Educational Forum
for
Anne Arundel County State and Local Candidates
Federal Clean Water Act Challenges Confronting State and Local Government Elected Officials
This forum was held on Wednesday, October 4, 2006 at
Anne Arundel Community College. Details of Forum structure may be found below.
Here's what was covered:
Read Summary of Forum
Read Dan Nees' speaking points
See Ron Bowen's presentation (Adobe PDF)
Educational Forum Content:
- Implication of Clean Water Act water quality standards (WQS’s) and total maximum daily loads (TMDL’s).
- Managing Economic Growth and Development in concert with required point source and non-point source pollutant load reductions.
- Opportunities to achieve compliance and avoid potential third party litigation.
- TMDL implementation, actions required to reduce existing pollutant loads and minimize new loads from on-going development.
- Challenges to financing and budgeting resources necessary to fulfill regulatory responsibilities.
Learn what Federal and State law require and participate in an open discussion on the issues that Local Government must confront regarding implications that TMDL’s impose on budgets, existing land use programs, government services and financial stability.
Sponsored by the Riverkeepers of Anne Arundel: Patuxent Riverkeeper; Severn Riverkeeper; South Riverkeeper; West/Rhode Riverkeeper
Participants:
- Jim George, PhD, Technical and Regulatory Service Administration Maryland Department of Environment
- Ron Bowen, Director Public Works, Anne Arundel County
- Dan Nees, Director Environmental Finance Center, University of Maryland
- Jack Greer, Assistant Director for Communications and Public Affairs, MD Sea Grant Program.
Speaking Points for Dan Nees
Anne Arundel County Candidate’s Forum
October 4, 2006
My name is Dan Nees, and I am the director of the Environmental Finance Center located at the University of Maryland in College Park. We are a regional center working throughout the mid-Atlantic region, and we are part of a network of centers located across the country. Our mission is to assist communities in their efforts to finance and implement environmental initiatives of various types.
I am going to talk to you today about finance. More specifically, I’m going to talk to you about how to pay for the programs that Jim and Ron just talked to you about. To start, I’d like to define finance and its core components.
What is finance?
Finance is an allocation process of acquiring, managing, and investing fiscal resources. Ultimately, the goal of any financing effort is to increase or maximize return on investment. As public servants, your job is to maximize the public’s return on investment. Therefore, I’d like to provide you with some ideas about how to accomplish this goal by focusing on the three core financing elements: acquiring fiscal resources, managing fiscal resources, and investing those resources.
What financing is not:
Before I address the first issue, I’d like to discuss what financing is not. Financing is not a reason for doing anything. There are any number or reasons why protecting water resources is a good thing to do, whether they be social, environmental, or economic. What finance can do is provide a strategy for accomplishing your protection goals in the most efficient way possible. In short, finance provides the framework for how you accomplish your goals, not why.
Acquiring revenue:
So the first component of the financing process is acquiring revenue or fiscal resources. In many ways, this is the core issue associated with implementing any new community program – identifying where the money come from. Financing begins with revenue. In fact, without revenue, there is really nothing to finance.
Who should pay vs. will they pay
Because finance requires revenue, the decision to finance a project, initiative, or program assumes that a decision has been made to commit fiscal resources. Really, the key question is, where will the resources come from? Let me answer that for you; the source of any financing effort will always be the citizens, consumers, taxpayers, and ratepayers of the community. The bottom line is that water quality programs, like any other community priority have associated costs, and those costs require revenue. The question isn’t who will pay these costs – it will be the citizens of this community. The question is will they pay these costs. If these programs are a priority in this community, the community will need to pay for them. Finance can help you determine who should pay, but not will they pay. That will be your decision.
Dedicated, sustainable, sufficient
Revenue streams can take a variety of forms, but for the most part, public programs are funded through either fees or taxes. There are advantages and disadvantages to each, but what is critical for any effective financing effort is that the revenue streams be sustainable, dedicated, and sufficient. There are a variety of reasons why each of these is necessary, but in short, they reduce the cost of financing, thereby increasing return on investment.
Managing fiscal resources
The second financing component is managing fiscal resources. What this means is, money alone will not solve your water quality problems. It takes capacity in a variety of forms. The candidates in this room will either represent or serve a community that in most respects has the capacity to manage water quality programs in a very effective way. One of the concerns facing this community in particular is the decision whether or not to develop a stormwater utility to manage the county’s stormwater requirements. It is interesting to me that the discussion focuses almost exclusively on the issue of whether or not a fee should be assessed. By the way, we have heard all of the descriptions of a stormwater fee before – rain tax, property tax, etc. I happen to think it’s a fee, but if we insist on calling it a tax, let’s call it a pavement tax, because it doesn’t matter how much land you have or how much it rains, your fee won’t change. But if you decide to pave your lawn you will pay more, and if you decide to install rain barrels, pervious pavers, and other stormwater BMP’s, you pay less.
Stormwater utility creates efficiencies
Anyway, a stormwater utility is about more than the fee. It is about coordinating and managing the activities of multiple public agencies and programs into a single effort. This creates efficiencies that will achieve the primary financing goal – maximizing return on investment.
Investing fiscal resources
The final financing component is investing fiscal resources. This essentially describes the entire process that I just outlined, but the important thing to remember is that it is not sufficient to just raise revenue and spend it. One thing that each candidate and citizen in this room can agree on is that our governments – local, state, and federal – may not always invest money in the most efficient ways possible. I agree with each of you that our goal should be to implement these programs as efficiently and effectively as possible. You have heard me say repeatedly that the goal is to maximize return on investment. In the private sector, this means making more money. In the public sector, this means decreasing costs, or accomplishing a goal in the most efficient manner possible. It is critical that local communities focus their attention on developing programs that get the job done, and get the job done efficiently. This, after all is what we expect as citizens.
Reduce costs
So what are some of the ways this is accomplished? First, the most efficient way to finance anything is to reduce its costs. And one of the most effective ways to reduce costs of water quality programs is to prevent the problem from happening in the first place. This means effective, enforced land use regulations and controls. Without question it is cheaper to protect than it is to restore. Anyone who has ever worked on stormwater issues can verify this to be true. I’m not suggesting that you must stop development in your community, but I am suggesting that you must aggressively control where and how that development occurs.
Act today
The second fundamental approach to cost reduction is to act sooner rather than later. It is cheaper to act today than it is to act tomorrow. This is directly related to the first issue. Once land is developed, especially if it is developed in the wrong place in the wrong way, it is very difficult and very expensive to mitigate. It is like un-frying an egg. There will be no new technologies buying our way out of these problems. If you act today, it creates more efficient results.
Conclusion
So, that is essentially finance in a nutshell. Again, finance is not a reason to act, but it is a very effective tool for ensuring you get the maximum return on the public’s investment into these programs. The three core components – sustainable, dedicated, sufficient revenue; effective management; and effective cost reduction and investment – provide the foundation for an effective program, and ultimately the greatest return on investment.
