Many of the local governments we assist at the Environmental Finance Center struggle to raise enough money to support their environmental services. Often, we work with these communities to improve the finance and management of their systems through better rate setting, cost controls, and long-term planning. But another solution for struggling communities is to increase and strengthen their customer base through community and economic development.
EPA has a number of programs and resources aimed to revitalize communities through “Smart Growth” economic development, which builds upon existing assets, takes incremental actions to strengthen communities, and builds long-term value to attract a range of investments. In previous posts on the School of Government’s Community and Economic Development blog, we looked at aspects of EPA’s Smart Growth initiative including their new Framework tool for Small Cities and Towns as well as Smart Growth efforts here in North Carolina. This post examines another aspect of the Smart Growth initiative: the Building Blocks for Sustainable Communities program.
Back in September, the School of Government’s Community and Economic Development in North Carolina and Beyond blog highlighted a new program from US EPA to work with small businesses nationwide to develop and commercialize technologies that tackle critical environmental problems: the Small Business Innovation Research (SBIR) Program. Now the US Department of Energy’s Office of Energy Efficiency and Renewable Energy has launched its own program to assist small businesses, the Small Business Vouchers (SBV) pilot program. The Small Business Vouchers program links small businesses who promote clean energy technology with the DOE National Laboratories.
At our workshops and through our discussions with water systems during technical assistance work, many water systems, in particular small systems, ask what seems like a simple question: “Are our rates right?”
I suspect our initial answer is somewhat unsatisfying: “It depends.”
Even when rates are sufficient to generate the revenues needed for the utility, whether or not rates are “right” depends on what a particular water system hopes to accomplish with its rate structure. Hopefully, that is more than simply having the lowest rates of any of its neighboring systems. We encourage water systems to articulate a broad range of rate-setting objectives and to rank them from most to least important.
In previous posts, we outlined how to use the financial statements of a water or wastewater system to calculate the key financial indicators of operating ratio (a measure of self-sufficiency), debt service coverage ratio (a measure of a system’s ability to pay its long-term debts), and days of cash on hand (a measure of a system’s financial security). Another key financial indicator is current ratio.
Current ratio, also known as quick ratio, is a measure of short-term liquidity or the ability to pay your current bills. It is most often calculated by dividing unrestricted current assets by current liabilities. In other words, could a water or wastewater system pay all of the bills currently sitting on someone’s desk with the cash it has on hand?
EPA is encouraging all states and tribes to create wetland program plans. These plans lay out the activities that each state or tribal program plans to undertake over the next few years in each of the four core elements of wetland programs: regulation, monitoring & assessment, restoration & protection, and water quality.
In a previous post, we discussed how those plans can incorporate elements of sustainable finance. The most comprehensive plans first identify the work of the state or tribal program and then describe a plan for seeking out appropriate funding (both from the state/tribe itself and from grants) and appropriate partners to complete that work.
Of course, identifying funding sources is not the same as securing those funds. How, then, can wetland program plans be written to increase the likelihood of securing state and tribal appropriated funds and grants?