February 2025 Vol. 80 No. 2
Features
28th annual municipal sewer/water infrastructure forecast & market analysis: How long will the money flow?
Robert Carpenter, Editor-in-Chief
As the old saying goes, we’ve got good news and bad news.
First, the unwelcome news. America’s water, sewer and stormwater infrastructure systems continue to show their age and neglect at an alarming rate of decay. Obviously, the country, as a whole, has not done an adequate job of investing in sewer and water infrastructure and every year, the situation continues to decline.
The good news is that thanks to another round of spending in 2024 from the famous Infrastructure Investment and Jobs Act (IIJA) passed in November 2021, funding has never been greater. With a renewed mindset of aggressively addressing their failing systems by American cities and states, it is entirely possible that continued record levels of investment will continue through 2026 – or at least until the IIJA expends its authorized funding.
IIJA has continuously pumped billions into sewer and water markets that are desperate for funding aid. Many projects have been approved and greenlighted that would never have even been considered before government billions became available. Hopefully, cities will continue their efforts to elevate their systems back to high-quality levels. The painful truth is that infrastructure problems caused by decades of neglect and underfunding will also require decades of investment and care to recover and produce consistently high service that the American people increasingly demand.
Underground Infrastructure’s forecast anticipates spending in 2025 to increase an additional 6.1 percent over what was a record 2024. UI’s data is based on projections from a set number of responses in specific geographical areas by small, medium and large respondents.
This data, and much more, was the focus of Underground Infrastructure magazine’s 28th Annual Municipal Sewer/Water Infrastructure Forecast & Market Analysis. The survey polled U.S. municipalities about their top concerns and issues, 2025 infrastructure spending plans, and working relationships with consulting engineers and contractors.
This exclusive annual study also provides detailed insight into America’s cities with information and perspectives on industry topics and technology. It reflects only information regarding sewer, water and stormwater piping infrastructure and does not include figures or data on pumping and lift stations, treatment plants, etc.
Respondents ranged in size from rural communities of less than 1,000, to mid-sized cities up to 500,000, and a representative sampling of the nation’s largest municipalities. Survey results came from all 50 states and were weighted for regional population density and city sizes to develop a nationwide benchmark that would allow for statistical extrapolation.
Big money
The projected 2025 spending of $27.68 billion for both construction and rehabilitation of sewer, water and stormwater systems is not just the IIJA stimulus. Municipal survey respondents perceive that their local economies will strengthen and continue to invest as the new President Donald J. Trump administration continues to apply its “common sense” form of government to the economic drivers of the country.
“We see a renewed, strong local push to keep investing,” said a municipal manager from this Southeast city. “The feeling is that enhanced funding – at least for a while – will be available to continue wrapping up some of the work we’ve got planned.”
From the Rocky Mountain states, a city public works leader pointed out that “we’ve got to keep the forward momentum going for our state and local governments. We haven’t received any of the Infrastructure Bill money locally but still, we’ve tackled some big projects over the past few years with a more supportive city council. We need to continue that effort.”
While Trump policies and the impacts of Elon Musk’s aggressive audits and evaluations from the newly created Department of Governmental Efficiency (DOGE), have been strongly lauded by the majority of Americans, there is some concern that IIJA funding will continue on schedule.
In late January, the Trump Administration issued a freeze on all federal loans and grants for evaluation purposes. However, the Administration quickly announced that it would lift the spending freeze on clean water and safe drinking water funding programs (among other areas). Specifically, the Clean Water State Revolving Fund and Drinking Water State Revolving Fund loan programs, overseen by the Environmental Protection Agency, are historically crucial for financing water quality protection and drinking water projects.
Still, even though the freeze was reversed, that action raised a lot of industry eyebrows as to what was at stake. The original purpose of the IIJA funding was to strongly supplement existing programs which, quite frankly, have never been funded at levels necessary to elevate, repair and replace the whole of America’s failed sewer and water infrastructure systems.
But for now, the federal infrastructure programs remain on schedule as does DOGE’s effort to trim billions – and still counting – in wasted, misdirected, inefficient or even fraudulent spending. A new standard for a lean federal government that is conscientious about its spending habits and efficient operations is putting a kink in old-style approaches to grant and loan funds.
There are plenty of signals trickling down to states and towns that their citizens are beginning to demand the same at the local level. On the plus side, cities will hopefully discover a more efficient and practical manner in their efforts to snag a piece of the federal funding pie.
Assuming the IIJA funds are disbursed as planned over the next two years, what happens after 2026 when the last of this bonus Federal hand-out trickles away? Will there be a second wave of infrastructure spending? Will states be willing to do a better job of financially supporting local infrastructure needs? Will cities have to follow the lessons of the Trump administration and re-evaluate their spending priorities in such a manner as is more palatable for local citizens?
A lot of funding issues, but for most of the survey respondents, the attitude was to ride the current funding wave while they could.
Hot button issues
Water issues remain a huge need and, in some cases, a problem for cities. Lead pipe replacement continues to be a major driving force as the deadline for the lead pipe census nears and cities are desperately trying to replace lead pipes. The problem for many cities is they are discovering their inventory of lead pipe is much broader – and costly to replace – than what was anticipated.
Fueling a water pipeline construction boom have been water shortages across much of the country, but especially for drought-stricken conditions in the Western U.S., where the rush to source and transport water is only growing. Cities running short of water in both near- and long-term scenarios are fervently seeking water sources and dreaming up all kinds of possibilities to transport water.
The recent economic inflation woes of the nation have been forcing many cities to raise sewer/water rates. Various reports placed rate increases at between 4 and 5 percent in 2024. Respondents report that their city governments are still reluctant to raise user fees, pointing to often still struggling local economies. However, the cumulative backlog of work necessary to bring sewer and water systems up to date is overwhelming, and many survey respondents admit increasing rates is a necessity. UI’s Municipal Survey reports that rate hikes are now occurring every two-to-three years.
City personnel were asked to, assuming a perfect world, put a price tag on their near-term funding needs to address all their system issues. Respondents believe they would need $118 billion for sewer, $95 billion for water and $30 billion for stormwater. When asked the same question but for five years or more, the amount increased to $342 billion for sewers, $159 billion for water needs and $61 for storm sewers.
The percentage of those surveyed who said they prefer trenchless methods grew slightly from 45 percent in 2024 to 46 percent for 2025. A slight increase was noted for those who have no preference, as to open-cut or trenchless, coming in at 41 percent.
The big keep getting bigger. Early into 2025, the acquisition and consolidation trend continued across the sewer and water landscape. Mega-companies are rolling up smaller firms from construction to engineering to vendors. Yet, start-up companies keep popping up, as well. All of this business activity is indicative of a healthy market.
“It’s good and bad,” said a Northeast muni manager. “Many of our old contacts have disappeared as the mergers take place. We just keep our fingers crossed that we’re still going to get the same level of expertise and cooperation that we’re used to.”
Rating goods and service
The survey also asked municipal personnel to rate the consulting engineering community based on the 1-to-5 scale, with five being the highest approval rating. Basically, this number provides a confidence benchmark. The consulting engineer score held steady at 3.8 for the second year in a row.
For the most part, respondents were pleased with the efforts of consultants. Asked about how engineers could increase their relationship and effectiveness with cities, “quality” again stood out, with 80 percent citing that factor. Other areas included “understanding of new technology” (77 percent of respondents), “cost” (65 percent of respondents), and “productive relationships with contractors” (44 percent).
The survey also asked municipal personnel to rate contractors. The overall rating was a composite from four categories: quality of work, timely project completion, fair pricing and dependability, based on a scale of one (worst) to 5 (best). Contractors saw their composite score remain at 3.9 for the fifth straight year.
Like engineers, quality was the number-one desired trait for contractors, cited by 82 percent. On-time project completion was also highly coveted by 72 percent of respondents.
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