Senate Bill 432 in Wisconsin aims to streamline the private purchase of municipal water systems by removing required public referendums. However, private water utilities typically charge higher rates and provide poorer quality service compared to public utilities. The document argues Wisconsin should reject SB 432 and instead consider policies that limit privatization and increase funding for public water infrastructure to ensure water remains affordable and accountable to communities.

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Wisconsin’s Fast Track to Privatized Water Systems:
Privatization shortfalls and the importance of public
water utilities
By Dylan Waldhuetter, UW-Milwaukee School of Freshwater Sciences
Executive Summary
A recent bill brought forth by Aqua America, a
provider of water and wastewater services to over
three million people in eight states, is attempting
to streamline the process of private purchase of
municipal water sources in the state of Wisconsin
(Murphy, 2016). Senate Bill 432 which coincides
with Assembly Bill 554, includes provisions that
would amend the current process of the sale and
lease of municipal water by removing the referen-
dum process. With the private corporation, Aqua
America, at the fore front of the bill and zero of
the 582 local water utilities requesting the legisla-
tion; there are many questions regarding its mo-
tive (Morrissey, 2016). Although SB 432 is cur-
rently off the table until at least next session, wa-
ter privatization has peaked as a polarizing issue
in the state. With aging infrastructure and media
driven water quality concerns the call for action is
apparent. Upon the rejection of privatized water
in St. Louis, Alderman Christine Ingrassia stated,
“The public must have power in decisions regard-
ing our public water system. I would be wary of
contracting with any corporation that relies on
circumventing the public voice with backdoor
dealings to expand its business, especially when it
comes to our most vital public service” (Lobina,
2014). This sentiment is demonstrative of the im-
portance that Wisconsin vote down SB 432 and
consider alternative policies to ensure that our
water systems remain public. Privatized munici-
pal water systems have continuously resulted in
less accountable and less affordable service (“The
State of Public Water”, 2016). This brief will ex-
plore the negative impacts of water privatization
as it relates to municipalities in the United States
and present evidence to guide decision makers
away from legislation that would expedite the
sale of municipal water sources.
Context
Water is a public good. Under this reality, the
public sector has been trusted with providing its
citizens quality water at a reasonable price. How-
ever, recent trends have led public officials to face
pressure from the private water industry to sell or
lease their public operations. According to the
U.S. Environmental Protection Agency, private
water companies currently own about 10% of wa-
ter systems (“The State of Public Water”, 2016).
This is the result of many municipalities looking
for opportunities to fix their financial burdens and
this number is subject to grow with the passage of
SB 432 and similar legislation (Polycarpou, 2010).
Water privatization leads to increased cost and
decreased service. A 2010 survey of the largest
utilities in the Great Lakes region showed that pri-
vate water utilities charged residential households
over twice as much as municipal utilities (Beecher
& Kalmbach, 2011, pg. 14). The largest independ-
ent survey of community water systems revealed
that among the 500 largest in the United States
private utilities charged households 58% more
than local governments charged for drinking wa-
ter service (“The State of Public Water”, 2016). Pri-
“I would be wary of contracting
with any corporation that relies
on circumventing the public
voice with backdoor dealings to
expand its business”
— St. Louis Alderman, Christine
Ingrassia

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vate companies are driven by profit and therefore
not only increase prices for consumers but also look
to cut costs on their end. This leads to water quality
and service issues as has been demonstrated numer-
ous times by Aqua America. In Florida, Aqua Ameri-
ca provided drinking water to 60,000 people until the
public drove
them out in 2013
due to water
quality issues
which included
76 drinking water
quality violations
from 2007 to 2011.
According to
Kimberly Dis-
mukes of the
Florida Public
Service Commis-
sion, the custom-
ers complained
that the company’s water was smelly, discolored,
contaminated and undrinkable (“Aqua America”,
2014). This isn’t an isolated incident as multiple other
communities have taken back their water systems
from Aqua America.
Critique of Senate Bill 432 &
Water Privatization
Local governments need to remain in control of wa-
ter services as their decisions are made in the interest
of public health and wellbeing. Private corporations
operating water utilities are businesses that are ac-
countable first and foremost to their owners. It is this
discrepancy that creates variances in decisions re-
garding where to extend service, the price of the ser-
vice, and the quality of the service.
Senate Bill 432 explicitly sets out to remove the pub-
lic from the decision making process in the sale of a
public water source or service. Current law states
that a referendum is mandatory; however, the pro-
posed bill requires that in order for a referendum cit-
izens must submit a request and have 30 days to get
the signatures of 25 percent of the municipality’s vot-
ers (Wisconsin State Legislature). Similarly, the state
of New Jersey recently passed legislation seeking to
“authorize municipalities and municipal, county,
and regional utilities authorities to lease or sell their
water or wastewater assets to a private entity, with-
out any referendum.” Further details of the bill re-
quire the signatures of 15 percent of voters within 20
days in order to
consider a refer-
endum (New Jer-
sey State Assem-
bly). According
to a survey con-
ducted by the
U.S. EPA, New
Jersey is third
nationally in pri-
vate ownership
of community
water systems at
greater than 35%
(Figure 1). In or-
der for Wisconsin to continue its practice of munici-
pal water distribution, it is important that we reject
legislation that would expedite the sale of these pub-
lic sources and ensure that the public continue to
have a voice in the decision.
An example of the importance of public voice is rep-
resented by a case from Akron, Ohio in 2008. The
mayor introduced a proposal to lease the city’s sew-
ers to private interests. The combined efforts of
stakeholders opposed to this privatization took ad-
vantage of the referendum process by
“overwhelmingly supporting the public’s right to
have a voice in what happens to their utilities” and
voted against it by a margin of two to one (Lohan,
2008). In Wisconsin, the current law allows for a pri-
vate company to purchase municipal water systems
pending referendum (Murphy, 2016). There is no evi-
dence suggesting that this current law needs to
change. As we’ve discovered, it makes more sense
for the state to consider policy to limit privatization
or at least ensure that the appropriate stakeholders
are involved in decisions related to price and quality
should a for-profit corporation take over a municipal
system.

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Overview of Current & Alternative
Policy Options
Under current state law a referendum is mandatory.
There is no reason to amend this law as there hasn’t
been demand for it outside of the private corpora-
tions, lobbyists, and legislatures. Not one municipali-
ty was involved in the drafting of the bill nor have
any been identified as being in vital need of private
assistance (Murphy, 2016). In communities where
they are desperate for private assistance there is still
the opportunity for them to privatize their water up-
on positive results of a referendum. As the previous
examples show, it is important that this referendum
process remain the law so that the decisions aren’t
strictly made by vested interests without further in-
vestigation and voice from the municipality’s stake-
holders.
A second alternative is the introduction of a bill to set
measures explicitly prohibiting privatization. Ac-
cording to the WI AWWA Policy Watch, Sen. Chris
Larson and Rep. Amanda Stuck have begun circulat-
ing a memo that would “prohibit a town, village, or
city from selling or leasing to an investor-owned
public utility any plant or portion of a plant used to
provide water or sewer service” (Heyroth, 2016).
Such a proposal would affirm Wisconsin’s recogni-
tion of the importance of public control of municipal
water.
Ultimately, municipalities are pressured into selling
their utilities due to economic restrictions as private
industry promises greater private sector efficiency,
advanced and innovative technological solutions,
high-quality services, and private finance for infra-
structure development (Lobina, 2014). From 1977 to
2009 federal funding for water and sewer systems fell
by 75 percent (Barlow & Hauter, 2014). In order for
public utilities to remain as such, it is necessary that
national water policy be established which includes
increased funding for water and sewer systems as
well as considerations of alternative pricing models.
It is estimated that the United States will require at
least $1 trillion over the next 25 years if we are to
maintain current levels of water service (Cromwell,
Reynolds & Model). It is the responsibility of our
government to continue to maintain and operate our
public utilities in the best interest of its citizens.
Conclusion
Senate Bill 432 was introduced with the intent of
streamlining the process of water privatization and
encouraging more competition among private corpo-
rations with interest in privatizing Wisconsin water
(Murphy, 2016). The removal of the referendum pro-
cess would mean that the sale and all decisions rela-
tive to the sale (terms, price, etc.) would be made
without any voice from the public. As we demon-
strated from previous examples, the profit driven
motives of the private water servicers leads to dra-
matically increased pricing and decreased water
quality.
It’s important to emphasize that zero of the 582 Wis-
consin water utilities were involved in the drafting or
current support of the bill. This is a private corpora-
tion pushing its own agenda to make the route to wa-
ter privatization easier in the state of Wisconsin. The
state legislators must vote against SB 432 so that the
public remain involved in decisions regarding the
sale of public water systems. There are overwhelm-
ing inadequacies of many privately operated water
systems. Water is our most important public re-
source and is to be monitored and distributed by the
state in the best interest of its citizens. Considering
these things, legislators should look to create policy
that limits the ability of water privatization and in-
creases public funding for water systems in the state
of Wisconsin.

4. 4
References
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Figure 1. Private Ownership of Community Water Systems by Service Population. This figure was retrieved
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