Indiana faces up to $8.5 billion funding gap for wastewater and drinking water infrastructure

November 21, 2016

The 20-year statewide funding gap for Indiana wastewater and drinking water infrastructure is estimated to be between $6.5 billion and $8.5 billion, according to a new study by the Indiana Advisory Commission on Intergovernmental Relations.

Between 2005 and 2014, local governments invested approximately $4.5 billion in combined wastewater and drinking water infrastructure. If spending levels remain at the same level, state and local governments will face an annual shortfall between $326 million and $423 million to meet the infrastructure capital needs identified in the report.

“This represents a significant challenge for both local and state government,” said state Rep. Mike Karickhoff, R-Kokomo, who chairs the commission. “There has been a lot of focus on roads infrastructure funding in the state, but it’s incredibly important that we are aware of the needs for wastewater and drinking water and take appropriate steps to close this funding gap.”

In addition to the funding gap, the study, titled “Financial Needs for Water and Wastewater Infrastructure in Indiana (2015-2034),” includes several major findings:

  • The 20-year statewide capital needs for wastewater and drinking water are $15.6 billion and $17.5 billion.
  • Indiana has significant needs in all water-related infrastructure categories: combined sewer overflows, wastewater, septic systems, storm water conveyance and management, and drinking water.
  • All 92 counties have significant capital needs

The estimates in the report, which was prepared by the Indiana University Public Policy Institute, are based on self-reporting, surveys, engineering models and other data depending on the type of infrastructure. The yearlong study was sponsored by the commission and the Indiana Office of Community and Rural Affairs.

Bill Konyha, executive director of the Office of Community and Rural Affairs, said the state’s ability to maintain quality wastewater and drinking water is critical to its growth and stability.

“Access to safe water for consumption and fire protection is essential to every community,” Konyha said.

Of the five infrastructure categories, drinking water accounts for the most capital needs at $6.6 billion. The estimate, which is based on the Environmental Protection Agency’s “2011 Drinking Water Needs Survey and Assessment,” has Lake County — with $678 million — accounting for more than 10 percent of that total. The median Indiana county has $44 million in capital needs for drinking water infrastructure.

Across the state, the working estimate of individual county capital needs ranges from a low of $11.5 million to $12.2 million in Warren County and a high of $3.2 billion to $3.5 billion for Marion County. More than one-third of Indiana’s counties have needs greater than $100 million.

While local government investments in water and wastewater infrastructure are supported by agencies such as the Office of Community and Rural Affairs and the Indiana Finance Authority State Revolving Loans Program, the funds available from these organizations are limited. Access to additional grants and low-or-no-interest loans will be needed to minimize utility rate increases across Indiana.

“While we know that much of the infrastructure improvements will be paid for with user charges, it’s important we do everything we can to wring the most utility out of available resources so that we can minimize the impact on our most challenged communities and residents,” Karickhoff said.

Download the full report here.

About the Indiana Advisory Commission on Intergovernmental Relations

The Indiana Advisory Commission on Intergovernmental Relations, or IACIR, was established in 1995 by the Indiana General Assembly to provide a forum for discussion and planning in light of the increasing demands being made on state and local governments. The commission is composed of members of the Indiana General Assembly; representatives from municipal, county, township and regional government; representatives of intergovernmental expertise; citizens; and state officials. The Indiana University Public Policy Institute staffs and administers the commission.