New Jersey's Plan To Spend Federal Water Aid Leaves Thousands Without Relief, Critic Warns

By Dana DiFilippo, New Jersey Monitor

February 23, 2023

While hundreds of thousands of New Jerseyans owe millions in overdue water and sewer bills, state officials racing to beat a deadline to distribute federal assistance are giving more money to households that already got aid — including for future utility services they haven’t yet received.

The state Department of Community Affairs, which administers the federal Low Income Household Water Assistance Program, recently changed program rules to increase the amount of aid available to delinquent utility customers from $5,000 to $8,000.

The change came after federal authorities warned states slow to distribute the aid, like New Jersey, that they would soon redistribute funds to states like Pennsylvania that have already spent their allotment.

Officials will also now pay up to $4,000 toward future bills for households owing less than $2,000, and pay an unspecified “rate reduction” for the future bills of low-income households with no arrears, according to a Feb. 16 letter written by a DCA official to a lawmaker trying to facilitate aid distribution.

Under the new rules, state officials distributed about $6.1 million more in aid to about 3,400 households that already had received $3.3 million in aid, according to the letter, signed by Janel Winter, assistant commissioner for the Department of Community Affairs.

The federal Department of Health and Human Services, which oversees the program, approved the changes, Winter wrote.

The troubled program has been plagued by a slow rollout, uncooperative utilities, and a cumbersome application process, which together have hampered aid distribution. A utility must participate for its customers to receive aid, and just 136 of about 600 utilities statewide have signed agreements to participate, state officials say.

Advocates exasperated by the program’s many hiccups say the assistance was intended to provide debt relief, not cover future bills.

This kind of shortcut New Jersey is using to spend the money will result in a windfall for some families, while countless others in need get nothing, said Larry Levine of the Natural Resources Defense Council, which has lobbied lawmakers to establish a permanent water assistance program.

“This program was a COVID-relief program to help people avoid shut-offs and to avoid lien sales on their homes — people who could potentially lose their homes from having unpaid water bills,” Levine said. “If you take a huge chunk of that money and put it towards paying future bills for people who have already had their debt relieved, you’re leaving a lot of people out there at risk, contrary to the stated priorities and intention of the program.”

Ev Liebman, director of advocacy for AARP New Jersey, said the state and utilities must effectively communicate to low-income residents about the program and ensure it’s easy to apply for and open to all.

“We are not reaching all eligible residents who should have the right to participate in this program,” Liebman said. “That needs to change.”

Levine said he has urged state officials to pause distributing funds to households that already received help and instead help those that haven’t. He estimates more than 360,000 households statewide could owe as much as $200 million in water and sewer arrearages.

Lisa Ryan, a spokeswoman for the Department of Community Affairs, said the department has been marketing the Low Income Household Water Assistance Program and contacting utility customers with arrearages to tell them about it.

In response to Levine’s and Liebman’s concerns, she added that the program “benefits assist low-income households that are paying a high proportion of their income for drinking water and wastewater services. The additional funds are being provided to help these households maintain their water and sewer services.”

The state has until Sept. 30 to use up all of the $24 million it received from the feds in 2021 to erase residents’ water and sewer arrearages. With $3.6 million earmarked for administrative expenses, that leaves $11 million still unspent.

State officials must submit a spending plan for that remainder to federal authorities by early next month, or the feds will reclaim the money for reallocation.

Ryan said state officials aim to spend the rest by August and don’t expect to have to return funds.

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