Key US lawmakers back Clean Water Trust Fund

Key lawmakers in Washington DC this week expressed support for the creation of a federal trust fund for wastewater infrastructure, citing it as a solution to a gap in necessary wastewater investment that could top $400 billion over the next decade.

At a hearing on the creation of a Clean Water Trust Fund, Congressman Jim Oberstar, chairman of the House Transportation and Infrastructure Committee, and Congresswoman Eddie Bernice Johnson, chairwoman of the Subcommittee on Water Resources and Environment, both came out in favor of such a financing mechanism for the nation’s wastewater infrastructure.

A federal funding source for water infrastructure – the Clean Water State Revolving Fund – already exists. But the revolving fund, which gets its appropriations directly from Congress and state matching grants, is not expected to be able to meet the nation’s growing gap in water infrastructure funding, estimated to range between $150 billion and $400 billion over the next decade, according to the Environmental Protection Agency (EPA).

A trust fund, by contrast, is a federal spending account with a dedicated revenue stream from sources such as taxes. The Highway Trust Fund, for example, gets its funding from a dedicated tax on gasoline. A Clean Water Trust Fund would function in a similar manner.

Johnson said in prepared remarks that “all of the potential revenue sources for a [clean water] trust fund must be put before Congress and debated”, specifically those recommended by the Government Accountability Office. She did not back a specific target size for the fund, according to a subcommittee spokesperson.

In a May report on the design issues in creating the Clean Water Trust Fund, the Government Accountability Office identified a variety of excise taxes on beverages, pharmaceuticals and plumbing products that could be used to raise revenues for such a fund. Other options could include an income tax or a water use tax, but it would be difficult to generate $10 billion from any one option by itself, the report concluded.

That report also cited other approaches besides the trust fund that could be used to bridge the shortfall identified by EPA. These approaches included the use of public-private partnerships, the creation of a national infrastructure bank and the elimination of restrictions on the use of private activity bonds, tax-exempt bonds issued by state or local governments to provide financing for qualified private sector-led projects.

On Capitol Hill, though, lawmakers seemed to favor the option of creating a trust fund as the preferred method of closing the gap. Chairman Oberstar said the Transportation and Infrastructure Committee has “extensive experience” in the benefits of infrastructure trust funds and cited the success of the Highway Trust Fund, the Airport and Airway Trust Fund, the Harbor Maintenance Trust Fund and the Inland Waterways Trust Fund in creating “predictable, long-term financing for capital expenditures”.

In recent years, though, some of the trust funds, in particular, the Highway Trust Fund, have experienced shortfalls as their revenue bases have failed to meet cost outlays. Last year, for example, Congress had to appropriate $8 billion of emergency funding to keep the Highway Trust Fund solvent and a similar debate is now underway in Congress as the Highway Trust Fund is again predicted to run out of money before the end of the government’s current fiscal year-end in September.

Other Congressional appropriations for wastewater infrastructure include $4 billion in the American Recovery and Reinvestment Act, which will go toward the Clean Water State Revolving Fund.

The House-passed interior and the environment appropriations bill for fiscal year 2010 also gives an additional $2.3 billion to the revolving fund, which was appropriated $689 million in fiscal years 2008 and 2009, according to the Government Accountability Office.