WASHINGTON – Increased federal funding is needed to help state and local governments improve water and wastewater systems Senate committee members agreed during a hearing on Thursday.
The hearing, called "The Federal Role in Keeping Water and Wastewater Infrastructure Affordable," was held by the Senate Committee on Environment and Public Works as the basis for legislation to address water and wastewater infrastructure issues.
Committee chair Sen. James Inhofe, R-Okla., said the legislation could come as soon as the end of April.
"This hearing is laying the foundation for legislation on water and wastewater infrastructure, which I hope to be ready to move at the same time as we move our Water Resources Development Act legislation later this month," he said.
Concerns over aging national infrastructure and recent water crises, including that of Flint, Mich., have led lawmakers to explore a variety of options to finance water and wastewater systems. Proposals include increasing funding for the state revolving fund programs under the Clean Water Act and the Safe Drinking Water Act; the development of a large Water Infrastructure Finance and Innovation Act program, a federal water infrastructure trust fund, and a national infrastructure bank. Also under consideration is the lifting of restrictions on private-activity bonds so they could be used by states to finance privately owned water infrastructure. These options would help close the gap between available funds and proposed local needs, committee members and witnesses said.
President Obama's fiscal 2017 budget request proposes $3.1 billion through 2020 and $7.7 billion through 2025, for "water, sewage and hazardous waste disposal facilities," according to the Office of Management and Budget.
During the hearing, Sen. Barbara Boxer, D-Calif., the ranking minority member of the committee, said federal funding should be used to assist local governments with water infrastructure.
"We spent $2 trillion on the war in Iraq. I care about this country," Boxer said. "To say we can't afford it? Baloney. We could afford the war so we can afford this."
Inhofe said the Environmental Protection Agency has estimated $384 billion in drinking water needs and $271 billion in wastewater needs over the next two decades.
"The Joint Tax Committee assumes that these programs increase the use of tax-exempt bonds, creating a loss to the Treasury that we need to offset," he said. "This is actually a barrier to increasing funding authority for the SRF loan programs and WIFIA."
Inhofe said in February that the committee is back on schedule to pass a WRDA bill every two years. The last one was passed in June 2014.
The Senator from Oklahoma said he supports the clean water and drinking water state revolving loan funds, which President Obama proposed cutting by $414 million and increasing by $197 million, respectively, in his proposed fiscal 2017 budget. The clean water and drinking water SRF programs provide grants to states, which the states then match at least by 20%. The SRF programs are administered by the EPA, but are implemented by the states.
Inhofe also said he supports private investment in water and wastewater infrastructure, which Joe Gysel, president of EPCOR Water, Inc. and representing the National Association of Water Companies, later emphasized because of the significant financial capacity of the private sector.
"WIFIA loans provide only 49% of project costs so where does the funding come form if the remaining 51% cannot be raised through municipal bonds?" Inhofe asked the panel of witnesses.
Gysel recommended not only allowing further private investment, but also clarifying the federal tax code to facilitate P3s, expanding state revolving funds and fully implementing WIFIA, which was introduced as a pilot program in 2014 to provide low cost loans.
Perhaps no panel member was more adamant about supporting WIFIA than Aurel Arndt, the former chief executive officer of the Lehigh County, Pa., Authority who was testifying on behalf of the American Water Works Association, which represents roughly 50,000 water professionals.
Arndt stressed the four areas where he said the federal government plays a role: issuing tax-exempt bonds, WIFIA, state revolving funds and private-activity bonds. Tax-exempt bonds account for roughly 75-80% of annual investment in water funding, and are used by 70% of utilities across the country, he said.
As estimates predict that investment in water infrastructure could triple or quadruple by 2040, Arndt said munis will become even more vital.
"We need billions of dollars annually and we need lenders to provide those billions," Arndt said. "If we take away this financing, then the cost of capital and rates to customers will rise to unprecedented levels – particularly for older systems."
Bipartisan legislation proposed in February by Sens. Inhofe and Debbie Stabenow, D-Mich., would provide $220 million of federal funds to Flint, which has faced a lead contamination crisis in its water supply since April 2014.
The proposed bill for Flint would provide $70 million to back secured loans made under WIFIA, which leverages federal investments on a basis of up to 60 to 1. The federal funds would help local governments, which Inhofe said have invested more than $2 trillion in water and sewer infrastructure through 2013, including $117 billion that year alone.
Boxer, who co-sponsored the Flint bill, said federal funding is available and should be allocated to state revolving funds and WIFIA to target areas those most in need. WRDA, Boxer said, will help address what she called the "aging' water and wastewater infrastructure.
Others who testified during the hearing were David Berger, mayor of Lima, Ohio on behalf of the U.S. Conference of Mayors; Rudolph Chow, director of Baltimore Public Works; Robert Moore, general manager of the Marshall County (Okla.) Water Corporation on behalf of the National Rural Water Association; and Erik Olson, director of the health program at the Natural Resources Defense Council.
Inhofe said taxpayers are paying higher bills as federal mandates multiply, which harm those most in rural and low-income areas, a sentiment Moore agreed with.
