The House Transportation and Infrastructure Committee approved legislation yesterday that would provide $20 billion over five years for the clean water state revolving fund, but the measure may be in jeopardy because a provision was added making all funds spent on construction under the bill subject to the Davis-Bacon Act.
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The measure would be more than the $1.35 billion that Congress appropriated to the sewer grant SRF program in the current year.
Before approving the measure, the committee adopted an amendment offered by Rep. Sue W. Kelly, R-N.Y., that would require that Davis-Bacon -- a Depression-era labor law requiring payment of prevailing wages on most federally funded construction projects -- apply to all sewerage projects undertaken as a result of the bill.
But the Kelly amendment triggered some controversy when several members cautioned that the provision would require the labor law's wage requirements to apply both to the initial federal funds that are granted to the SRFs and to so-called recycled funds --money that is paid back into the SRF when the loans are paid off and loaned out again.
The clean water and drinking water SRF programs, which are initially funded each fiscal year with grants from the Environmental Protection Agency, provide low-interest loans to local governments and operators of sewer and water facilities to build and maintain infrastructure. The programs have become a major source of water infrastructure financing and several states have leveraged their programs by issuing bonds -- a move that allows them to get more funds immediately. Bond issuance also sometimes covers the funds states are required to match. Those must total at least 20% of the federal contribution.
The Davis-Bacon Act currently does not apply to any clean water SRF funds because Congress allowed the authorization for the SRF program to expire at the end of fiscal 1994. Before that, the wage law's requirements applied only to construction work done with initial Environmental Protection Agency capitalization grants, but not to recycled funds.
Some panel members voted to change the Kelly amendment to specify that the labor law would only apply to the federal funds, but the initiative was defeated.
"My amendment simply takes the Kelly amendment back to the 1994 language on Davis-Bacon," said Rep. Michael J. Rogers, R-Mich., whose amendment failed. "I think this is a common-sense amendment that we can work together on; that will allow this bill to pass ... If we pass the Kelly amendment, this bill comes to a screeching halt."
However, committee chairman Don Young, R-Alaska, who supports the bill, said he would be "surprised" if the Kelly amendment kills the bill. "It's a long way to finalization; the Senate has introduced a very similar bill ... but we expect to get this bill to the House floor and into conference sooner or later this year." However, the bill is likely to face opposition from the Bush administration, which has said it will not support more than its $1.21 billion request in the fiscal 2003 budget because it has dedicated funding increases to homeland security.
In addition, the House bill would grant bonds issued for the clean water and drinking water SRF program complete relief from arbitrage rules, and exempt private-activity bonds used to finance the construction of clean water and drinking water projects from the state private-activity bond volume cap. The Committee has no jurisdiction regarding these tax provisions and has referred to the House Ways and Means Committee.
The pending Senate measure, introduced Feb. 15 by Environment and Public Works chairman James M. Jeffords, I-Vt., does not deal with the Davis-Bacon issue. The measure would provide $20 billion for the clean water SRF over five years and, unlike the House bill, would also provide $15 billion over five years to the drinking water SRF. The Senate bill has no tax provisions.
