Small Town Arkansas Just Got Hit With a Big Bill
Bentonville, Arkansas. (Source: Google Maps.)
Residents of Bentonville, Arkansas — home to Walmart’s headquarters — were hit with unwelcome news on March 11: Their water bills will double starting as soon as April 14. City council members who voted for the rate hike argue that it is necessary to cover rising operating costs, reduce water loss, and fund future infrastructure projects.
Some residents, however, are frustrated by who’s footing the bill. “How about the Waltons pay for that? Seems they can ‘fix’ just about everything else,” one local wrote on Facebook, referencing the billionaire family behind Walmart. “Now, like always, the people will pay for it.”
According to the consulting firm that recommended the 100% increase, this isn’t the first time water rates have been adjusted in Bentonville. The city previously approved a 4% water rate hike in 2021 and wastewater rate increases of 5% in both 2023 and 2024 — also on the firm’s advice. But those modest adjustments have failed to keep pace with the city’s failing infrastructure. Water loss has surged from Bentonville’s historical average of 30% to over 50%, far exceeding the national average of 14%, according to city-provided data.
A representative from the firm asserted that the most effective way for Bentonville to cut operating costs for its water system is to reduce leaks. By addressing this issue, he argued, the city could free up funds to invest in long-term infrastructure needs — potentially allowing for future adjustments to water rates.
Is It Just a Leak?
For Strong Towns’ Chief Technical Advisor Edward Erfurt, the numbers are decidedly absurd. “The system is producing nearly 20 million gallons per day, and half — 50% leakage — is not generating revenue,” he noted. “If this was a broken pipe, Bentonville would have a new lake or giant sinkhole somewhere.”
To put that loss into perspective, 10 million gallons would fill approximately 15 Olympic-sized swimming pools. It could also supply about 33,300 households with water for a full day — yet in Bentonville, it’s vanishing without generating a cent of revenue. “My assumption is that this isn’t just a broken pipe, but a result of expansive growth — the system is not that old,” Erfurt added. In other words, the water leaks are a symptom of a larger problem.
Bentonville’s population exploded by 75% between 1990 and 2000, only to be outpaced by the following decade’s 79% increase. By 2024, the city had reached 61,020 residents. “My suspicion is that the system grew so fast, the utility provider couldn’t keep up with management and maintenance of the system,” Erfurt explained. “New households would result in the construction of new pipes, expanding the system. If your system grew by 50% or 75% per year, I do not think you could keep up.”
To be clear, the issue isn’t that Bentonville has welcomed new residents over the past 30 years — it’s how that growth has been accommodated. The relentless outward expansion of the city has stretched public resources to a breaking point, and now residents are footing the bill. This is what Strong Towns refers to as the Growth Ponzi Scheme.
The Growth Ponzi Scheme is the financial model many cities follow, where short-term revenue from new development masks long-term infrastructure liabilities. Cities encourage expansion — building new subdivisions, big box stores, industrial parks, roads and so on — because it generates immediate tax revenue and impact fees. This makes the local government appear financially successful in the short term. In order to support this new growth, cities take on long-term obligations: building roads, sewer systems, water lines and other infrastructure. While developers may pay for the initial construction, the city is usually responsible for maintaining and eventually replacing this infrastructure — costs that don’t show up immediately but grow over time.
The problem emerges when the infrastructure ages and needs maintenance or replacement. When those bills come due, cities often approve even more new development to generate fresh revenue, repeating the cycle — just like a Ponzi scheme.
Eventually, however, the costs catch up. The city cannot expand fast enough to keep paying for aging infrastructure, leading to higher taxes, budget deficits, service cuts and sometimes even bankruptcy. That’s what is likely happening to Bentonville. Though, it’s hardly the only city finding itself on the scarier slope of the cycle.
Ten years ago, the then City-Parish President of Lafayette, Louisiana, began questioning why a city widely regarded as fiscally prudent was on a path toward bankruptcy. No matter how much taxes were raised, they couldn’t keep pace with Lafayette’s ever-growing infrastructure obligations. In fact, local taxes would have needed to increase by over 500% just to keep the city financially afloat — an impossible burden for the median Lafayette family. Even then, the costs would only continue to rise with every new road built, every expansion project and every unforeseen expense. In reality, there was no feasible way to raise enough money to cover the mounting liabilities.
Green is cash flow positive and red is cash flow negative. The pattern is clear — Lafayette’s urban core (generally green) is financially productive, while suburban-style development (red) drains public resources to varying degrees.
“The story of Lafayette is the story of America,” Strong Towns founder Charles Marohn noted when he wrote about the city in 2015. “They’ve just had the courage and foresight to ask a more sophisticated set of questions.”
Today, Bentonville is in “emergency mode,” Marohn notes, but the city’s historical 30% water loss — double the national average — should have been a red flag long before it climbed past 50%. Instead of simply raising rates to cover past neglect, Bentonville should take this opportunity to reevaluate its approach to infrastructure investment, ensuring that today’s “fixes” don’t become tomorrow’s burdens.
Is your city constantly raising taxes but still falling behind on infrastructure maintenance? If so, it might be caught in the Growth Ponzi Scheme. To learn more, check out this page or watch the video below.
Asia (pronounced “ah-sha”) Mieleszko serves as a Staff Writer for Strong Towns. A dilettante urbanist since adolescence, she's excited to convert a lifetime of ad-hoc volunteerism into a career. Her unconventional background includes directing a Ukrainian folk choir, pioneering synaesthetic performances, photographing festivals, designing websites, teaching, and ghostwriting. She can be found wherever Wi-Fi is reliable, typically along Amtrak's Northeast Corridor.