An April 9 report from the Congressional Budget Office (CBO) estimated a proposed “Water Infrastructure Finance and Innovation Act” (WIFIA) would cost the federal government $260 million over the next five years and reduce federal revenues by $135 million over the next ten – throwing a minor wrench into the proposal’s path forward.
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 last month. Most of the bill would authorize a range of U.S. Army Corps of Engineers projects ranging from levee building to harbor dredging to ecosystems restoration, but Title X of the bill would establish two five-year WIFIA pilot programs run by the Army Corps and EPA, respectively, with each authorized at $50 million per year. Under WIFIA, each agency could offer direct, low-interest loans for major water infrastructure projects expected to cost more than $20 million.
The CBO report projects the overall WRDA bill would cost the federal government $12.5 billion over the next decade, with the vast majority of spending going to Army Corps construction projects. Just $260 million – or two percent of the total cost of the bill – is represented by WIFIA. But because Title X would allow WIFIA loans to cover no more than 49 percent of a project’s total cost, CBO assumed the remaining project costs would come from “issuing additional tax-exempt bonds” – thereby reducing federal revenues by approximately $135 million over the next 10 years.
In order to keep the WIFIA proposal budget neutral, Senate staff are considering adding language that would prohibit utilities from using any tax-exempt financing on WIFIA projects. But because this would make the program unworkable for many utilities, Senate staff have pledged to work with AMWA and other WIFIA supporters to find an alternative solution before the bill becomes law. The ban on tax-exempt financing, therefore, would simply serve as a temporary edit that allows the bill to move through the Senate in compliance with budget rules, before being revised later.
As another solution to the budget scoring issue, AMWA has suggested senators strike the 49 percent cap on WIFIA project funding from the legislation. Senate staff have said they will examine this option going forward. S. 601 is expected to reach the Senate floor within the next few weeks, but will eventually have to be rectified with an as-yet-unwritten House WRDA bill.