 873 in the Senate branded it as an increase in
taxes. Because the entire General Assembly was up for re-election in 1991, the pressure on
legislators appeared particularly acute.
S.B. 873 had comparatively more support among the larger, more vocal systems because
their fees would have been lower than those under a water usage fee. The bill was not
endorsed by the Virginia Water Commission, however. It stated that the bill did not address
the larger issue of funding implementation of the SDWA Amendments.
Future Action. The Water Commission will be meeting in December, 1991 to undertake
a comprehensive review of the State water policy. A major focus on the review will be to
identify options for funding the expanded requirements of the SDWA Amendments. The
Commission will make recommendations to the 1992 General Assembly.
4. States That Have Lost Resources
Michigan
Overview. The Michigan Division of Water Supply (DWS) has had a five percent
reduction in the State-match portion of its drinking water budget this year. The State’s
continuing budget problems may necessitate additional cuts in the drinking water program.
History. In 1990, the Michigan Legislature enacted an across-the-board budget cut of 9.2
percent in each line-item. The legislation permitted each agency to implement an alternative
budget reduction plan of its own choosing which would still achieve a 9.2 percent reduction in
its total budget. As part of its alternative plan, the DWS eliminated $120,000 from its
Wellhead Protection Program, which had not yet been staffed.
Reasons for Failure. Drinldng Water Program was not isolated from across-the-board
cut.

-------
g thgWaterFuz dii g 13
Future Action. Given a need for additional revenue to implement the requirements of the
1986 SDWA Amendments, DWS is undertaking a two-phased approach to securing additional
resources. It has compiled enough information on the cost of implementing the new non-
community system requirements to introduce fee legislation during the current session of the
Legislature.
DWS has drafted legislation establishing fees for non-community systems which would
raise approximately $1 million. The proposed annual fees would range from $50 to $125,
depending on whether the system is transient or non-transient, and whether it is currently
licensed by a local health department. The fee revenue would be placed in a dedicated fund for
appropriation by the Legislature. The fee amounts would be indexed to the inflation rate so that
DWS would not have to pursue new legislation to adjust them for inflation. In case of non-
payment, the legislation contains penalty authority.
DWS has retained a consultant to analyze the cost of implementing an expanded community
water system program before developing fee legislation for community systems. The
consultant will perform a comprehensive analysis of program resource needs and funding
alternatives available to the program. The consultant’s fmal report should be available in
January, 1992.
There is some support for fees among utilities. The Michigan chapter of the American
Water Works Association has endorsed the creation of fees to help the drinking water program
maintain Primacy. Recognizing that constituent group outreach is important in building
consensus for fees, the DWS has conducted a number of meetings for operators of community
systems and for trade associations representing non-community systems. An advisory
committee is being formed to evaluate fee alternatives and to develop recommendations for the
program.
Conclusion
As the experiences of these States show, drinking water programs must make a strong case
for additional funding with both small and large utilities, legislators, and the general public.
During the current period of tight fiscal constraints, it is becoming exceedingly difficult for
State agencies to secure increased general funds. In many cases, user fees may provide a
viable alternative re’ienue source. However, winning legislative approval of new fee
structures can often be a daunting task.
States that have been successful at gaining resources, have followed thoughtfully
constructed strategies. For example, Florida’s approach was to make the connection between
funding shortfalls and compliance programs. Kentucky’s planning process provided it with
accountability to the Legislature and credibility with the water supply industry.
Other successful States, such as Montana, have established Advisory Committees to build
consensus among industry related groups that a drinking water program funding shortfall is a
major public health concern. These committees have the ability to address the funding issue
before it becomes a crisis, providing enough time for its members to fully present their case to

-------
kb Water Fw2dh g 14
the governor and legislature. In the case of Montana, the advisory committee process produced
other dividends in addition to increased funding, specifically enhanced system viability and
administrative penalty authority.
In addition, drinking water administrators need to consider the political consequences of
funding proposals, especially on issues as volatile as user fees. Input from all affected parties
will likely be necessary to develop solutions that are perceived as equitable, politically
acceptable, and economically feasible. Although most drinking water administrators are not
permitted to engage in lobbying, they do need to elicit the support of legislative leaders as well
as other legislators who understand the importance of drinking water issues.

-------