Gov. Rick Snyder wants $5 fee on drinking water for pipe fixes

Stores in western Oakland County quickly sold out of bottled water after a transmission main broke in October 2017 (Bridge photo by Joel Kurth)

Gov. Rick Snyder pitched a plan Thursday to raise $110 million per year to fix Michigan’s busted and rusted water and sewer systems — and to replace lead service lines in the wake of Flint’s water crisis.

The funding source: Michigan ratepayers.

Snyder, a Republican, proposed phasing in a state fee on users of public water systems that serve 1,000 or more people. The fee would start at $1 and increase by another $1 per year until capping at $5 per year in 2024.

“Critical updates are necessary to rebuild our state’s failing water infrastructure,” Snyder said in a statement. “Investing in our state’s water infrastructure needs is essential to ensure every Michigander has access to safe drinking water, protect our environment and continue our state’s outstanding economic growth.”

In 2016, a commission assembled by Snyder concluded Michigan was short $800 million per year to meet water and sewer system needs due to decades of deferred maintenance.

MORE COVERAGE: Michigan needs $4B more per year for infrastructure, but how to pay for it?

Meanwhile, Snyder is pushing a separate proposal that would require some water utilities to replace all of their lead drinking water service lines lines over 20 years. That’s in response to the scandal that exploded in Flint after a state-appointed emergency manager ordered a switch of municipal water sources that led to the release of lead from pipes into city drinking water.

Some skeptics, including fellow Republicans and utility officials, say Snyder’s proposed lead-in-water rules are overly ambitious and expensive. Much of the money raised under Snyder’s proposal would go to local grants for lead line replacements.

Though Flint is now internationally associated with Michigan’s failing water infrastructure, it’s far from the only example. Last October, a water main break in Oakland County made water unsafe to drink for several days for more than 300,000 people. A year earlier, a collapsed sewer line triggered a massive sinkhole in Macomb County. Local officials completed a $75 million repair project in December.

MORE COVERAGE: Water crisis hits Michigan suburbs. ‘We’ve been sounding alarms for years’

In a press release, Snyder’s office called the added fees “affordable.” The plan requires legislative approval.

The announcement comes two days after Snyder proposed increasing Michigan’s comparatively low fee on landfill dumping to replenish funding for cleanups at thousands of polluted sites across Michigan.  That plan that would cost the average Michigan household an extra $4.75 per year, according to the governor’s estimates.

To make either proposal a reality, Snyder, who is term-limited and in his final year in office, would need buy in from a Republican-controlled legislature that has increasingly gone its own way on taxing and environmental issues.

On Thursday, Snyder’s office said 80 percent of the extra money from extra water system fees would fund projects in the region that collected it.

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Kevin Grand
Thu, 02/01/2018 - 3:02pm

Oh, how nice.

A WRAP-fee now imposed on the entire state of Michigan.

If Gov. Snyder feels so strongly about this issue, then let him find the revenue from the same source used when promoting and passing the "Gilbert" bills.

Fri, 02/02/2018 - 8:09am

Yep if the state isn't paying off their debts and pensions, we're taking over and rebuilding their water systems. Come to think of it, isn't that how this whole thing started in the first place? Surprising how we never have money for fixing the roads?

Kathleen Bilger
Fri, 02/02/2018 - 9:31am

What is wrong with taxing the corporations? As a taxpayer, I am very tired of bearing the burden while corporations get away with little to no tax burden. It is time for business to pay its share. The low tax gift was supposed to attract more corporations here. High tech has spoken, low taxes wont get them here but an educated work force will.

Barry Visel
Fri, 02/02/2018 - 11:33am

This isn’t a tax, it’s a fee added to utility rates. Corporations pay utility rates too. Revenue collected for utility systems, like water and sewer services, are separate from general fund taxes. When these systems were first built most rate structures did not include collecting money for eventual replacement, hence the problem we face today. This also shouldn’t be a State issue since local governments and/or authorities build and run these systems. Taxpayers helped pay for most of these systems in the first place, up to 80% of the cost back in the 70’s (I wrote some of those grants). We shouldnt have to help pay for them again.

Bonnie Smith
Fri, 02/02/2018 - 10:36am

Let's get on with it and get the repairs done.

John Saari
Fri, 02/02/2018 - 10:46am

We need to pay a fair amount for all our services.

Barry Visel
Fri, 02/02/2018 - 11:24am

This seems like an elegant idea...local user fees to solve local problems. Replacement costs should have been included in the rate structure in the first place. Of course, seeing how these funds get redistributed will be interesting to watch.

Gary Burk
Fri, 02/02/2018 - 12:05pm

First, please identify what the proposed fee is? $1 to $5 per month? per quarter? per year? per thousand gallons? That is, what is the actual impact to a typical water system customer?
Second, what is the benefit of extracting local dollars to support a state administrative bureaucracy to decide how to reallocate only a portion of those local dollars?
Third, the proposed fee would "double tax" users of proactive water systems, like Lansing Board of Water that have already removed lead service lines at local cost, to support systems that have not addressed their aging infrastructure.
Fourth, setting up a state funding source will give local utilities an excuse to delay action while waiting in line for their "share" of this limited state pot.
Fifth, there will undoubtedly be additional costs in applying for and utilizing the funds funneled through the state (eg. application and grant administration costs; prevailing wage, buy american or other state purchasing or contracting dictates).
Yes, water rates will need to be increased to address lead service line and other aging infrastructure capital investment. However, it will be most cost-effectively accomplished by keeping local dollars - local. Local government decision makers (City Councils and Township Boards) need to bite the bullet and establish local water and sewer rates that provide adequate revenue to meet local needs and provide for sustainable, essential, high quality water and sewer service to their customers.

Fri, 02/02/2018 - 1:11pm

So says the governor who gave away $2 billion of our money to corporations and the rich so they'd create job that they didn't create and now (after asking us to fix the roads these same companies destroyed) wants AGAIN for us to fix infrastructure that should have been fixed decades ago.

Let's get rid of taxes and become the Somalia of America. Lots of guns, militias, no government, police, etc. Should be the Republican paradise on earth.

J Hendricks
Mon, 02/05/2018 - 8:00am

We need to get serious about this. We should start with $5 per month -not year, and pass all funds back to the local municipalities proportionate to their water customers. At that point, responsibility is all local. If locals have already dealt with this problem, they can use the funds for other local infrasructure; if locals mess up with these additional funds, they gave no one but themselves to blame- deal with it locally. These are costly improvements and it is right that the users pay the bill. Unlike Washington we have no magic money tree in Lansing.