Last month, four out of five finance officers told the National League of Cities they'll have a harder time balancing the budget next year than they did this year — which itself wasn't a walk in the park.

During past economic downturns, cities could use property tax revenues to offset lackluster sales and income-tax receipts. But in the wake of the housing market's largest decline since the Great Depression, values continue to adjust. Since taxes on this property won't be collected for 18 months, experts don't expect revenues to start inching up again until 2010.

In the meantime, let's look at the unfortunate impact of exotic loan instruments on the public sector. Like homeowners, some finance directors found Wall Street's debt-financing solutions too tempting to resist.

Some eschewed the fixed-rate loans that have historically made the municipal bond market a boring but reliable investment. Instead, they chose “buy now, pay later” variable-rate loans that are “insured” by credit default swaps, which — unlike regular insurance — aren't regulated and don't require issuers to set aside capital for potential losses. Municipal borrowing soared. According to Thomson Reuters, it more than doubled from $195 billion in 2000 to $425 billion last year.

Jefferson County, Ala., has become the poster child for what can go wrong when the engine driving all the speculation — the (unrealistic) assumption that housing prices will never stop going up, up, up — sputters and dies.

The county refinanced more than half the $3.2 billion it had borrowed to upgrade the sewer system serving its 11 cities with auction-rate securities, whose interest rates are regularly reset. When the credit rating of the county's debt insurers was lowered because of their investment in subprime mortgages, the county's credit rating fell as well. Interest payments soared. When the insurers sued the county for mismanaging its debt, the county sued them for failing to protect their client's financial interests. At press time, the city was considering filing for what would be the nation's largest municipal bankruptcy.

Not surprisingly, cities, counties, and states are holding off on issuing bonds now that tight credit is driving up interest rates. U.S. governments issued 35% less this September than in September 2007, the research firm Municipal Market Advisors reports.

Luckily, the federal government's attempts to stimulate the economy are injecting life into dormant programs.

President Bush's financial rescue plan includes full funding — $367 million — for the Payment in Lieu of Taxes program through 2012. The 60% increase is the highest ever for the program, which compensates local governments with large public land areas for lost property tax revenues.

The package also extends production tax credits for wind, solar, and geothermal projects; and includes incentives for energy-efficient buildings, electric cars, biofuels, and advanced coal projects.

And the Housing and Economic Recovery Act of 2008 provided $3.92 billion for the Neighborhood Stabilization Program, funded through the U.S. Department of Housing and Urban Development's Community Development Block Grant program.

Each state receives at least $19.6 million, and almost 100 counties and consolidated governments will receive direct funding allocations. Grantees have until Dec. 1 to explain how they'll spend the money, 18 months to obligate funds once they receive them, and four years to spend it all.

Michael Bloomberg

If it weren't for the economy, New York City's mayor would be gracing this month's cover. In addition to launching Building America's Future, a coalition of political heavy-hitters that's urging the federal government to spur economic growth through infrastructure investment, he's one of the nation's “green mayors.” He's pushing a citywide initiative to restore the city's water, sewer, and paved infrastructure while promising to improve service using a quantitative program called “MayorStat.” One initiative sends “scouts” into the field to find out how quickly potholes are repaired.

Theresa Bernhardt

Waging a 10-year campaign to remove 90,000 cubic yards of contaminated sediment from local waterways isn't enough for this Michigan resident. This year's EPA President's Volunteer Service Award recipient has now enlisted local students in efforts to continue restoring the Muskegon Lake Area of Concern.

Nicole Blute

The senior project engineer with Malcolm Pirnie Inc. is leading a Glendale, Calif., project that is the first of its kind to identify treatment technologies capable of removing cancer-causing hexavalent chromium to ultra-low concentrations. Glendale's groundwater supplies are in danger of rising chromium levels within the next few years due to the migration of groundwater plumes.

Boston's ‘Big Dig'

The Big Dig earns a berth on our list for the second consecutive year as a prime example of what's happening to the nation's — and the world's — financial markets, and why. Interest on debt Massachusetts assumed to finance the project brings its final price tag to $22 billion, according to a Boston Globe analysis, that won't be paid off until 2038. Even after raising tolls and cutting maintenance, the state spends 38% of its highway budget — compared to a national median of 6% — on debt payments.

Pam Broviak

The LaSalle, Ill., public works director and city engineer created the world's first virtual-reality public works resource center, demonstrating how the Internet-based world Second Life can be used as a learning and networking tool as well as a platform to test designs before implementing them in real life.


Prime Minister Stephen Harper launched the Government of Canada's unprecedented “Building Canada,” a $33 billion, seven-year plan that provides more funding for provincial, territorial, and municipal infrastructure and for a longer period of time than any Canadian federal program since World War II.

City Councils of Chicago and Washington, D.C.

Both city councils designated street sweepers as parking enforcers on street-sweeping routes last summer. Video cameras were mounted on select street sweepers to record license plate data from illegally parked vehicles through image verification.

Andres Clarens and Lisa Colosi

The environmental engineering professors at the University of Virginia hope to increase algae oil yields by feeding the algae extra carbon dioxide and organic material such as biosolids. If the project is successful, it could prove helpful removing nitrogen from wastewater.

Don Correll

The president and CEO of American Water took the company public in April, making it the largest investor-owned water and wastewater service provider in the country.

George Crombie and John Hughes

Vermont's secretary of the Agency of Natural Resources (Crombie) and University of Vermont's provost and senior V.P. (Hughes) are overseeing the Vermont Climate Collaborative to manage climate change through a “green” economy.

Suneet Dabke

The Indian biochemist used 300,000 hungry earthworms to remove four acres of toxic waste from contaminated soils. Soil tests show a 60% reduction of heavy metals.

Denver Water

In addition to serving up the tastiest water in Colorado, New Mexico, and Wyoming (according to the American Water Works Association), Colorado's largest and oldest public provider uses ozone rather than chlorine to disinfect water mains. Ozone takes 20 to 30 minutes to work and converts to oxygen within an hour vs. chlorine-based disinfection, a 24-hour process that requires dechlorination, which can take yet another 24 hours.

Easy money — the U.S. economy

If it looks too good to be true, it probably is. Even if PUBLIC WORKS editors were economists, we'd each have a different opinion about what's happened to the credit market. We do know, however, that lower-than-expected property tax revenues and much-higher-than-average fuel prices equal a bigger battle for readers at budget time.

Ecorse, Mich.

The FBI is investigating whether Ecorse's mayor, some city council members, and others violated federal law by eliminating the city's 60-member public works department and hiring a private company to do the same work for an allegedly higher rate of pay. The company employs the mayor's son and grandson as well as relatives and friends of some council members.

Chris Finberg

He helped establish a preventive maintenance program that reduces Las Vegas roadway lifecycle costs by 66%. The program's seven-year cycles save city dollars because contractors can bid on projects in a renewable fashion for long-term contracts, enabling them to offer volume discounts. Originally implemented for residential streets, this year marks the completion of the first cycle for arterial roadway systems.

Great Lakes Compact

Hands off, Southwest! And any other water-poor region eyeing one of the lakes, which contain 90% of North America's freshwater, as a new source of drinking water. Last month President Bush signed the compact into law, ending a decade of negotiations among eight states. The law bans new diversions of water while requiring each state to develop a conservation program.

Susan Hann

The driving force behind the American Public Works Association's Emerging Leaders Academy, launched last year to provide training and networking opportunities to potential leaders among employees with less than seven years experience. The program's inaugural Class of 2008 attended monthly conference calls, a two-day workshop, and a leadership track at the APWA 2008 Congress and Exposition.

Heritage Middle School, Westerville, Ohio

Thirteen-year-olds Glen Gainer, Emma Henderson, and Jeremy Boyd teamed with teacher Debra Pellington and volunteer mentor Ted Beidler, PE, from the Franklin County (Ohio) Engineering Department to create a SimCity 3000 model of a desert city that uses solar technology to produce drinking water and treat wastewater, earning their school first place at the 2008 National Engineers Week Future City Competition.

Kalamazoo College

Clocking a recycling rate of nearly 59%, the Michigan campus competed against 400 colleges and universities nationwide to win this year's “Grand Champion” bragging rights in the annual Recyclemania competition. (The “Grand Champion” in the partial campus division category is California State University in San Marcos, which recycled 76% of its waste stream.) Altogether, participating schools recovered more than 58 million pounds of recyclables and organics.

Hoover, Ala.

A local energy provider will use “gasification of wood waste” to convert the city's trees, limbs, and branches into ethanol. The city already converts used cooking oil into bio-diesel to fuel its fleet.

Todd Humphreys, Paul Kintner, Brent Ledvina, Brady O'Hanlon, and Mark Psiaki

The Virginia Tech and Cornell University researchers proved that GPS can be duped. They programmed a briefcase-sized receiver used in ionospheric research to send out fake signals. The phony receiver is placed near a navigation device to track, modify, and retransmit satellite constellation signals. Gradually, the “victim” navigation device would take the counterfeit navigation signals for the real thing. Though the researchers proved they can “spoof” receivers, as well as already established countermeasures, they are also confident they can help devise methods to guard against such attacks.

Sang-Soo Kim

Ohio University is licensing the associate professor of civil engineering's asphalt binder cracking device to test the durability of highway asphalt, which has so far produced more accurate, consistent results than conventional methods. The invention is the size and shape of a beverage coaster and contains a metal testing ring. Different types of asphalt are poured into the device, which is then placed in a cooling chamber. An off-the shelf computer program determines which types of pavement hold up to the stress of traffic and weather extremes.

Ken Kirk

The executive director of the National Association of Clean Water Agencies formed a nonprofit alliance to advance holistic, watershed-based approaches to water quality and quantity challenges. Launched in September, the Clean Water American Alliance includes more than 30 members from universities, private companies, regional organizations, and municipalities.

Samuel Lamerato

The fleet management superintendent for Troy, Mich., brings in an additional $500,000 by insourcing services through agreements with other cities. To add to this revenue base, in 2007 he launched a pilot program leasing his fleet vehicles to another city that brought in $6,000, and Lamerato expects leasing revenue to more than double.

Minnesota DOT

The department used the rebuilding of the I-35W bridge to restore public trust by making the entire process transparent. For details, see page 24.

Dalton McGuinty

Thanks to the premier of Ontario, Canada, provinces can spend an anticipated $1.1 billion in surpluses instead of returning the money to reduce the province's debt. Passed in May, the Investing in Ontario Act was motivated in part by a survey of executives who identified infrastructure repair as a top need.

Minnesota Chapter of the American Public Works Association

Upon its 2007 creation, the 10-person committee immediately went to work analyzing the cost-effectiveness and phosphorous-removal-effectiveness of stormwater best management practices (BMPs). Led by Michael Eastling, public works director for the city of Richfield, and Pete Willenbring, consulting engineer for WSB & Associates consultants, the study analyzed unknown and previously untested maintenance costs associated with a variety of BMPs, including rain gardens and stormwater treatment ponds.

Missouri DOT

The latest in a line of experiments include: testing soy- (instead of water-) based striping paint; posting You Tube videos that help the public visualize new transportation projects; and hosting its first online public meeting. Plus, other states are adopting, or considering adoption of, MoDOT's “Practical Design” cost-savings plan, which has saved the department more than $500 million over three years by customizing construction projects to fit specific needs rather than applying generic standards across the board.

Judith Mueller

Thanks to this public works director's 2003 draft of Charlottesville, N.C.'s first-ever Environmental Sustainability Policy, the city adopted the Charlottesville City Council Vision – 2025 last year, which describes Charlottesville as a “Green City,” complete with a vibrant urban forest, tree-lined streets, and lush green neighborhoods. Under Mueller's leadership, the Department of Public Works became the lead agency in driving environmental sustainability into every aspect of city government operations.

Heather Nachtmann

The director of the University of Arkansas-based Mack-Blackwell Rural Transportation Center and a team of researchers concluded that risk-based urban transportation assessments can't simply be applied for rural transportation assets. Her team provided rural networks with a tool to create risk assessments of their infrastructure assets.

Mary Peters

The U.S. Transportation Secretary and former director of the Arizona DOT receives the American Public Works Association's 2008 Presidential Leadership Award for being a “tireless advocate for the nation's infrastructure.”


As prices crept toward a record $147.27/barrel in August, asphalt and fuel costs took a bite out of operations budgets nationwide.

Residents of Cedar Rapids, Iowa

The second-snowiest winter gave way to an unusually rainy spring, setting the stage for the worst flooding in the city's history. More than 600 residents answered the city's televised pleas for help within 45 minutes. They lined up four deep and 100 yards long to place 10,000 sandbags and save the city's drinking water system.

Lance Santo

The Hawaii Agriculture Research Center agronomist is working with Air New Zealand and Boeing Co. to develop a strain of the jatropha tree that may lessen the airline industry's — and, presumably, the world's — dependence on crude oil. Used for years in South America for medicinal purposes, the jatropha tree produces golf-ball sized fruit whose oil may be used in standard diesel engines. The oil does not require processing and the tree, which grows in soil not suitable for most food crops, can survive droughts. The tree is being tested in Florida and Hawaii for its effectiveness as a viable alternative biofuel.

Sam Schwartz

Schwartz created (and currently heads), the New York City Bridge Centennial Commission. This commission, whose members include the New York City DOT Commissioner, promotes the value of civil engineering by publicizing New York's structural engineering accomplishments over the last century. In January, in conjunction with New York University, he gathered representatives of the U.S. presidential candidates to discuss transportation and infrastructure issues.

Elizabeth Royte

In Bottlemania: How Water Went on Sale and Why We Bought It, the author explores how bottled water became a $60 billion/year industry when public supplies are safe, less expensive, and far more environmentally friendly.

John Simpson

The Oak Ridge National Laboratory researcher developed a material that is easy to fabricate, uses inexpensive base materials, and can lead to the creation of a new class of water-repellant products, including windshields, eyewear, clothing, building materials, road surfaces, and self-cleaning coatings. The nano-structured glass powder coating causes water-based solutions to bounce off virtually any treated surface.

Peter Sellers

The public works director is reactivating Framingham, Mass.' standby groundwater sources for full-time use to minimize the town's reliance on wholesale drinking water. The resulting $1 million/year savings will support a long-term capital program to improve the town's sewer system. Construction began in October and the groundwater sources will be available within two years.

Sunil Sinha

The Virginia Tech associate professor in the Department of Civil and Environmental Engineering is leading an effort to develop a national database of underground water pipes. The Internet-based geospatial database would allow users to review interactive maps to monitor and maintain the existing system, creating a pipe condition index and condition model.

University of California, San Diego, undergrads

A group of undergraduate students designed, built, and deployed a network of five weather-monitoring stations to save energy. The stations helped locate the sunniest rooftops on which to expand the university's solar-electric system; determine when to open dampers and use cost-free ocean breezes to cool buildings; and measure soil moisture to activate irrigation sprinklers based on when athletic fields become dry rather than irrigating on a fixed schedule.

Tampa Bay Seawater Desalination Plant

After closing in 2005 due to design problems, the nation's largest seawater desalination plant is back on line, pumping up to 25 mgd. Through a public-private partnership, Tampa Bay Water enlisted American Water-Pridesa to lead the remediation, including redesigning the reverse osmosis membrane cleaning system; converting the dual-stage sand filtration system to single-stage; and adding diatomaceous earth filters, screens to remove incoming debris from source water, a variable-speed capability cooling water pump, rapid mixing of treatment chemicals, and conditioning prior to filtration.

The Associated Press

After five months of research, the news outlet's National Investigative Team announced that 41 million Americans are drinking water “contaminated” with the byproducts of medicines and other unregulated chemicals, prompting local media across the country to question how “safe” constituents' tap water is. A tricky PR gauntlet for public providers.

Transportation Research Board

In 2007 the board published “Guidelines for the Selection of Snow and Ice Control Materials to Mitigate Environmental Impacts” (NCHRP Report 577), which evaluates the effectiveness of 42 deicers. The report includes a free downloadable decision-making tool that allows managers to compare different purchasing and application scenarios by varying the “weight” of: cost, product performance, the effects on infrastructure, and the impact on the environment. To download the tool go to and perform a key word search for NCHRP Report 577.

U.S. Civilian Research & Development Foundation

To further reconstruction efforts in Iraq and to develop a mutually beneficial relationship between Iraqi and U.S. engineers, the U.S. Congress-authorized nonprofit organization selected five Iraqi engineers to intern with U.S. universities and private-sector engineering firms. They will return to Iraq and serve as liaisons between the two countries' governmental ministries, educational institutions, and engineering firms.

Susan Warner

If it can kill germs on surgical instruments, it can handle solid waste. That's the theory the diversion manager of the Salinas Valley Solid Waste Authority is testing with a 2-ton autoclave, which basically steam-cleans garbage. Because municipal solid waste is high in cellulose, she's sharing the results of the authority's first conversion-technology project with the U.S. Department of Agriculture, which is studying cellulose-to-ethanol conversion.

U.S. Congress

Republicans and Democrats reached across party lines to override President Bush's veto of the Water Resources Development Act of 2007. H.R. 1495 authorizes hundreds of water-resources and flood-control projects, including Everglades restoration in Florida and post-Katrina rebuilding efforts in Louisiana. It was the first veto override of the Bush administration, and the first water-resources bill to pass in seven years.

U.S. Geological Survey

USGS scientists completed one of the first nationwide studies of nitrate trends in groundwater, concluding that agricultural fertilizers have increased nitrate contamination.

Eric Wahlberg

The Brown and Caldwell project manager developed the Flocculated Suspended Solids (FSS) test, which has been adopted by the Water Environment Federation and the International Water Association; the Total Suspended Solids (TSSnon) test, which helps quantify optimal primary clarifier performance; and the Wahlometer, an apparatus and method for controlling and optimizing the performance of the activated sludge process by measuring parameters such as settling, compacting, and flocculating characteristics.

Washington State Pollution Control Hearings Board

In a landmark ruling that is expected to heavily affect stormwater control in western Washington, the board ordered the Ecology Department to require “low-impact development” building techniques (i.e., rain gardens and porous pavements) to control what scientists argue is the largest pollution threat to Puget Sound: rainwater runoff. In developing rural areas, the ruling is expected to eliminate the use of curbs and gutters in favor of low-impact stormwater BMPs such as street-side green spaces.

Amy Zander

The director of Clarkson University's Interdisciplinary Engineering and Management Program is reshaping the curricula to incorporate environmental considerations into decision-making. The program now prepares engineering students at the Potsdam, N.Y., campus to take into account social responsibility, corporate citizenship, and environmental consequences in business and technological decisions.

Source: Transportation Research Board