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NTU Study on Water, Sewer Bidding Leaves Critics All Wet
After nearly 45 years on the job protecting taxpayers, NTU has encountered several eternal truths in politics, one of which is: if you rile up entrenched interests enough to lash out against you, you’re likely succeeding. So it is with an article in a recent edition of the journal published by the prestigious American Water Works Association (a group representing professionals of many disciplines in the water and wastewater sector).
It all began with a four-paragraph mention in AWWA’s September 2013 journal (subscription-based) outlining the main findings of NTU’s report, Reforming Our Nation’s Approach to the Infrastructure Crisis. There we recommended a more transparent, accountable, and fiscally responsible system of management for the nation’s water and sewer systems, which included more life-cycle cost analysis and competitive bidding in selection of piping materials.
Apparently that article yanked one chain too many, so to speak. The November 2013 journal contained a “Perspective” from AWWA’s Kenneth Mercer that claimed a “review” of NTU’s report “confirmed” the “concerned responses from some Journal readers who claimed it presented an incomplete picture in advocating for one pipe material over another.” The article actually makes many points with which NTU would agree; yet, its implication of bias was something we had to answer.
But before we could do that, we needed another answer – whether AWWA’s journal would print our response – and it was a polite “no.” Fortunately, Government Bytes is willing to provide a forum instead. Here in its entirety is the text of our response which AWWA did not print:
“December 17, 2013
To the Editor:
The reaction from an unidentified number of AWWA Journal readers (as well as the Journal itself) to National Taxpayers Union’s (NTU’s) report, “Reforming Our Nation’s Approach to the Infrastructure Crisis,” only illustrates NTU’s point: industry interests should avoid entrenching themselves in positions that are too deeply rooted to fear and orthodoxy (“Choosing the Right Pipe,” November 2013). The information we presented demonstrates that there are better strategies to attacking the $1 trillion liability that AWWA itself has identified in its “Buried No Longer” report.
The original article that prompted Mr. Mercer’s response (from the September 2013 Journal) actually cited not only a study from NTU, which has 362,000 members nationwide, but also a report from the U.S. Mayors Water Council, which represents all mayors of cities over a population of 30,000. These are diverse voices, but they are speaking from one common source: they’re using AWWA’s pipe data and cost data.
So why should AWWA, which highlighted this trillion-dollar liability in the first place, be surprised that a nationally-known organization would offer more cost-effective solutions than the federally-funded infrastructure bank that AWWA seems to prefer? How does this possibly answer the two major problems behind the future cost spiral, that pipes are failing from corrosion rather than age, and pipe thicknesses for DI are declining?
We sought some constructive answers. That’s why both NTU and the Mayors Water Council reports use the comparison of the two leading water pipes as examples, and then applied open procurement, asset management practices and financial analysis to recommend reforms.
For the record, NTU is not involved in this issue to take sides within an industry. AWWA may represent a collective of water utilities, but in the case of public water systems, the “owners” (rate payers and taxpayers) are on the hook for all utility financial management decisions, including pipes. That’s why we’re engaging on this and other infrastructure issues at every level, every day.
In fact, AWWA’s “review” of our report, which essentially accuses NTU of being biased in favor of one pipe material, seems to have skipped over an important detail – the language of the report itself. Namely, the following, balanced assessment from the author:
The issue at hand is not really the selection of one pipe over another, but the ability for a utility to take advantage of all materials, processes, technologies and products that create the most cost-effective solution while meeting sustainable performance goals. In fact, every pipe has its best use, but no single pipe is best in every situation. Open competition …will really reach the objectives of elected officials, rate payers and developers concerned with the rising costs of water infrastructure capital programs.
If we as a nation are to address the very real challenges facing water and sewer system replacements, organizations like AWWA need to lead the way by providing an open forum to discuss issues such as optimal consultative procedures for pipe selection; or, how the concepts of longevity and reliability are affected by corrosion and water main breaks; or, why AWWA standards and the National Association of Corrosion Engineers (NACE) are in disagreement over wrapping iron pipe in plastic.
In the absence of this vital dialogue, organizations like my own have to step in and develop a set of criteria, such as the 25-part “Yardstick” that utility rate payers can use to interact with elected officials. Journal readers deserve to know about all of them, but here are just five of those points:
8. Does the utility consider sustainability policies and life-cycle costs in the procurement process?
12. Has every fee and charge been reviewed as to its accuracy in the last 3 years?
16. Does the utility use a computerized maintenance management system (CMMS) to schedule all work orders?
21. Does the utility track and forecast the affordability impacts of current and future rate increases for each major demographic group within the utility’s boundaries?
24. Has the utility posted information pertaining to capital improvement plans, master plans, mitigation studies, cost-of-service studies, allocation studies, asset management issues, fee structures, and other key documents of interest to rate payers in an easy-to-understand format on the Internet?
Who can argue with principles like these? Hopefully, no one who reads AWWA Journal. After all, even underground, there ought to be a way to reach common ground.”
Perhaps this blog post will be a start in the direction of that “common ground.”0 Comments | Post a Comment | Sign up for NTU Action Alerts
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1.3 to 1.5 million Americans will lose work hours, jobs, or never get them, according to a new CBO report on Obamacare. NTU State Affairs Manager Lee Schalk has a big update on the states, with BBA news, unemployment insurance, and more. Plus, NTUF's Demian Brady talks budget, and the Outrage of the Week!0 Comments | Post a Comment | Sign up for NTU Action Alerts
The Congressional Budget Office (CBO) released its annual Budget and Economic Outlook report this week, and their projections for the next ten years won't inspire much confidence for those concerned with the country's debt and deficits. In the latest edition of The Taxpayer's Tab, NTUF delves into the CBO's report and offers an analysis of the long-term trends they predict, which include steadily increasing deficits after next year and a publicly-held debt topping 79 percent of GDP by the end of the next decade.
Also featured this week:
The full issue, with more information on these bills and the CBO report, is available online.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today, the Congressional Budget Office (CBO) released multiple reports on the state of the U.S. economy. One of them, "The Slow Recovery of the Labor Market," examines current job market conditions and projects where employment figures are heading relative to historical trends. The full report is available online, but here are three quick take-aways summed up in graphical form (visuals courtesy of CBO):
The first in a new weekly video series from your friends at National Taxpayers Union! We'll keep you updated on what's really going in in Washington, and the issues that will affect your pocketbook.
$40 BILLION is the cost of President Obama's State of the Union, and that's just what can be quantified - NTUF's Demian Brady explains. Plus, Pete talks Obama's hypocrisy on energy; and the Outrage of the Week goes to the Super Bowl (sort of)!0 Comments | Post a Comment | Sign up for NTU Action Alerts
Yesterday, I wrote that one of the top four ways the President can make good on his promise to uphold an “all of the above” energy policy would be to move forward with the Keystone XL pipeline:
The Keystone XL pipeline would bring with it 20,000 much-needed jobs over time, and support thousands of other jobs in many sectors. That’s not to mention an additional 500,000 barrels of oil a day from Canada, our largest and most stable trading partner. This would inject our economy with billions of dollars in additional activity. … President Obama’s State Department can stop their delay tactics and approve the pipeline’s permit at any point.
Today, the pipeline cleared a major hurdle. The Associated Press reports:
The long-delayed Keystone XL oil pipeline from Canada moved a significant step toward completion Friday as the State Department raised no major environmental objections to its construction.
Of course, this isn’t the first time the pipeline has passed environmental muster. During President Obama’s first term, the State Department conducted a study and found that the pipeline would not have any substantial environmental impact. However, the pipeline’s permit was still rejected by the President, and TransCanada, the company behind the project, was forced to reapply.
TransCanada did so, but the President postponed a decision until after the 2012 election. Meanwhile, other reports have found that the tar sands derived oil that will be transported by the pipeline is no more risky to transport than other kinds of crude oil and TransCanda has agreed to comply with ever more stringent construction conditions. The whole saga is described in greater detail here.
Due to the Administration’s past delay tactics, it’s too soon for taxpayers to start popping the champagne. But one thing is clear today: the President has run out of excuses to stop Keystone XL.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Troubling Contradictions: Obama on Energy Taxes in his State of the Union
In the President’s address Tuesday night, sharp-eared observers might have noticed he took credit for growth spurred by the oil and gas industry, saying:
“And here are the results of your efforts: … A manufacturing sector that's adding jobs for the first time since the 1990s -- more oil produced -- more oil produced at home than we buy from the rest of the world, the first time that's happened in nearly twenty years.”
The President’s excitement over the accomplishments of the energy sector might come as a surprise considering he has consistently worked to make life more difficult for those businesses.
The trouble is, sending signals like these can do damage, not only to the economy but the cause of tax reform too … and, most ironically, to the Treasury’s bottom line.2 Comments | Post a Comment | Sign up for NTU Action Alerts
NTUF Celebrates National School Choice Week, Donates to Local Charter School
In celebrating National School Choice Week (NSCW), NTU Foundation and the Alexandria, Virginia chapter of Liberty on the Rocks brought together local taxpayers, educational freedom supporters, and students for a night of discussion, teaching, and skee ball. The Wednesday night event was one of over 5,500 events going on in every state that aimed to build awareness of local and national school choice efforts and educate citizens about the benefits and challenges of changing schools and school systems.
For this event, NTUF sponsored a “Skee Ball 4 School Choice” game where everyone played a game of skee ball and afterward joined in the larger group talks on what charter and voucher schools are, what everyone’s personal experience was and is in education, and where we see room for reform in educating students at all levels and ages. Congrats to Holly, Juli, & Demian for being the top three scorers in our friendly game of skee ball!
We also called on attendees to bring school supplies to help the efforts of Perry Street Prep, a DC charter school that serves low-income families and sometimes homeless students. The turnout for the students was overwhelming, collecting 3 boxes of assorted supplies like notebooks, composition books, crayons, and pens. Financial donations were also made to directly help the students and teachers at Perry Street Prep. If you would like to help NTUF’s and Liberty on the Rocks’ support, learn how to at their Giving page.
This was the first time that NTU’s education and research arm, NTUF, has hosted a NSCW event but it is not the only instance of our involvement in school choice. For the past three years, NTUF has organized in-person and online events for the Milton Friedman for Freedom Legacy Day, reaching hundreds of taxpayers across the country.
The Alexandria, Virginia chapter of Liberty on the Rocks has hosted school-choice events for three years, including NSCW and Milton Friedman for Freedom Legacy Day. The social group is dedicated to enhancing and expanding the cause of freedom. Check the group’s national site to see or start a chapter new you or go to the Alexandria chapter page to see when the next event will be held.
Thanks to everyone who donated or contributed to our school supply drive! Be on the look out for more chances to donate to Perry Street Prep and for more information on school choice.0 Comments | Post a Comment | Sign up for NTU Action Alerts
The Lone Savings Proposal in President Obama's Speech
President Obama used last night's State of the Union address to lay out his agenda for the coming "year of action," as he described it. NTUF analyzed the remarks and estimated that, if the 13 proposals we were able to score are passed, federal spending would increase by just under $40 billion per year.
At one point in the speech, the President asked Congress to help him bring stability to housing markets without burdening taxpayers:
"And since the most important investment many families make is their home, send me legislation that protects taxpayers from footing the bill for a housing crisis ever again, and keeps the dream of homeownership alive for future generations of Americans."
There's been legislation introduced in Congress that aims for a similar goal, and NTUF featured it in a recent issue of The Taxpayer's Tab. We based our score of the President's housing proposal on the Congressional Budget Office's (CBO) cost estimate for S. 1376, the FHA Solvency Act. Senator Tim Johnson (D-SD) introduced that bill in order to address financial difficulties facing the Federal Housing Administration's (FHA) Mutual Mortgage Insurance Fund (MMIF). The MMIF required a $1.7 billion bailout from taxpayers in 2013 after it couldn’t meet financial obligations it took on during the housing market crisis.
Part of the bill stipulates that the troubled FHA program has to maintain a higher capital reserve ratio (three percent) than it has in the past (two percent), in order to ensure it has sufficient funding to cover expected losses. One of the ways in which it does that is by raising premiums on the mortgage insurance it offers.
This doesn't directly decrease federal outlays, but CBO records these receipts as offsets against spending. The higher rates would take effect in 2018, when CBO expects the government to collect $522 million. Meanwhile, the bill's other requirements would increase spending by about $2 million per year.
This proposal was the only one the President made in his speech that NTUF was able to quantify as a net savings measure. Note that isn't because it reduces outlays, but rather, increases receipts enough to offset the program's potential long-term costs.
This could help minimize the risk that taxpayers would be stuck "footing the bill" for the next housing crisis, but would it guarantee that this won't happen again? The FHA guarantees approximately 1 in 5 mortgages for new homes. Fannie Mae, a "government-sponsored enterprise", remains the largest single issuer of single-family mortgage-related securities. Its market share covers nearly half of all new single-family mortgages. As long as federally-backed entities continue to play such a significant role in the market for new mortgages, taxpayers will be at risk.0 Comments | Post a Comment | Sign up for NTU Action Alerts