Unpacking Its Impact on Water Projects
Last week, the White House unveiled its long-awaited plan for addressing the nation’s $1.5 trillion in pressing infrastructure needs. In this TPR interview, National Association of Clean Water Agencies CEO Adam Krantz unpacks how the administration’s proposal would impact water infrastructure projects around the country, especially in contrast to other Congressional proposals under consideration. While supportive of elements of the plan that promote innovation and private-sector collaboration, Krantz stresses that any successful infrastructure program will need to include substantial direct federal spending. He compares the administration’s framework—which puts the onus on already overburdened municipalities to raise capital—with House and Senate plans, arguing for a combination of traditional and new funding mechanisms to create resilient water infrastructure nationwide. For more information about NACWA’s response to the White House plan, their response is accessible here.
The White House’s long-awaited proposed national infrastructure financing plan was unveiled earlier this month. Given the country’s substantial water infrastructure needs that NACWA has identified over the years, please share your reactions.
Adam Krantz: There are two ways we evaluate proposals like this. First: Is water included in the proposal in a serious way? In many infrastructure bills and stimulus packages, water is not considered on an equal basis with highways, transportation, ports, bridges, schools, etc. The good news is that in this particular bill, water is a critical focus—at times, even the majority focus.
The funding is split among the Department of Transportation, the U.S. Army Corps of Engineers, and the Environmental Protection Agency. Two of those three agencies are governed by core water projects, so it does put the levers of decision-making and control for the funds into agencies that have a clear focus on water. That’s very important—and it’s something we haven’t seen before. We’re proud that the water sector is becoming recognized as a core infrastructure sector; that’s the silver lining of this proposal.
The problem is that it takes what is being called a “jump ball” approach —where infrastructure projects from different sectors have to compete, and those who come to the table having leveraged the most money on their own are the most likely to succeed in getting federal dollars. About $100 billion over the next 10 years—or $10 billion a year—is meant to leverage state and local funds as well as private-sector investment into a $1.5 trillion investment in infrastructure. That is not sufficient.
Already, local and state governments shoulder the lion’s share of infrastructure investment for water across this country. A 20 percent federal share, while an improvement, is still insufficient—especially since the projects likely to be chosen would be in addition to projects already planned. Most importantly, we’d like to see a more even cost-share that brings the federal government in as an equal partner over the long-term.
We’d also like greater certainty that a significant portion of the funds will go toward water infrastructure. With jump ball money, where that money goes and how much goes to which municipality or state or to which type of project remains a question mark.
After his election, President Trump said that one of his core infrastructure goals was to triple federal funding for the state revolving funds (SRFs). That was not in this package, and it should have been. In our view, though, the game has just begun. The real meat on the bones will be developed in the House and the Senate, where we’re working diligently to encourage more direct funding for water.
Compare and contrast the administration’s proposal with other congressional proposals on water infrastructure financing currently being debated in Washington D.C.
The important difference is that many in Congress support more direct federal spending. We are intimately involved with the bipartisan House Problem Solvers Caucus Infrastructure Working Group.
A Senate bill has also been put forward several times by Senators Schumer (NY), Sanders (VT), Gillibrand (NY), and Cardin (MD). It was a trillion-dollar-plus infrastructure funding bill that devotes direct funding to water and wastewater projects across the country.
There have also been numerous bills to reauthorize the SRF, which has not been reauthorized in decades, as well as bills to create a trust fund for water on equal footing with the Highway Trust Fund, and to address low-income water affordability. There is no shortage of good ideas circulating in the halls of Congress on water infrastructure investment that could strengthen a broader infrastructure package.
From the White House, on the other hand, we’re seeing a limited federal contribution intended to leverage more spending at the local level. That’s not, in and of itself, a bad idea—but we know that direct spending works, and that the SRFs and the Water Infrastructire Financing Innovation Act (WIFIA) are already oversubscribed. At a certain point, this package has to evolve to mirror some the proposed legislation that provides more direct funding for water and wastewater.
If the administration’s infrastructure package were adopted as proposed, how successfully would it meet the needs and affect the cost of local water infrastructure projects across the United States?
It’s important not to take the White House package out of context of their other recent actions. When the tax reform package passed, municipal interests were pleased to see that they were able to still take advantage of tax-exempt bonds, which are the core means by which municipalities fund capital improvement projects (as well as rate increases).
But the tax bill also took away advanced refunding, which allowed municipalities, once a decade, to buy back bonds when interest rates are low and then reissue them. That saved cities significant funds—sometimes in the tens of millions of dollars. That’s no longer available, and we estimate that that fact will cost municipalities up to $3 billion that they otherwise could invest in infrastructure. Already, that puts municipalities at a deficit.
It’s also important to note that, counter to popular perception, this administration has not stopped regulating the water sector. But at the same time, it has decreased funding in many areas. One of the only three rules that the administration has passed since the election requires municipal wastewater agencies to work with hundreds of thousands of dentists’ offices to ensure that mercury doesn’t make its way into the nation’s waterways. Another rule requires the Great Lakes States to adhere to stringent sewer overflow notification requirements. And now, they’re looking at surveying 15,000 wastewater treatment plants across the country to determine how effectively they’re removing nutrients from their plants.
Despite these regulations, we are seeing a decline in federal funding overall. To make up for that, there has to be direct federal investment that is both long-term and reliable for water infrastructure. But the new infrastructure package does not provide that.