Optimism, Uncertainty Persist as Clean Water Initiatives Take Shape

By Kristina Surfus

With the major changes that came to Washington, D.C. this year, both in the White House and Congress, the municipal clean water sector is seeing new challenges as well as opportunities to advocate for clean water as a bipartisan federal priority. The National Association of Clean Water Agencies (NACWA) advocates for sustainable policy solutions that advance clean water, and has been at the forefront of efforts to engage with the new Administration and new Congressional leadership.

NACWA is committed to maintaining and growing the federal funding and financing tools available to clean water agencies. The Association is also continually working to advance regulatory improvements that enable clean water utilities to become more efficient and innovative — and in turn, cut costs — while still advancing environmental and public health protections. Given these priorities, we are concerned by some of the conflicting messages on infrastructure investment in Washington in recent months. Overall, though, we are encouraged by strong interest from both parties in advancing clean water and addressing the water affordability challenges facing the industry.

Clean water in the United States relies on a strong federal-state-local partnership, and the case for maintaining federal funding is clear. Federal statutes and mandates are a driving factor impacting utility spending. This is perhaps particularly evident in the case of Clean Water Act consent decrees, but it is clear throughout the sector.

As followers of federal clean water funding know well, federal funding now accounts for less than 5 percent of the nation’s investment in water infrastructure. The overwhelming reliance on local ratepayer funding and municipal bonds was not always the case; in the early 1980s, federal funding covered close to one-third of the nation’s water infrastructure investment. The transition away from Construction Grants to the Clean Water State Revolving Fund (CWSRF) program contributed to a decline in real federal investment — while costs continued to rise due to growing compliance costs, aging infrastructure and other factors.

NACWA was pleased with the attention water infrastructure received this election year, including a proposal by then President-elect Donald Trump to triple SRF funding. We are also encouraged by continuing discussions on advancing an infrastructure bill and continue working to position clean water within any funding, financing and/or regulatory improvement package that emerges.

But we see mixed signals in actual spending proposals. While the Administration’s “skinny” budget released in February called for level SRF funding in FY18 (equal to FY17 and FY16 enacted amounts), a great number of other U.S. EPA programs that support clean and safe water were proposed for funding and personnel reductions, or elimination. The Agency’s overall budget was proposed for an unprecedented 31 percent cut.

In light of this proposal, a key part of NACWA’s message for FY18 is that various programs work together to support clean water investment, water quality improvement and watershed collaboration. Further, the dramatic reductions proposed for these programs would increase pressure on the SRFs, effectively reducing the assistance available to individual communities even if SRF funding is maintained.

While the FY18 funding situation is mired in this uncertainty, we were pleased that the final FY17 Omnibus package maintained level funding for all core clean water programs. This includes $1.394 billion for the CWSRF, $171 million for nonpoint source control grants and level or greater funding for each of EPA’s Geographic Programs. This package serves as a strong starting point for FY18 budget negotiations.

Tax reform has also become a clean water priority this year. Certain reform proposals would reduce or eliminate the tax-exemption for municipal bonds. Potential changes to municipal bonds are not a new threat, but the risk is real given the current strong interest in advancing comprehensive tax reform. Our research, available on NACWA’s website, has found that eliminating the tax-exempt status of municipal bonds would raise financing costs for utilities 25 percent — counter to the goals of improving water affordability and addressing the water investment gap. NACWA is working with other concerned associations to communicate that municipal bonds are fundamental for water and wastewater.

While much of this focus in Washington is on raw dollar amounts, NACWA is simultaneously working to raise the profile of the water affordability challenge. Already this spring, Congressional committees are considering legislation to advance integrated planning, support extended compliance schedules and address the impact of water rates on low-income populations. NACWA is highly supportive of all these efforts, which could provide struggling communities with new tools to meet their Clean Water Act obligations while respecting the acute financial pressures many communities and individual households face.

After decades of improvement in our nation’s water quality, utilities should be trusted to have greater control over their destiny while ensuring water quality improvements continue in accordance with the Clean Water Act. Increased flexibility and strategic planning capabilities will also enable utilities to better address emerging challenges and explore technological innovations that could enable them to operate more efficiently, create resources from waste and become true “Utilities of the Future.”

NACWA looks forward to continuing to elevate these issues with Congress and the Administration. We are encouraged by substantive discussions underway and interest in bipartisan and politically viable solutions. We look forward to advancing these discussions as work continues on infrastructure legislation, tax reform and federal spending over the summer.

Kristina Surfus is director of legislative affairs for the National Association of Clean Water Agencies. Prior to joining NACWA in 2015, Surfus worked on the Hill and as a consultant. She earned an M.S. in Freshwater Science & Policy from the University of Wisconsin–Milwaukee and B.A.’s in Environmental Analysis & Policy and International Relations from Boston University.

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