ASSESSING THE RELATIONSHIP BETWEEN DRINKING WATER INFRASTRUCTURE AND SOCIOECONOMIC CHARACTERISTICS IN MICHIGAN MUNICIPALITIES CLGFP REPORT 2025-03
September 30, 2025 - Erika Rosebrook, Mark Skidmore, Sarah Klammer, and Sahithi Sane
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EmailMichigan’s 731 municipally-owned and operated water systems provide water to 7.5 million Michigan’s residents (Michigan Department of Environment, Great Lakes, and Energy 2021). These systems, which serve three-quarters of Michigan’s population, are a core public service, foundational to the health and economic well-being of Michiganders.
Like all municipalities and public authorities, water systems have public reporting requirements, and their budgets and financial statements are readily available, but due to how information is reported and the nature of their funding structures, the fiscal health of water systems is not always apparent. Further, water system finances are not reported or monitored separately from municipal budgets, so emerging fiscal challenges specific to water systems may be less visible. As enterprise funds, water systems can be insulated from pressures on general fund budgets, but they are also subject to risks due to loss of ratepayers, higher costs of defrayed maintenance, unaffordability, and other distinct challenges.
Our analysis of the fiscal health of 250 Michigan public water systems from 2008-2022 shows low interest loans and technical assistance from State programs offer an important opportunity for fiscal stability. This insight is increasingly important as state and local government decision makers are faced with fewer options to finance necessary maintenance and long-term system improvements.
In addition to the quantitative analysis of the sample of 250 water systems, we provide a more detailed comparison of Flint’s water system to other systems across the country to underscore how fiscal and management challenges manifest in different municipal contexts. This evaluation offers insight into how to better ensure the health and long-term viability of this critical infrastructure.
Recommendations:
Establish State reporting and monitoring requirements for the fiscal health of water systems, not just water quality.
Seek opportunities to continue and expand the Drinking Water State Revolving Fund (DWSRF) as federal funding declines, as the fund is an important component in maintaining water affordability and quality of life for Michigan residents.
Consider state-level incentives for water systems to collaborate for more stable finances and management and accompany those incentives with governance protections to ensure transparency and accountability.