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The Valley Reporter
P.O. Box 119
Waitsfield, VT 05673

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Is there a problem?

By Matthew Jarosinski

The Tea Parties are over and the town of Waitsfield was soaked with millions in government money. The EPA and USDA, arguably the most wasteful federal agencies, sliced the public money for the municipal water project still full of discussed details. In the flood of federal aid to the deserving -- inept car companies, mismanaged banks, reckless insurance companies and wasteful local governments -- this is a proverbial drop in the bucket. But it turns a small project, which started under the banner of helping individuals and businesses to get financial aid, into an important public policy venture.

Lisa Loomis's editorial of April 23, 2009, entitled "Impressive" has termed this project a "critical infrastructure for Waitsfield." The water pipeline which is going to benefit a limited number of users, who hunted for a municipal bond, suddenly assumed an elevated status. The term "critical infrastructure" has been adopted to recognize only the structures, like roads or bridges for example, which if significantly damaged or destroyed would make it impossible for an entire community to evacuate or receive aid. If indeed the editorial is right that this is a "critical infrastructure" than the town can mandate the use of taxpayer's money for the system.

The bond vote passed because the residents were assured that this project is self-funding and that there is no tax exposure; that all costs and expenses would always be fully covered by user fees. This brings up a second problem. The Waitsfield municipal project contains holes: $1.5 million engineering debt, litigation costs, underfunded operation and maintenance, etc. The critics continue to allege that user fees are not large enough to keep up with the cost. The editorial mentions the misinformed critics, but it doesn't explain where these opponents miscalculated.

The town website is not self-explanatory and details on the plan are few. Moreover, one cannot have a dialog with a website. Based on the website there is a gap between essential cost and projected revenues. This is because the operation and maintenance was projected below the real cost so the user fee could be lowered. The low fee attracted more users, but it cannot cover the cost. Rather than presenting the bona fide operation and maintenance costs and projecting the user fee accordingly, the select board moved a portion of the operation and maintenance expenses to the "Initial Costs" section, which is not funded with user fees.

This contradicts the principle that the project is self-funding. Many of these expenses are not "initial" expenses. They will keep popping up every year long after the government funds assigned to the "initial" cost are gone, leaving us with a dire shortfall. At that stage Waitsfield will not be able to close the gap between essential funding and actual revenue. The residents may find out only after the fact that they had been given a project with escalating tax cost hidden under poorly explained arrangement.

Problems with municipal infrastructures are being reported by the media across the nation and abroad. The European Union, for example, flooded municipalities with easy money and grants generating a wave of grand infrastructure projects which are too expensive to sustain. According to the media, 5 percent of households in England cannot now afford municipal water and the number has been growing rapidly. Like the mortgage crisis, which grew out of governmental policies based on good intentions and wishful thinking, these ventures are destructive.

In the EU the support for risky projects was often gained through deceptive practices, and proponents left financial transparency in dust so the true tax cost was hidden until it was too late. Then the strapped community was forced to borrow rather than default on the bond. When a project is allowed to play down the risk, it is ill-equipped to manage that risk when it finally emerges from the shadow. Contrary to the private projects, the municipal ventures are exceedingly difficult to reverse even if the cost outweighs the benefit. They often weaken a community's economic health.

So is there a problem? The taxpayers can carry a bigger load if the town connects to the system municipal facilities and the school. In the future the town can build larger facilities adding more ERUs paid with the tax money. Certainly operating the system will require administrative work, which can be done routinely by the town and thus paid the by the taxpayers. Still, the low user fees might have to be increased.

The project, which split the local community roughly in half, continues to generate serious concern, especially among homeowners with lower incomes. Even if we get through the current severe economic crisis we are going soon to be confronted with inflation, higher income taxes and crushing cuts in Social Security.

The funding problem could be solved, however, if the town allows a dense urban growth in the area thus adding new ERUs. This is a possibility since there are no mandatory restrictions which would prevent the planning board from allowing it to happen. But it will certainly inflate other problems, and especially environmental.

Based on the website it looks that municipality described the financial exposure too vaguely while advantages were exaggerated. The details are increasingly technical in nature and one would thus hope that the select board would write, as promised earlier, a letter to the editor clarifying the apparent funding problem. This would help the Valley residents to properly assess the situation, including those with no access to the internet and those with no technical and analytical skills.

Matthew Jarosinski lives in Waitsfield.


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