Everyone agrees that a long-term funding solution is overdue for the nation's water infrastructure, but there's not yet a consensus about whether that solution should be a water trust fund or an infrastructure bank. Either way, something has to be done: The U.S. EPA projects that water systems will need to invest $335 billion by 2027 to upgrade or replace aging drinking water and wastewater infrastructure.
In July 2009 Rep. Earl Blumenauer (D-Ore.) introduced H.R. 3202, the “Water Protection and Reinvestment Act,” which would establish a trust fund to repair the nation's corroded pipes and stressed wastewater systems.
It would be funded by a variety of taxes on manufacturers in several industries, such as a 4-cent-per-container fee on water-based beverages; a 3% tax on items disposed of in wastewater, such as tooth-paste, cosmetics, and toilet paper; and a .5% excise tax on pharmaceutical products.
It would be another avenue for projects to receive federal funding beyond just the state revolving loan funds. The bill has been referred to the House Committees on Transportation and Infrastructure, Energy and Commerce, Ways and Means, and Science and Technology. So far it has more than 20 sponsors from both sides of the aisle.
Though it would raise $10 billion a year, not everyone supports the measure.
“Aggregate water use can only be reduced by changing the way people think about flushing their toilets, watering their lawns, and washing their dishes and how industries think about water as an input cost,” the National Association of Water Companies (NAWC) said in a testimony to the U.S. House of Representatives Committee on Transportation and Infrastructure shortly after the bill was introduced.
Supporters of the trust fund concept say that the Water Protection and Reinvestment Act simply would supplement the revolving loan program, essentially increasing the amount of tax-exempt funding available to water and wastewater utilities.
“This bill takes all the provisions in the House and Senate versions of the SRF re-authorizations and is set up to use those same formulas,” explains Julia Anastasio, director of sustainability at the American Public Works Association. “The trust fund is just another funding avenue for utilities. The more tools in the toolbox, the better for our members.”
In 2009 the GAO released a report about the trust fund concept. It found that the lowest tax increase (6%) to generate $10 billion would be from the pharmaceutical industry. On the other hand, excise taxes on water appliances and plumbing fixtures would have to jump 39% to generate $10 billion.
“We're not as supportive of a trust fund concept as an infrastructure bank,” adds Alan Roberson, director of security and regulatory affairs for the American Water Works Association. The bank would borrow money through the federal treasury at low rates to make low-interest loans for water projects too large to access the State Revolving Fund, which varies state by state and depends on the yearly federal allotment.
States also could leverage capitalization grants to raise even more money for local revolving-loan applicants.
Critics argue that historically Congress doesn't often spend all the funds raised for the intended purpose.
Currently the Government Accountability Office (GAO) is examining the feasibility of an infrastructure bank and public-private partnerships — yet another long-term funding option — at the request of the House Committee on Transportation and Infrastructure.
Blumenauer's bill is not the first that seeks to establish a trust fund for water infrastructure. In 2005 Rep. John Duncan Jr. (R-Tenn.) introduced the Clean Water Trust Fund Act. Seven years earlier Rep. Pete Visclosky (D-Ind.) introduced the National Clean Water Trust Fund Act of 1997. Neither made it out of committee.