trust fund

This week in the Huffington Post, Governors Paterson, Schwarzenegger and Rendell called for more public-private partnerships to help improve our crumbling roads, water systems, schools and other public works projects.

Public-private partnership – What’s that? Basically, it’s when the public pays a high price for a corporation to do something that local governments should be doing. 

For example, if your city needs a new water treatment plant, it could contract with a corporation to design, build and run the plant. Governors Paterson, Schwarzenegger and Rendell want cities and towns to cut more of these deals and make the private partner finance the project.

Sound good? Local governments are struggling because of the economic meltdown, and they need assistance to build important improvement projects and protect public health. These Governors think they’ve found a simple solution: privatization.

But not so fast. It’s not free and easy money. These private players are businesses, and like any business, their ultimate goal is to make money for their owners. They’re not going to donate any money. In fact, they’re going to charge the public a steep premium for it. In many ways, these public-private partnerships are expensive loans that you will have to pay back through user fees like water bills.  

Public operation is a much better deal for taxpayers. It’s cheaper and easier. And it doesn’t require you to give a private entity control over one of your valuable public resources. 

It’s true that many government coffers have gone empty in the fallout of the housing bust, but a better solution is a Clean Water Trust Fund, which would help local governments pay for needed water projects and provide safe, clean and affordable water.

Act now and tell Congress that we need a Clean Water Trust Fund.

More information about how privatization can cost you money, see Food & Water Watch’s report Money Down the Drain: How Private Control of Water Wastes Public Resources.

Recent water main breaks all over the country (including one that shut down the train I ride to work) remind us that under our feet are miles and miles of decaying pipes. The main reason?  Lack of funding. Federal funding for drinking water infrastructure has decreased by 50% since 1997; while federal funding accounted for 78% of overall wastewater infrastructure spending in 1978, it accounts for only 3% today.

President Obama has introduced a budget that would begin to restore funding for water infrastructure, but it isn’t enough.  As long as water infrastructure funding is decided year-by-year, it remains at risk of being reduced in the face of other congressional priorities. That’s why we need a Clean Water Trust Fund.

This summer Congress will be considering a bill to create Trust Fund.  A Trust Fund will set up a way to protect our water infrastructure funding from the whims of Congress and the change of administrations.

To learn more about why we need a Clean Water Trust fund, read our report. 

Global financial markets are in peril. Panic is gripping Wall Street. The Dow has taken huge dives and continues to stagger. September job loss was the highest in five years and nearly one in six homeowners are under water – owing more on their mortgages than their houses are worth. Times are tough.

Several state and local governments are drowning in these rough waters. They can’t make payroll or raise money for vital public works projects. With revenues running dry and municipal bonds becoming a hard sell, city officials have thrown their hands up in exasperation. A few are even thinking about turning to the private sector and the very financial institutions that helped get us in this mess.

Milwaukee's comptroller has proposed privatizing its water system, hawking it off to the highest bidder, to raise funds to keep city operations running. This is a classic example of taxing through the tap. The city would lease off the utility for 75 to 99 years in exchange for a one-time payment of $500 million. Then whatever corporation gets the deal will invariably hike water prices not only to recover the city’s payout but also to pad their stockholders’ wallets. Leases are an absurdly expensive way to raise money – even in this tight municipal bond market.

Milwaukee is not alone. Akron, Ohio, will vote on a similar lease of their sewers this November. Morgan Stanley is advising the deal, which comes as no surprise. They are eyeing water investment, as have Goldman Sachs, the now-defunct Lehman Brothers and AIG.

For more than a decade, the global water barons have been going into cash-strapped communities to push them to privatize their water. They have paraded around as if they were the saviors of these struggling governments, claiming to have the capital to make needed improvements and upgrades. In the last few years, investment banks joined this charade, expecting big payouts.

Ah, but time did tell another story. The investment bank era is over. The government forced the last two big independent investment banks – Goldman Sachs and Morgan Stanley – to become commercial banks. The problem? Not enough capital.

The irony is too great. These were the very banks that had pranced into communities proclaiming their wealth and bad-mouthing government finance. Then – bam! Stocks plummet as bad decisions catch up with greedy speculators. Now the federal government has to use our tax dollars to bail out the crumbling institutions. Goldman Sachs and Morgan Stanley stand to be two of the biggest beneficiaries of the $700 billion bailout. AIG already got its cushion. 

We trusted Wall Street with our homes, and look what happened – subprime lending, speculation, foreclosure crisis, doors boarded up, tent cities across the nation. Can we afford to trust it with our water?

Instead of corporate handouts and golden parachutes, our tax dollars should support projects that benefit the public good and protect the wellbeing of communities across the country. The federal government should ensure the safe and sound operation of our nation's water systems, so that something as precious and necessary as water is never subject to the whims of speculators and the fleeting fancies of the fat cats on Wall Street. 
 

Act now and tell Congress to support a trust fund for clean and safe water. Tell them we need public money for public utilities.

For more information about how corporations could seek heady profits from the water funding crisis, check out our report Costly Returns.

[Image from Candor]

Too often these days it seems that large corporations and powerful individuals can do whatever they want. However, outrage over corporate control of water is causing more and more citizens to mobilize against efforts to profit from our public resources.

Such is the case in Akron, Ohio this week. On Monday, the citizen group Citizens to Save Our Sewers and Water (SOS) succeeded in putting on the November ballot a measure that would put to a public vote any effort by City Council to privatize city utilities.

The initiative drive—which collected nearly twice the signatures needed to order the issue to ballot—developed after Akron Mayor Donald Plusquellic announced in February his intention to lease Akron’s wastewater system to a private company. The mayor’s plan, which will also be on the November ballot, has the seemingly virtuous goal of financing a scholarship program for Akron youth.http://www.afsc.net/PDFFiles/mayorsplan0001.pdf

The contract, however, assembled in just a few short months, steps directly into many of the pitfalls of water privatization, not to mention fails to address questions of city and corporate responsibility and the degree and quality of services provided.

While the cause of financing education is a laudable goal, privatizing the city’s water system would create more problems than it would solve. Besides, the question at hand is not about the (inestimable) value of education, it is about whether or not corporations should control access to water in Akron.