This week the U.S. Senate is expected to begin consideration of S. 601, the Water Resources Development Act of 2013, a measure that includes an AMWA-backed Water Infrastructure Finance and Innovation Act (WIFIA) pilot program to help fund large-scale water infrastructure projects.
As approved by the Senate Environment and Public Works (EPW) Committee in March, Title X of S. 601 would establish a five-year WIFIA pilot program that will allow the Army Corps of Engineers and EPA to offer low-interest loans for major water infrastructure projects expected to cost more than $20 million. WIFIA would not replace the existing State Revolving Fund (SRF) programs, but would offer low-cost financing to large-scale projects that may not be good candidates for SRF assistance.
This WIFIA framework is expected to remain intact as S. 601 moves through the Senate, but a complication arising from a cost estimate developed by the Congressional Budget Office (CBO) will require one amendment to the proposal. The CBO predicted WIFIA will lead to increased usage of tax-exempt bonds to supplement the program’s financing – which would then reduce federal revenues and add to the budget deficit. In order to keep WIFIA budget-neutral and facilitate its passage through the Senate, lawmakers will insert language to block the use of any tax-exempt bonds on projects financed in part by WIFIA.
WIFIA supporters have warned that this change would make the program unworkable for many water systems, but Senate staffers have assured AMWA this language represents only a temporary revision, and lawmakers will develop an alternate means of offsetting the projected federal revenue loss before S. 601 is enacted. Therefore, any WIFIA program that becomes law is expected to ultimately allow the use of tax-exempt financing on such projects.
Importantly, the need to amend this language has not dampened enthusiasm for WIFIA on Capitol Hill. On a conference call with stakeholders last week, EPW Chairman Barbara Boxer (D-Calif.) praised the WIFIA proposal, saying that it will give communities “a chance to leverage investment in water projects.”
Separately, lawmakers may also amend Section 2015 of S. 601 during this week’s floor debate. Section 2015, as approved by the EPW Committee, would require new congressional assent before the municipal water supply allocations in some federal reservoirs could be modified. Communities across the country have warned senators that this could jeopardize their future ability to access necessary supplies. Capitol Hill staff told stakeholders they have a plan to address the problem, but no updated language has yet been made public.
Last week, AMWA and the American Water Works Association (AWWA) jointly wrote to senators to praise the WIFIA title of S. 601 and to warn of the potential consequences of Section 2015 as currently drafted.