Rural Water Utilities in the Time of COVID

By April Simpson

Rural water and wastewater systems have largely been left out of initial pandemic relief, despite the critical roles they play in local economies. As the virus stretches further into smaller communities, these systems are fighting for survival under long-standing economic weights.

"If the economics of the community are hit by an outside source like COVID, it impacts the water and wastewater systems and their ability to make sure those communities continue to grow and thrive," says Nathan Ohle, CEO of the Rural Community Assistance Partnership.

A year before the pandemic even hit small towns and the economy, North Carolina's Local Government Commission had to take over the town of Eureka and the Cliffside Sanitary District. Now, the state is reporting utility bill delinquency rates of up to 50 percent. Photo by Watson Brown.

Under water

With many states maintaining a moratorium on water shutoffs, water systems have fewer ways to deal with unpaid bills. These systems are generally funded by user rates, not tax dollars. In North Carolina, municipalities are reporting delinquency rates of 30 to 50 percent, says Scott Mooneyham, director of political communications and coordination for the North Carolina League of Municipalities.

"The bottom line is that these rural communities were already struggling with 30, 40, 50 years of global trends that were working against them," Mooneyham says. "COVID comes along and their biggest financial challenges, operating these utility systems — it massively affected that going forward. If this continues without additional help down the road, some of these communities will be basically unable to operate."

Financial problems related to their aging water and sewage systems prompted North Carolina's Local Government Commission to take over the town of Eureka and the Cliffside Sanitary District last year.

"I don't think it's unreasonable to expect that we could see a lot more Eurekas out there with their utility systems essentially bankrupt and bankrupting the town themselves if there's not some effort made to help these communities," Mooneyham says.

Desperate for aid

In April, the National Rural Water Association estimated small water and wastewater systems would lose $998 million in revenue by mid-July, not including emergency operational expenses. The association surveyed 4,915 water and wastewater utilities in all states and U.S. territories — systems that serve more than 29 million people and nearly 1.4 million businesses.

Federal dollars typically cover upgrades, infrastructure projects, and new water pumps; they don't cover operating grants or working capital costs. While some rural systems benefited from federal coronavirus relief to small businesses through the Paycheck Protection Program, it was initially unclear that wastewater cooperatives, typically 501(c)12s, were eligible, says Matt Holmes, CEO of the National Rural Water Association.

Governmental units or municipalities could have received money through the federal CARES Act. The $2 trillion bill included direct appropriations to municipalities with populations greater than 500,000. But rural advocates would like direct funding to municipalities with smaller populations.

Some rural areas were not well-equipped to withstand the pandemic because of long-standing trends in job, population, and industry losses, says Mooneyham. "It's disappointing in my position to hear politicians say, 'You're just asking for more money to fix an existing problem,'" he says. "Well, yeah, there was an existing problem that was created through no fault of these communities themselves, which you've kind of ignored — and now you're blaming them."

April Simpson is a staff writer for Stateline. This story was reprinted with permission from Stateline, an initiative of The Pew Charitable Trusts.