Topics

sq764

SQ 764: Bonds for Important Water Projects, or State Credit Risk With Inadequate Oversight?

Background

State Question 764 is a statewide measure on Oklahoma’s November 2012 ballot.

This measure amends a section of the state constitution to allow the Oklahoma Water Resources Board to issue $300 million in bonds for water, storm water and sewage projects.

A ‘yes’ vote on SQ 764 means the OWRB would be given the authority to issue the bonds, and that the legislature would appropriate money for the bonds and a means to issue them.

A ‘no’ vote means no bonds for the OWRB.

Context

Water is a big deal in Oklahoma, the ongoing drought has exacerbated debates over what former Governor Robert S. Kerr called the state’s most “blessed resource.”

In October 2011, the OWRB released its Comprehensive Water Plan, which, among other things, recommends the state keep its overall water usage to 2012 levels while maintaining growth for the next 50 years.

To keep water usage levels static while serving more and more users each year, water authorities have to make sure their systems are as efficient as possible. But officials with smaller water districts say their aging water infrastructure isn’t as good as their big-city counterparts, and complain that they lack robust funding mechanisms. Older systems are inefficient and waste water, David Ocamb with the Sierra Club tells KOSU’s Michael Cross.

The OWRB has been giving hundreds of loans to small water districts since the 1980s, which Tulsa World‘s Wayne Greene reports, “have resulted in a handful of defaults,” but none serious enough to require additional appropriations:

The only problem with the program, says state Sen. Brian Crain, R-Tulsa, is that it isn’t nearly big enough.

Proponents

The OWRB, Sierra Club, the State Chamber and local chambers and many small water districts are urging a ‘yes’ vote on SQ 764.

The Oklahoma Policy Institute championed SQ 764 in a blog post, writing:

OWRB’s loan programs are a necessity for small Oklahoma towns that do not have the capital to fund expensive, yet vital water infrastructure projects. The OWRB’s bond rating allows them to borrow and finance loans with lower interest rates than many small Oklahoma towns can access.

Opponents

Free market-minded lawmakers, Oklahomans for Sovereignty and Free Enterprise and officials in some smaller water districts are wary of SQ 764. Critics have several concerns, namely funding, oversight, and specific projects.

Funding and Oversight

If SQ 764 passes, smaller municipalities could fund water projects by going through the OWRB instead of issuing their own bonds. Basically: They could piggyback on the state’s good bond rating instead of using their own — potentially not as good — credit structure.

State Rep. Mike Reynolds tells the World that SQ 764 means the state is risking its own credit rating to help cities build infrastructure:

“They want to wreck the state’s credit and rely on the state’s interest rate,” Reynold said.

If cities need water infrastructure, they should finance it themselves, Reynolds tells the Tulsa paper. The OWRB is an unelected entity, and Amanda Teegarden with OK-Safe says the state shouldn’t be “giving its credit card to an organization with no oversight,” KOSU reports.

Specific Projects

If passed, SQ 764 could fund all sorts of water projects. And at least one state lawmaker is worried about funding any project that might move water from their district to other parts of the state — or be sold to another state:

“I think that’s an effort to work on this transfer of water from southeastern Oklahoma to central Oklahoma and on to Texas because it was such a huge amount of money,” Sen. Jim Wilson, D-Tahlequah, tells KOSU.


StateImpact’s 2012 Ballot Question Handbook

Oklahoma’s economically important state and county ballot questions — explained.

Latest Posts

America Can Fix Its Crumbling Water Infrastructure, If You Help Pay For It

An sludge pump built in the 1930s still operates at the Konawa, Okla. wastewater treatment plant.

New Deal programs in the 1930s and federal construction grants through the ’70s helped build America’s vast water infrastructure. Now the rapidly aging treatment plants and pipelines need to be replaced, but the generous programs of the past are long gone. Ratepayers will ultimately have to shoulder a large portion of the $1 trillion burden. [...]

Oklahoma’s Water Future Depends On Cheap, State-Backed Loans

Broken Arrow Engineering Director Kenny Schwab says the city's water currently has to be piped in from 30 miles away.

How important are the Oklahoma Water Resources Board’s financing programs for local water projects across the state? Since 1985, close to $3 billion in low-interest loans have been secured for projects ranging from $80,000 for a water tower in rural Custer County, to $65 million for a new water treatment plant in Broken Arrow. For [...]

How Oklahoma’s Credit Rating Affects Your Tap Water

New construction surrounds the rusting remnants of Broken Arrow's old water treatment plant.

Building new water systems is expensive, so Oklahoma has a program to help communities pay for these projects. Here’s how it works: Cities and towns apply for a low-interest loan through the Oklahoma Water Resources Board. The state has a better credit rating than most cities do. So going through the state gets them a [...]

Oklahoma’s Top 5 Local Water Priorities Now That State Question 764 Is Law

Water Tower

The Oklahoma Water Resources Board’s Financial Assistance Program helps local governments secure loans to make water infrastructure improvements. Since the program began in 1985, nearly $3 billion has been provided to counties and municipalities to build wells, improve sewer systems, install generators, and a host of other water projects. The program allows localities to use [...]

About StateImpact

StateImpact seeks to inform and engage local communities with broadcast and online news focused on how state government decisions affect your lives.
Learn More »

Economy
Education