Mo. among states not using up water money

KANSAS CITY, Mo. -- Millions of dollars in federal funds intended for drinking-water projects in Missouri and four other states have languished unspent, according to a federal report.

The Office of Inspector General for the Environmental Protection Agency said it found that five states reviewed -- Missouri, California, Connecticut, Hawaii and New Mexico -- have $231 million in unspent balances above the goal level in the Drinking Water State Revolving Fund, which provides low-interest loans for cities, towns and local water districts to make drinking water infrastructure improvements.

"As a result, $231 million of capitalization grant funds remained idle, loans were not issued, and communities were not able to implement needed drinking water improvements," the report said. "When loans are not issued, intended drinking water improvements may not be implemented and states lose opportunities to infuse funds into their economy and create jobs."

The report, issued July 16, follows one in 2011 in which the EPA's OIG said the DWSRF program was not doing enough to find water systems that weren't compliant with regulations and could benefit from the program. The EPA provides the DWSRF funds to the states.

Missouri had the second-highest amount in unused DWSRF funds in 2013 -- nearly $60 million -- with about $22 million of that above the recommended level, according to the new report.

California had the most unused funds in 2013 at $357 million, with $157 million of that above the recommended level. New Mexico had about $21.9 million above the recommended level, Hawaii had about $17 million and Connecticut was about $11.7 million above the recommended level.

The EPA's IG office selected the states from regions with the highest percentage of unliquidated funds and said the five states reported several reasons for not using the money, including staffing shortages and failure to project how much revolving fund money would be available each year.

Missouri's Department of Natural Resources said in the report it doesn't project how much revolving fund money would be available each year and lists projects as fundable although many are not ready for construction. "And in most cases it takes anywhere from 18 to 24 months for a project to proceed through the state's approval process," the report said.

Missouri had 20 drinking-water projects listed in 2013, with nine of those projects reaching final agreements, according to the report.

Missouri DNR spokeswoman Gena Terlizzi said in an email that DNR was still reviewing the report Wednesday and "will continue to work to ensure available funds are put to work in communities across Missouri to assist in meeting water infrastructure needs."

The EPA said it planned to ensure DWSRF money from FY2013 and earlier would be used by 2016.

But Nancy Stoner, the EPA's acting assistant administrator for water, said in an April letter to the agency's inspector general that while the EPA agrees the money should be spent to "advance investment in the reliable delivery of safe drinking water," the states play a primary role in the program.

"This might pose a programmatic challenge when determining how the EPA can adopt some" of the recommendations, Stoner said.