The Water Infrastructure Finance and Innovation Act (WIFIA), a water trust fund and expanded access to private activity bonds were among the suggestions pitched to members of the House Interior, Environment, and Related Agencies Appropriations Subcommittee last week at a hearing on the status of the State Revolving Fund (SRF) programs and new options for water infrastructure financing.
Speaking at the outset of the hearing, Subcommittee Chairman Michael Simpson (R-Id.) noted based on FY12 spending levels, it would take more than 250 years for the country to meet all of its identified water infrastructure needs through federal investment. Given the “massive” federal debt that limits opportunities for dramatic federal spending increases and similar challenges facing state and local budgets, Simpson called for “outside-of-the-box” thinking to bring new funding ideas to the table.
A panel of witnesses from across the water sector testified on the virtues of several new approaches. These included a new WIFIA that would offer low-cost loans to major water infrastructure projects, a clean water trust fund financed by new taxes on bottled water and flushable products, and lifting the state volume cap on private activity bonds (PABs) used to fund water infrastructure upgrades, which would attract more private capital to those projects. Several witnesses also urged Congress to not make the infrastructure funding problem worse by eliminating the tax-exempt status of interest collected by municipal bond holders – a step that could lead to higher interest rates for local communities that finance infrastructure through bond sales.
Testifying on behalf of EPA, Deputy Assistant Administrator for Water Mike Shapiro told the committee that the government could stretch infrastructure dollars further by encouraging utilities to adopt asset management plans and replace aging infrastructure before it fails.
The hearing did not offer a clear path forward for any of these proposals, but Chairman Simpson said he is hopeful that Congress will tackle the issue this year.