406 Dirksen

Sen Jim Inhofe

Statement of Senator James M. Inhofe

“The Federal Role in Keeping Water and Wastewater Infrastructure

Affordable”

April 7, 2016


EPA has identified $384 billion in drinking water needs and $271 billion in wastewater needs over the next 20 years based on capital improvement plans developed by local utilities.  According to the U.S. Conference of Mayors, through 2013, local governments have invested over $2 trillion in water and sewer infrastructure, including $117 billion in 2013 alone. 

 

These local expenditures represent over 98% of the cost of providing services and investing in infrastructure.  These costs are paid by you, me and our neighbors when we pay our water and sewer bills. 

 

As a general rule, this is appropriate.  Water and wastewater is funded by the ratepayers who receive these services.  Unfortunately, however, we are no longer just paying for services.  We also are paying for unfunded federal mandates.  And as federal mandates pile up the bills paid by individual homeowners get bigger and are becoming unaffordable for many Americans.

 

Federal mandates also force local communities to change their priorities.  In the water and sewer world, this pushes basic repair and replacement to the bottom of the list.  When we force communities to chase mandates that may have very small incremental health or environmental benefits, we risk losing both basic public health protections and the economic foundation of our communities. 

There is a federal interest in maintaining these health protections and economic benefits and there are a variety of ways we can help. 

 

First, we have to continue to support the clean water and drinking water state revolving loan funds that provide low cost loans for infrastructure improvements.  The President’s FY 2017 budget proposed cutting the clean water fund by $414 million and provided a $197 million increase in the drinking water fund. 

 

Second, we have to find new ways to increase investment in infrastructure.   In 2014, we took action by adding the Water Infrastructure Financing and Innovation Act to the WRDA bill.  EPA is finally requesting funding to start up the WIFIA program, although they are only requesting $15 million.  In our proposal to help Flint and other communities around the country, we are planning to provide $70 million to capitalize WIFIA. 

 

Third, we need to look for ways to encourage even more private investment in water and wastewater infrastructure.  WIFIA loans provide only 49% of project costs so where does the funding come from if the remaining 51% cannot be raised through municipal bonds?

 

Fourth, we need increase support for small rural communities who simply can’t afford the investments that EPA wants them to make and need technical support to keep up with all the federal mandates.  Mr. Robert Moore, of Madill Oklahoma will offer testimony on this.

 

Finally, we have to make sure that federal mandates don’t force communities spend 100s of millions of dollars for projects that may have little impact on water quality, while delaying other critical programs.  The U.S. Conference of Mayors has spent a lot of time trying to work with EPA on this last issue.  Despite EPA’s rhetoric on integrated planning and flexibility, communities are still being threatened with penalties even as they are trying to negotiate with EPA. 

 

I strongly believe that investment in infrastructure expands our economy.  The U.S. Conference of Mayors reports that each public dollar invested in water infrastructure increases private long-term Gross Domestic Product output by $6.35.  To date, the Joint Tax Committee has not been persuaded by these numbers.  The Joint Tax Committee assumes that these programs increase the use of tax exempt bonds, creating a loss to the Treasury that we need to offset.  This is actually a barrier to increasing funding authority for the SRF loan programs and WIFIA.  So the Water Environment Federation has conducted a new study to measure the increases in personal and corporate income taxes paid into the US Treasury attributable to water infrastructure investment. 

 

This hearing is laying the foundation for legislation on water and wastewater infrastructure, which I hope to be ready to move at the same time as we move our Water Resources Development Act legislation later this month.