Privatization Bill Would Do Nothing To Address Crumbling Infrastructure or $40 Billion Deficit

 End Run Around Current Voter Approval and BPU Review Requirements

Corporate Profits, without investments in upgrades, a formula for higher rates & continued deterioration

The Assembly approved the controversial water privatization bill yesterday, so now the debate shifts to the Senate, as corrupt machine politicians in Trenton try to ram this bill through before the holidays before growing public opposition can be organized to block it. See, NJ Spotlight story:

• MUCH-DEBATED WATER-INFRASTRUCTURE BILL PASSED — WITH LITTLE FANFARE

The bill is being sold as a way to generate private sector funds to address NJ’s $40 billion deficit in water infrastructure.

That is a big lie. Here it is – “beyond government capacity to restore”:

b. There are public water and wastewater systems in the State that present serious risks to the integrity of drinking water and the environment because of issues such as aging 2[combined sanitary and storm sewer overflow] infrastructure2 systems, 2[the threat of sodium intrusion,]2 the deterioration of the physical assets of the systems, or damage to infrastructure so severe that it is beyond governmental capacity to restore; 

The Senate sponsor has put his cards on the table – he is ideologically a privatization zealot and opposed to public water (Bergen Record):

Sen. Paul Sarlo, D-Wood-Ridge, and a prime sponsor of the measure, believes “no town should be in the public water supply business.”

Contrary to the big lies Sarlo & Co. are peddling, the bill does nothing to mandate that private water companies make ANY investment in the public water systems that they purchase. Zero. Nothing. Nada.

Nor does the bill require that private water companies prepare and actually finance asset management plans as DEP is now requiring as a condition of loans from the NJ Environmental Infrastructure Trust.

Read Section 6.b (@page 8) – and note that an asset management plan is merely one piece of information submitted during the bidding process. Nothing requires that the private entity actually prepare an asset management plan, including a financial plan backed by real capital investment and user revenues.

This contrasts with DEP’s Asset Management Guidance, which DEP claims is a requirement for a loan from the NJ Environmental Infrastructure Trust.

Thus, asset management requirements are stricter for public systems than private systems. The bill does the direct OPPOSITE of what it claims – it lets private corporations OFF the hook for asset management!

As I testified, the bill also does not require consideration of climate change risks and compliance with President Obama’s executive order on adaptation and resilience.

And as even NJ Business and Industry Association noted, the bill is divorced from any planning process to determine supply, demand, infrastructure conditions, and investment needs – those are some of the main objectives of the outdated 1996 NJ Water Supply Master Plan.

These are fatal flaws in the legislation that expose the big lie and the real agenda behind the bill.

The only purposes of the bill are to eliminate the current requirement for a voter referendum to approve any private sale and to prohibit BPU from reviewing the reasonableness of the purchase price of the water system.

Passage of this bill would be a death knell for the large majority of NJ’s public water systems – those that would not be profitable will be allowed to deteriorate further and we will be faced with a two tiered third world water system.

The combination of current fiscal crisis and effective caps on property taxes will put extreme pressure on towns to enter into short sighted one shot fiscal gimmicks by selling their public systems for pennies on the dollar.

Local officials will not be able to resist a $20 million one shot revenue carrot offered up by private water companies.

Over decades, taxpayers and ratepayers have invested billions in these public water systems, which will be give away at firesale prices to corporations who have guaranteed BPU monopoly profits.

Additionally, Towns that want to invest in their public infrastructure that seek loans from the NJEIT will have to prepare asset management plans and make real investments in the systems, which will force unpopular local user rate increases.

This too will pressure them to sell to private corporations to avoid taking on the long term investments.

At a minimum, the bill must require private corporations to invest and comply with asset management requirements.

The bill must be stopped – call you Senator today!