WEST LEBANON — Upper Valley municipal managers say the loss of a state grant program that helped New Hampshire towns and cities pay for costly wastewater upgrades will translate to higher tax and utility bills as they work to cover the funding shortfall.
The state’s two-year budget, signed into law last month by Republican Gov. Chris Sununu, reinstates a moratorium on new projects eligible for wastewater state aid grants.
The program, administered by the New Hampshire Department of Environmental Services, is intended to offset the multimillion-dollar costs that municipalities can incur while improving their sewer systems and thereby provide an incentive to curb pollution.
Under state law, it offers to cover between 20% and 30% of costs, with contributions often used to help pay off long-term bonds on already-completed projects.
However, the new moratorium leaves about 110 projects without funding over the next two years, many of which are already underway.
“Taxpayers will have to pick this up,” said Margaret Byrnes, executive director of the New Hampshire Municipal Association, which advocated for inclusion of the grants in the state budget.
Byrnes said that by instituting the moratorium, the state essentially failed to meet its promises and left local officials in a bind. With few other ways to pay for construction, she said, residents in many Granite State cities and towns are likely to see bills get passed on to them.
That’s the case in Lebanon, where city officials are now working to include the additional costs in the upcoming 2022 budget, according to City Manager Shaun Mulholland.
The city had seven projects on the state’s lists of potential grant recipients, including three phases of the combined sewer overflow, or CSO, projects, a $73 million, federally mandated effort to separate sewer and stormwater in 15 miles of Lebanon’s sewer system.
The state’s list estimates it cost $18.2 million for the three CSO projects, meaning the state grants would typically send at least $3.6 million to Lebanon.
“It will impact water and sewer system users as well as taxpayers,” since all three contribute to the projects, Mulholland predicted earlier this week.
Lebanon homeowners and businesses connected to the utilities already have been facing yearly water and sewer rate increases as the city attempts to pay off debt from the CSO projects.
Any more fees placed on the city’s some 3,300 customers — and those in neighboring Enfield — could prove burdensome, said Lebanon Mayor Tim McNamara.
“Having the (state aid) grants not there is a problem for capital projects,” he said. “We may have to put some things off or we may have to delay some other projects to get priority projects done.”
Claremont also braced for the moratorium as it budgeted for the start of its fiscal year on July 1, City Manager Ed Morris said.
Claremont had two projects on the list of eligible projects, including more than $3.4 million in electrical upgrades to its wastewater treatment facility, so it could lose out on at least $170,000 in state grants.
Morris said both projects received low-interest loans from the state that will help minimize long-term costs. However, he acknowledged that ratepayers will be on the hook for more money and, without the state grants, future projects will likely be delayed.
“I hope that the state Legislature will reconsider in future years,” Morris said.
This isn’t the first time that lawmakers have limited the wastewater grants. A moratorium on new projects was in place for years until the then-Democratic-controlled Legislature restored funding in its 2020-21 budget.
That move allowed 160 projects that were substantially completed before the end of 2019 to apply for aid, which will continue over the next two years, despite the restrictions placed on new grants. Overall, the state’s two-year budget allocates $15.6 million to continue paying for those older efforts.
“Basically, that’s good news,” said Tracy Wood, who oversees the grant program at DES’ Wastewater Engineering Bureau.
Wood added that two bills were retained this year that could result in more wastewater programs getting funding next year, and the state agency will continue maintaining a list of projects just in case money is made available.
Some Republicans argue that they fully funded all of the state’s environmental requests. Rep Lynne Ober, R-Hudson, chairwoman of the House Finance Committee said DES didn’t seek the additional grant funding when Sununu administration officials made their funding requests earlier this year.
“There were agencies that did not get fully funded budget line items from the House,” she said in an email. “DES is not one as their budget was fully funded.”
However, state Sen. Sue Prentiss, a Lebanon Democrat whose district includes Claremont, said Republicans should have anticipated the local shortfalls and adequately funded the program in the first place.
“The most immediate impact is going to be felt by the ratepayers,” Prentiss said of the halt to new wastewater grants. “Anytime you take money out of that pot, something has to fill the gap.”
Cuts to wastewater grants aren’t the only example of downshifting, or forcing municipalities to pick up higher costs once covered by the state, within the budget, said Prentiss, a former Lebanon mayor.
New Hampshire’s new school voucher program, also known as education freedom accounts, will take money away from local school districts and instead allow them to go to private institutions, she argued, and cuts to social services could force towns and cities to pay a higher share to nonprofits that assist their residents.
Tim Camerato can be reached at tcamerato@vnews.com or 603-727-3223.