On February 18th, the Congressional Research Service (CRS) released a report discussing six policy options for addressing the financing needs of local wastewater and drinking water infrastructure projects. These policy options are intended to reverse the growing gap between available financing tools and project needs by creating new or more effective financing mechanisms. The report supports the same priorities and the same objective the CWC has been advocating since inception: that there is a growing need to address America’s water infrastructure.
We bring you today’s post in an attempt to provide viable options that will make a meaningful impact on our infrastructure. In the weeks to come, you will read about water infrastructure failures from several states who have elected officials sitting on the House and Senate Appropriations Committees. These committees are responsible for developing the specific funding levels for the federal government, specifically EPA’s State Revolving Fund program, which (as you will read below) CRS suggests should be funded at higher levels. As Congress begins formulating the federal budget, CWC intends to showcase how the current approach to financing infrastructure is insufficient. Increasing funding for the State Revolving Funds (SRFs), and the other policy options CRS suggests, would measurably benefit every American by ensuring access to clean and reliable water, creating jobs, strengthening the economy, and protecting America’s health and safety. We hope that by highlighting infrastructure needs in Appropriations Committee members’ back yards, we will ensure that they will no longer be able to continue turning a blind eye to the infrastructure needs of the country.
The CRS Report suggests:
. Increasing funding for the SRF programs in the Clean Water Act and the Safe Drinking Water Act. The SRF programs, which formulaically distribute appropriate dollars to states for low-interest loans and grants for water infrastructure projects, are the primary source of federal funding for water infrastructure improvements.
. Moving ahead with the Water Infrastructure Finance and Innovation Act (WIFIA) which was authorized in 2014. The WIFIA pilot program is authorized to grant secured loans or loan guarantees for drinking water and wastewater projects as well as water resource projects. We have closely monitored the flow of funds under WIFIA and will continue to do so. We were successful, for example, in our lobbying for a repeal of the ban on using tax-exempt bonds to finance WIFIA projects, as Congress included in the recently passed transportation funding law a provision lifting that ban, releasing the flow of critically needed federal funds for infrastructure projects.
. Creating a federal water infrastructure trust fund/establishing a national infrastructure bank. The trust fund discussed in the CRS report would be modeled after the highway trust fund, and would have the advantage of not being subject to annual appropriations as the SRF programs are; rather, it would be supported by dedicated revenues designed to provide sustainable and long-term financing. The national infrastructure bank would be set up by the federal government to provide credit assistance, including low interest rates and long maturities, thereby encouraging investment in large, expensive infrastructure projects that might otherwise not take place.
. Lifting private activity bond (PAB) restrictions on water infrastructure projects. Currently, the IRS restricts the amount, in dollars, of private activity bonds a state may utilize. This requires water projects to compete with more visible, more politically appealing projects. If the volume cap were to be lifted for water and wastewater projects, PABs could be more readily used to finance infrastructure.
. Reinstating authority for the issuance of Build America Bonds (BABs). These financing mechanisms are taxable bonds in which the U.S. Treasury subsidizes the interest costs to the issuer (a state or local government), thereby helping finance capital projects with lower borrowing costs. The authority to issue BABs expired in 2010.
The Clean Water Council has a long history of supporting each of CRS’s proposed policy changes. We have lobbied and taken action in support of each of these policy shifts and will continue to do so. Over the next couple of months, we will take targeted looks at specific Congressional districts in pursuit of increasing the SRF appropriation. We intend to illustrate how funding sources such as SRFs have a direct, positive impact on residents’ lives and how funding shortages threaten those peoples’ health, security and livelihoods.