American Water Works Association Resolution
The Executive Committee Calls Attention of Members and the Public to the Necessity for Increased Revenues for the Water Works.
In a preamble to the following resolution, the Executive Committee of the American Water Works Association calls attention to the fact that under existing war conditions the efficient and in all ways satisfactory management of put lick utilities is becoming increasingly difficult. It is also plain that there is a quite general lack of public appreciation of the really serious aspects of this matter. The experience of the railroads is a case in point. Notwithstanding the fact that the operating revenues of the railroads of the United States were $416,000,000 greater in 1917 than in 1916, their net earnings decreased $60,000,000, and in addition to this, state and local taxation amounted to $60,000,000 more in 1917 than in 1916. Secretary McAdoo has written to the various state governors asking them to bear a little lightly in their taxation of railroads for the obvious reason that we must guard against a system wherein the government shall operate a public utility at a deficit and make up that deficit from the public treasury, it being sensibly clear that the railroads must be operated at a profit even while the government retains control of them. While the representatives of gas and electric services have already gone far in a campaign of education respecting the vital facts associated with the management of such utilities in war time, up to now such efforts as have been made to show similar difficulties experienced in connection with the operation and maintenance of water works have been for the most part restricted to attempts of municipal water departments, water companies and building contractors, to obtain reasonably prompt deliveries of materials essential to the construction of necessary extensions in plants and to efficient plant management. It seems, therefore, that the American Water Works Association, representing as it does through its membership hundreds of municipal water departments, water companies and manufacturers, should immediately take some definite action along similar lines. Accordingly your Executive Committee have passed the following:
Whereas war-time conditions unavoidably have developed cardinal difficulties in the efficient operation and maintenance of water works properties, both municipally and privately owned, and in some cases the situation and relief of this important public utility has become a subject of grave importance; and
Whereas the very existence of a modern and civilized community depends upon a pure and adequate supply of water; and
Whereas the water rates now existing were, as a rule, fixed before the w’ar and based upon conditions which then prevailed; and
Whereas reliable information from a representative group of water works shows that the average increase in operating expenses in the past three or four years has amounted to some 40 per cent., and that during the same period the gross revenue of this group of water works has increased but about 7 1/2 per cent.; and
Whereas the increased cost of operation, the difficulty of providing for maturing obligations, and of making necessary extensions to meet the requirements of the Nation’s war needs and of expanding industries which water departments and companies share with all other public utilities, are. in the case of water works, intensified by certain conditions peculiar to this service as (a) A water works can gain no relief by temporary cessation ot service at stated times or in certain areas; there may be moonlight schedules, heatless day’s and areas, less frequent train service, etc., but water service, from its very nature, must be continuous, both in time and extent. The needs of large industries or war needs cannot be met by diverting from other consumers. A water works must carry its normal load and at the same time take care of its emergency service. (b) The Nation’s war program, including the mobilization of the country’s industries, indispensably requires extensions of service by water works. A water works extends its service and enlarges its facilities by increasing its pumping and purification equipment and by laying additional pipe. In such extensions iron products constitute the chief element, which products have increased in price enormously and probably more than any other commodity in general use. Since 1915, iron pipe has increased in cost 150 per cent., and pumping machinery and filtration equipment from 100 per cent, to 200 per cent. Since there can be no enlargement and extension of industries to meet war needs without increased and extended water service, water works are powerless to avoid expenditures for this purpose and unable to escape the paymient of such vastly increased prices. (c) The greatly increased cost of operation, which affects all public utilities, seriously affects w’ater departments and companies, in particular, for the reason that the largest single item of expense in the operation of water works is fuel. In normal times fuel constituted about 15 per cent, of the total cost of production. Now fuel cost is approximately 30 per cent, of the total cost of operation. In addition to this, the cost of water purification has increased more than 40 per cent, and cost of distribution more than 20 per cent, of the normal cost of operation, and
Whereas the general public, and in fact many State and municipal officials, appear not to visualize clearly that even properly imposed increases in the cost of of labor and essential materials must of necessity likewise increase the difficulties and cost of managing water works properties efficiently; and
Whereas considerations of equity and the vital necessity of maintaining continuous and adequate service require that the water consumer bear his proportionate share of such necessary increase in expense that water departments, whether municipally or corporately operated, should not be forced to operate at a loss or he deprived of the reasonable return on their business, necessary to command capital, upon advantageous terms, for required extension and betterment of the service; and
Whereas in time of war it is vitally essential that so far as is consistently possible it is necessary to conserve the health and well being of the public, and to guard against fire losses, by providing pure and adequate water service to the public, and to the industries, particularly those engaged in the manufacture of war materials; and
Whereas without an equitable balance between the cost of operation and management of water works and the revenue received from service it is inevitable that the maintenance in a satisfactory manner of this vitally important essential must of necessity deteriorate; therefore
Be it and it hereby is Resolved that for the benefit of the members of the American Water Works Association, and through them for the enlightenment of the public at large, the foregoing facts and information be immediately printed in pamphlet form by the association and mailed to each member thereof.