House Democrats support enhanced bonding to pursue environmental justice

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Ways and Means Committee Chairman Richard Neal, D-Mass., wrote in the introduction to the 11-page framework that he made it a committee priority in the last Congress “to explore the causes of our nation’s economic and health inequities.”

House Democrats want to enhance federal bond financing incentives for state and local governments as part of their environmental justice agenda.

That’s part of a policy paper released Monday by Ways and Means Democrats called "A Bold Vision for a Legislative Path Toward Health and Economic Equity."

The paper supports “enhanced bond financing incentives that can be used to improve water quality and reduce other environmental stressors.”

The paper doesn’t mention specific programs or tax changes that would be pursued.

Ways and Means Committee Chairman Richard Neal, D-Mass., wrote in the introduction to the 11-page framework that he made it a committee priority in the last Congress “to explore the causes of our nation’s economic and health inequities.”

The paper lists tax policy changes to benefit individuals, to improve the delivery of health services, to strengthen the federal partnership with local governments, and to pursue environmental justice.

“Our country leads the world in scientific, medical, and technological innovations, yet Americans – especially those from communities of color – live shorter and less healthy lives compared to people in every other wealthy democracy,” Neal wrote.

“There is no silver bullet to correct the inequities that are 400 years in the making and deeply ingrained in our systems, institutions, and laws,” he said, adding that “some actions we can pursue almost immediately.”

For individuals, the policy priorities include increasing the Earned Income Tax Credit for childless workers, reducing the minimum age of EITC eligibility to 19 from 25, extending the EITC to U.S. possessions, making the Child Tax Credit fully refundable, and creating child savings accounts.

For local governments, the priorities include funding county social services and community investment strategies, and making partnerships with community organizations and leaders a condition of federal grants. Other actions would increase funding for programs that serve disadvantaged communities, increase the supply of affordable housing through the Low-Income Housing Tax Credit and “provide deeper targeting of the Low-Income Housing Tax Credit to those with extremely low incomes.”

The environmental justice section, however, is somewhat vague other than the mention of enhanced bond financing.

At the National Resources Defense Council, an environmental advocacy group, spokesman Mark Drajem said the staff “say they were unaware of this issue and they cannot suss out what it means from the description given.”

Likewise, Tommy Holmes, legislative director for the American Water Works Association, said his organization has “not been in conversation with the Ways and Means Committee on this, so I am not sure whether they are describing a new bond instrument or putting more money into existing programs such as WIFIA.”

The Water Infrastructure Finance and Innovation Act of 2014 (WIFIA) established the highly popular WIFIA program, a federal credit program administered by the Environmental Protection Agency for eligible water and wastewater infrastructure projects.

In fiscal 2020 WIFIA supported over $12 billion in infrastructure investments for 55 loans totaling $5.1 billion ranging from $5 million to $404 million, according to EPA.

“Whatever they are working on, I hope Congress gives strong consideration to putting more money into WIFIA,” Holmes said. “It’s a program that is growing in popularity and doing lots of good for environmental and public health.”

Holmes also suggested that AWWA would support “lifting the annual volume caps for private activity bonds for water infrastructure projects.”

“However, the heart of federal support for water infrastructure investment would remain WIFIA, the SRFs, and protecting the tax-exempt nature of municipal bonds,” Holmes said.

The National Resources Defense Council and other advocacy groups have said in the past that states could address a significant part of the nation’s unmet water infrastructure funding gap by issuing bonds and loan guarantees through State Revolving Funds.

States are required to provide a 20% match to their federal grants to their SRFs, but can also issue bonds backed by the capitalization of the SRFs. A 2018 report by NRDC identified 22 states as failing to use bonding to boost the amount of money in their SRF.

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Muni tax exemption Water bonds Infrastructure Tax State and local finance Washington DC Bonds: environmental facilities