A new obstacle arose this month on the path toward enacting a “Water Infrastructure Finance and Innovation Act” (WIFIA), when the Congressional Budget Office (CBO) estimated the program would reduce federal revenues by $135 million over the next ten years – thus requiring lawmakers to find an offset for those expenses.
CBO’s estimate came as part of its analysis of S. 601, a bill to reauthorize the Water Resources Development Act (WRDA) that won approval of the Senate Environment and Public Works Committee in March. Title X of the bill would establish two five-year WIFIA pilot programs run by the Army Corps and EPA, respectively, with each authorized to spend up to $50 million per year – though the government could leverage the funds to make more loan dollars available.
Under WIFIA, each agency could offer direct, low-interest loans for major water infrastructure projects expected to cost more than $20 million. AMWA supports the proposal, as it could supplement existing State Revolving Loan Funds that often do not make meaningful amounts of money available for large-scale drinking water projects.
According to the CBO report, because Title X would allow WIFIA loans to cover no more than 49 percent of a project’s total cost, CBO assumed that the remaining project costs would come from issuing new tax-exempt bonds – thereby reducing federal revenues by approximately $135 million over the next 10 years.
In order to keep the WIFIA proposal – and the overall WRDA bill – budget neutral, Senate staff are crafting language that would prohibit utilities from using any tax-exempt financing on projects funded by WIFIA. This would make the program unworkable for many utilities, but Senate staff have stressed that they view this provision as a temporary measure to facilitate WIFIA’s advancement through the Senate. In the coming months, if and when S. 601 advances to a House-Senate conference committee, Senate staff say they will work with AMWA and others to replace this language with a more workable solution.
The Senate had been expected to consider S. 601 before the end of April, but it now appears that the bill may go before the chamber sometime in May.