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UNITED
NATIONS - / MaximsNews Network / - 27
February 2008 --
The collapse of the US
subprime mortgage market has dramatically impacted cities around the country.
At
the recent winter meeting conducted by the US Conference of Mayors, it was noted
by Mayor Douglas Palmer of Trenton,
New Jersey
who serves as the President of the Conference that the subprime mortgage crisis
has significantly contributed to the growing problem of vacant houses, depressed
property values, tighter credit, and expanded municipal budget gaps.
In
December, the US Conference of Mayors released a study indicating a projected
drop in CY2008 home values by US$1.2 trillion.
And while city budgets will be hit the hardest by the loss in property
taxes, states will also be affected. According to the Washington DC-based Center
for Budget and Policy Priorities, it is anticipated that at least 16 states are
predicting budget shortfalls for CY2009, totaling over US$30.1 billion.
What
does this mean for the US
domestic water/wastewater infrastructure & service sector?
As
a fallout from the extensive subprime mortgage fiasco and the resulting credit
crunch, both city and state governments have been left scrambling to close
budget gaps by cutting services, diminishing discretionary spending, and
reducing infrastructure investment plans.
Notes
Chris Hoene, the director of policy and research for the National League of
Cities “the credit crunch is going to make it more difficult to finance
capital projects.”
Many
of the municipal infrastructure projects including the upgrading of
long-neglected water and sewer systems were conceived when funding from
property, sales and income taxes was steady, commercial bank capital was more
readily available, and interest rates were low.
Local
government officials are acknowledging that the ground has shifted beneath their
feet. As a result, mayors like Mayor Frank Jackson of
Cleveland
and Mayor Sheila Dixon of Baltimore
along with Mayor Palmer are now calling for a massive cash infusion from the
federal government in order to shore up needed funding for municipal services
and infrastructure rebuilding.
And
compounding the loss on revenue from property, sales and income taxes is the
rising construction costs associated with these much needed infrastructure
projects.
According
to experts linked with trade groups like DBIA and AGC as well as the US Army
Corps of Engineers, the costs associated with contracting and construction for
municipal infrastructure projects continue to remain high despite the recent
declines in residential construction.
These
escalating costs are partly linked to competition brought on by the global
development/infrastructure boom in countries like
China
and
India, higher energy/material costs plus a plethora of
US
construction and contracting opportunities that were brought on by a number of
notable hurricanes like Katrina.
Therefore,
until new sustainable municipal funding sources for water & wastewater
infrastructure projects are identified and the construction costs diminished, it
is anticipated that there will be a scaling back of state and municipal capital
infrastructure projects.
Labels:
Kathy Shandling,
Subprime
Mortgage Market Collapse, International
Private Water Association,
IPWA, Water, water
wastewater infrastructure & service
~~~~~
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