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Cities and towns across New Jersey have struggled to balance their budgets in the wake of the recent economic downturn that has left them with dwindling revenues and escalating expenses. Meanwhile, public leaders in Trenton have promoted the privatization of public water and sewer utilities as a means of fiscal relief. Both the governor of New Jersey and mayor of Trenton had plans in the works to give private interests control over water systems in the state.

For New Jersey, water privatization is not a new concept. The state has a long history with private water provision and serves as headquarters for two of the country’s largest water companies: American Water, based in Voorhees, and United Water, based in Harrington Park.1 The state’s experience with private water service, however, has been marred with failure and disappointment. Consumers frequently report unsatisfactory service and high rates after private entities take over their water systems.

Indeed, New Jersey municipalities will not resolve their fiscal woes by privatizing water and sewer services. Tough economic times require local governments to take swift yet judicious measures to balance today’s budget without compromising tomorrow’s. As public officials determine how to cut deficits, they must avoid superficial solutions, such as auctioning off water utilities and outsourcing sewer services, which can have lasting consequences.

Water privatization is not a responsible way to shore up local budgets. It can result in greater long-term costs, serious environmental problems and a loss of local control.

Key Findings

The New Jersey State Privatization Task Force was one-sided and unnecessary.

New Jersey is one of the most receptive states to water privatization.

On average, private operation of water systems adds 64 percent, $153 a year, onto the typical New Jersey household’s water bill.

Private water companies have a questionable track record, which includes serving contaminated water in Dover Township and selling developers land that was meant to protect Bergen County water supplies.

Public-public partnerships and a renewed federal commitment to water infrastructure funding are better options for New Jersey municipalities.

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