Realtors told George Mansfield and Kazumi Tanaka they were the kind of people Beacon wanted -- sculptors from New York who have since transformed a rundown brick apartment building into a stylish flat and rental apartment.

For five years, having a small community of artists and easy access to jobs in New York have made Beacon a good fit for the Brooklynites.

Except, that is, when it rains.

Heavy rains make sewage from the city's century-old pipes bubble out of nearby manholes, flowing into the street, nearby yards and the Fishkill Creek that flows past their home and winds to the Hudson River.

In January, sewage poured through the walls and flowed knee-deep into their basement and an addition that is a few months from becoming the couple's studio. It flowed out of drains into their tenant's first-floor apartment. They have spent $1,000 already, and estimate it could cost another $3,000 to finish cleaning up -- all of which they expect the city to reimburse.

"We were blessed to get this place," Mansfield said. "Now, we're fighting to keep it from being washed away."

In 1981, the federal government recognized problems like these were only going to grow more common in older communities as sewage systems age. Similar problems have occurred in New Paltz, Poughkeepsie, Kingston and elsewhere in recent years. With an amendment to the Clean Water Act, Congress set up the State Water Pollution Control Revolving Fund to give communities low- interest loans to upgrade their sewage systems.

In January, President Bush proposed cutting the budget for the program by a third -- from $1.09 billion to $730 million. Last year, the budget was cut by $250 million.

The proposed cut comes only months after the EPA identified a national need for between $331 billion and $450 billion over 20 years to upgrade the nation's sewage infrastructure.

Sewage flowing into basements is an obvious problem. Sewage flowing into streams can also increase the chance of waterborne illness for swimmers, anglers and kids who play in the water. It can poison aquatic life.

Outdated sewage systems also affect business, said Michael Di Tullo, president of Mid Hudson Pattern for Progress, a regional planning group. Good central water and sewer systems attract business to established cities and villages, where environmentalists and planners agree new development should take place. Without good infrastructure in cities, open land in the countryside is more attractive, he said.

"From a business perspective, and this is very much related to the environment, there is no way you can have smart growth -- that is, growth directed into high density areas -- without infrastructure," DiTullo said. "Without resources, we will continue to see sprawl, we will continue to see development out in the rural areas where land is cheaper, and not around existing centers."

Payouts less than requested

A study by Mid-Hudson Pattern for Progress revealed in 2004, communities in six Hudson Valley counties requested $903.2 million more than was paid out by the federal revolving fund loan program, which is administered by the state Environmental Facilities Corporation. Total requests exceeded $1 billion, and only 12 percent of funding requests were granted in 2004, according to the report.

"We think the federal government is going in the wrong direction with this," DiTullo said.

Environmental groups and a coalition of municipal sewage plant operators also decried the cuts. The Association of Metropolitan Sewerage Agencies has urged Congress not only to restore the proposed cuts, but also to set up a trust fund for sewage infrastructure projects.

Two local officials facing significant sewer upgrade projects said the loan program is not generous enough to be critical to their work.

Beacon plans to apply for one of the loans to help it pay for upgrades to its sewage system that should correct the overflows near Mansfield and Tanaka's home. Now, storm drains are connected to the sewer, allowing water to overwhelm the system and cause overflows during rain storms. The project will separate the rain water and sewage pipes.

Over 20 years, the loan could save 1 percent of the $1.7 million cost of the project, City Administrator Joe Braun estimated. While helpful, that isn't enough to affect the city's decision to take on this, or any other project, Braun said.

"If it's worth doing, we would do it in any case," he said.

This year, the Village of Fishkill plans to rebuild and increase the capacity of the sewer treatment plant it built more than 30 years ago. It has saved about half the total cost -- between $2 million and $3 million -- and will apply for grants, take out bonds or apply for low-interest loans to cover the balance.

Low interest rates help

The loan program is not as attractive an option now, given that interest rates are so low, Mayor James Miccio said. And the loans aren't the only option.

"There are grants still out there, even with the budget cuts," Miccio said. "There's still a lot of money out there to be had."

Environmental groups are concerned not only about the proposed budget cut, but an EPA proposal to allow sewage treatment plants to blend and discharge untreated sewage with treated sewage during heavy rains. This practice already happens, but environmental groups say instead of sanctioning it, the EPA should require plants to upgrade.

On the Hudson River, environmental groups say the lack of funding and the blending rule could make it more difficult to reach Gov. George Pataki's goal of making the entire Hudson River safe for swimming by 2009 -- the 400th anniversary of explorer Henry Hudson's voyage up the river.

Sewage poses health risk

"Certainly it's diluted, but raw sewage even in a diluted form poses a public health and environmental risk," said Rich Schiafo, a project manager for Poughkeepsie-based Scenic Hudson. "Just because it's happening now, it's not appropriate to stamp it as OK. We should recognize it is happening now, but provide the appropriate funding to take care of the problem."

For Mansfield and Tanaka, the immediate concern is preventing sewage from ruining their investment and quality of life. But the role of federal government spending on the project goes beyond the stink of sewage and to the heart of the community they live in.

The city has acknowledged problems like the ones Mansfield and Tanaka have seen are present throughout the city, and that it will take many years and dollars to fix them all. Mansfield and Tanaka don't want to see the burden of those fixes fall solely on local taxpayers at a time when new development and wealth is already transforming the community.

In the five years Mansfield and Tanaka have lived in Beacon, prices have jumped so much that their other artist friends have been priced out, and they've seen longtime residents squeezed as well.

"I don't think people should be forced out because they can't afford to live here," Mansfield said.