Anchorage — The Department of Environmental Conservation’s Village Safe Water (VSW) program told the House Finance Committee on Feb. 14 that recent federal infrastructure dollars have increased funding available for rural water and sanitation, but that construction costs, supply chain issues and long‑term operations and maintenance needs mean the program remains far behind total need.

VSW Director Jean McCabe and Facilities Programs Manager Carrie Bohan described how funding flows to Alaska communities through two main channels — VSW/USDA/EPA capital grants requiring state match and Indian Health Service (IHS) funding guided by the Sanitation Deficiency System (SDS) database — and said that IIJA/IIJA‑era appropriations routed through IHS have driven a large spike in available dollars over the last two years.

The nut graf: Program staff stressed that while available capital has increased, construction in Alaska is expensive: VSW said an average first‑time piped connection costs roughly $1.35 million per home, projects can run from $500,000 to $4 million per home depending on site complexity, and a recent extreme planning estimate for the village of Alatna suggested about $25.5 million to serve seven homes — an example lawmakers asked VSW to document offline.

How VSW works and funding channels

Bohan and McCabe explained VSW funds planning, design and construction for water, wastewater and solid‑waste systems in mostly small rural communities (statutory eligibility typically caps at population <1,000 for villages). VSW manages a capital improvement process and coordinates closely with partners — the Alaska Native Tribal Health Consortium (ANTHC), Indian Health Service, USDA Rural Development, EPA and the Denali Commission — delivering planning support, design review and project oversight.

IHS’s Sanitation Deficiency System and IIJA

McCabe said the SDS database (managed by Indian Health Service and populated by field engineers and tribal partners) underpinned the $2.1 billion figure cited when IIJA funding was allocated to Alaska sanitation projects; she noted that cost estimates and project lists have changed since that database was compiled and that inflation and expanding needs mean that the original $2.1 billion does not reflect current program shortfalls.

Project scale, timelines and costs

VSW said a typical piped‑service project averages about $1.35 million per home connected and that projects commonly take five years from planning through construction. McCabe and Bohan noted projects can last longer when funding gaps appear during a multi‑year build sequence. The program reported many communities have projects in the pipeline and that officials prioritize projects through annual application cycles and multi‑agency review committees that examine technical, permitting and financial viability before committing construction funds.

Sustainability and operations & maintenance concerns

Committee members repeatedly raised long‑term sustainability concerns. Bohan said VSW now requests sustainability planning in advance of construction so communities and partners can assess whether user rates and local capacity will sustain O&M and eventual capital reinvestment. She noted Indian Health Service historically has limited authority or appropriations for operations and maintenance and said there are ongoing discussions at the federal level about whether and how O&M support could be provided for IIJA projects.

State revolving fund and PFAS loan forgiveness

VSW staff also described the state revolving fund (SRF) low‑interest loan program, which has funds available and has been modified to include fully forgiven loans for emergency mitigation of emerging contaminants (PFAS) in eligible systems; program staff said they are reaching out to communities they believe qualify for that funding.

Ending

VSW staff said the program is adapting procurement, modular construction and multi‑partner review to shorten on‑site time and improve project success, but that availability of experienced engineers, Build America/Buy America rules, and Alaska logistics continue to drive cost and schedule risks. They asked legislators to note that funding is larger than before but that needs and costs keep rising.

Development of costs and project examples were provided to the committee and VSW agreed to give follow‑up documentation, including the Alatna planning estimate and contractor/contracting records, at the committee’s request.