A six-year transportation policy bill in line for a Senate vote before the end of July would reverse a problematic feature of the Water Infrastructure Finance and Innovation Act (WIFIA) that bars communities from funding projects through a combination of tax-exempt debt and WIFIA loan funds.
The legislation, the “Developing a Reliable and Innovative Vision for the Economy (DRIVE) Act” (H.R. 22) combines several transportation policy bills written by a handful of Senate committees in recent months. The portion written by the Environment and Public Works (EPW) Committee (originally introduced as S. 1647) includes language to permanently strike from the WIFIA statute a provision that bars WIFIA-funded projects from also receiving funding from sources funded through tax-exempt debt. As it currently stands, this provision prevents communities from issuing tax-exempt municipal bonds to pay for portions of a project not funded through WIFIA loan proceeds.
Congress enacted WIFIA in 2014, but limited the program to only financing up to 49 percent of a project’s total cost. Congress also barred the use of tax-exempt debt to fund the remainder of project costs – a provision inserted to make WIFIA budget-neutral in the eyes of the Congressional Budget Office. However, AMWA and others have warned that an inability of communities to pay for project costs not covered by WIFIA would make it difficult for many municipalities to take advantage of WIFIA loans.
AMWA and other WIFIA supporters in the water sector wrote to EPW Committee leaders on July 8 to thank them for acting on this issue, and to pledge continued efforts to enact the fix into law. A subsequent report from the Congressional Budget Office estimated the WIFIA fix to cost the federal government $17 million over ten years – a sum that would be offset through other sections of the overall transportation bill.
But while the inclusion of the WIFIA language in H.R. 22 is a major step forward, a permanent fix to the municipal bond restriction still appears to be several months away. House of Representatives leaders have balked at voting on H.R. 22 before the end of July, and instead the chamber has passed a five-month extension of current highway policy (H.R. 3038) that does not include any WIFIA language. The short-term bill would allow Congress to revisit the DRIVE Act in the fall after lawmakers return from the month-long August recess, so a resolution of the WIFIA issue could come at that point.