There are multiple approaches to managing community water systems. The management model that best serves your Tribe will be determined by a variety of factors including your traditions and values, the cost of operating and maintaining your particular water system infrastructure, availability of funding, and what your community members are able to afford. Below you’ll find information on three common management models along with stories from Tribes who have implemented or are currently implementing them.
Communities that use the autonomous management model run water systems that operate independently from local or Tribal government, like a non-profit or a business. Communities with autonomous water utilities are typically able to set full-cost rates, meaning they are able to cover all costs of running the utility with revenue generated through customer billing. Advantages of this model include financial stability and security, since dependence on outside funding sources is greatly reduced. The main disadvantage is that full-cost rates to cover all water system costs are not affordable in some communities, particularly those with few households, or complex or energy intensive treatment plants.
Water utilities that use a fully subsidized management model provide treated water to community members free of cost. Communities with fully subsidized water utilities are typically those whose culture does not support charging for water and/or those who have a reliable source of revenue available to cover water system costs. Advantages of this model include alignment with some Tribes’ cultural values and removing the burden of a monthly bill off community members. The main disadvantage is that it is not feasible in communities without a major source of reliable revenue or strong local economy supporting tax revenue. Some examples of sources for full subsidization include partial taxes on profits from the development of local natural resources and direct Tribal participation in the local tourism industry.
In one southwestern Tribal community, traditional culture suggests that if you charge for a natural resource, it will go away, therefore charging for water is not an option in their community. The Tribe applies revenue earned through tourism to cover the cost of operating and maintaining the treatment plant.
Many water utilities use a hybrid management model, a combination of autonomous (financed by bill pay) and subsidized financing. Communities with hybrid water utilities subsidize a portion of the cost of running the water system and use revenue from customer bills to cover the remaining cost. Some advantages of this model are that it allows communities to lower monthly bills to a more affordable rate, but does not depend on large amounts of external funding sources when compared to full subsidization. The main disadvantage is that it still involves some dependency on outside funding, which can be unreliable.
One village in rural Alaska set rates that allows their water utility to function autonomously. With flat rates at $120 per month, the village was experiencing low rates of bill pay and accruing a significant amount of debt. The city council implemented a 4 percent sales tax at the local store. The community voted to apply the revenue from the tax to partially subsidize the water system. This allowed the village to drop the water/wastewater rates to $60 per month. Community members found these rates much more manageable. Bill pay increased and the village was able to balance their water system budget and also save excess funds for future emergency repairs and upgrades.