Government Relations

Stimulus Bill Moving Quickly

Congress is moving fast to pass an economic stimulus bill. The House moved quickly to pass its version of the bill after the Bush Administration and bipartisan House leaders agreed on a $146 billion package. The bill, H.R. 5140, passed the House on Jan. 29 and, as expected, the vote was a lopsided 385-35. The next day, the Senate got into the act when the Senate Finance Committee approved, by a 14-7 vote, its own $157 billion economic stimulus package.

While the details of both bills vary, the center pieces of both are direct rebates to taxpayers, some homeowner mortgage relief, and — of particular interest to businesses — accelerated depreciation. Under the House bill, businesses would be allowed to expense 50 percent of the value of new equipment placed in service during 2008 and the limit for expensing under Section 179 of the tax code would be raised from $128,000 to $250,000 in 2008. The phase-out threshold would also be raised from $510,000 to $800,000 for 2008, according to a Joint Committee on Taxation analysis (details of the Senate bill were not available at press time but are believed to be similar.)

The Senate bill also includes as $5.6 billion in tax incentives for renewable energy projects and an extension of unemployment insurance benefits. As of this writing, we believe the renewable energy piece is a straight year extension of current law with no modifications.

The situation with these bills is very fluid, and Senate Democrats are under some pressure to drop their bill in favor of simply passing what the House passed and sending it to the president. As lawmakers wade through the details, exactly how and what the Senate considers and passes will evolve.

What appears encouraging is that it is very likely some accelerated depreciation language will be included in the final bill. Last week, NAWC Executive Director Peter Cook wrote to lawmakers encouraging the inclusion of this provision, saying

“…accelerated depreciation is excellent economic stimulus and will pump capital into the economy efficiently and quickly. NAWC’s members, private water utilities, are extremely capital intensive businesses, so this provision will be particularly economically stimulative for our industry, and the thousands of communities we serve around the country.”

Report to Study Possible Water Trust Fund

Three congressional democrats have commissioned a report by the Government Accountability Office (GAO) to study ways to finance a clean water trust fund. Thus far, the lack of a dedicated revenue source has stalled supporters of a trust fund from moving such legislation. The study is slated to be completed by January 15, 2009.

The GAO will be tasked to find at least $10 billion per year to maintain and upgrade wastewater treatment and sewer-collection systems.

The leaders behind the trust fund movement are Chairman Jim Oberstar (D-Minn.) of the Transportation and Infrastructure Committee, Subcommittee Chairwoman Eddie Bernice Johnson (D-Texas) of Water Resources and Environment and Rep. Earl Blumenauer (D-Ore.). Both Chairman Oberstar and Rep. Blumenauer have indicated their interest in a water trust fund and we may see language this year, but serious legislative action probably won’t take place until at least 2009.

Chairman Oberstar is interested in finding consistent long-term funding for wastewater infrastructure that would populate a trust fund like the Highway Trust Fund and the Aviation Trust Fund — both funded off of surcharges or taxes.

Long-Term Stimulus Package?

Amidst the House consideration of the $145.9 billion stimulus package (see article above), many House representatives were tempted to load up the bill with pet projects, especially pertaining to infrastructure. These same representatives were disappointed that infrastructure spending was excluded from the initial stimulus package and, have since begun to talk about a long-term stimulus package that would include infrastructure spending.

Although there is no certainty of a second package, high-level meetings on the prospect for a long-term stimulus are certainly being conducted in the House leadership. Additionally, a bipartisan group of 20 senators have compiled a list of 3,027 infrastructure projects from around the country that could begin construction within 90 days.

Chemical Security Bill Without Water Utility Exemption Passes House Subcommittee

The House Homeland Security Committee is considering a proposal that would make permanent Department of Homeland Security (DHS) nationwide rules governing security protocols at chemical facilities. The bill would also extend the scope of DHS’s authority to mandate security protocols over sites handling and storing toxic chemicals to include water treatment and wastewater facilities, which current agency regulations do not cover. Now, the Environmental Protection Agency has sole security regulatory authority.

The bill would mandate that facilities nationwide stop using highly dangerous substances in their manufacturing processes and replace them with less hazardous alternatives known as “Inherently Safer Technologies, (IST).”

The bill passed the first phase of a Subcommittee markup. The next stage will be a full committee markup that is slated to take place on February 6, 2008.

Water Enterprise Bond Proposal in FY 2009 Budget

A Water Enterprise Bond Proposal with innovative financing solutions to address aging infrastructure challenges was included in President Bush’s FY 2009 budget released on Monday, Feb. 4. This provision will remove the volume cap on private activity bonds, something NAWC strongly supports.

This proposal provides fiscally responsible and innovative financing solutions to municipalities working to upgrade their water and wastewater infrastructure. Recognizing that there is no shortage of private capital available for this work, this proposal will create more avenues though which private capital can be put to work for the betterment of all.

In a time of federal budget shortfalls and uncertain economic forecasts, this change in the tax code would cost the federal government very little money: Wall Street experts and the Environmental Protection Agency estimate the change could result in as much as $6 billion annually in private capital being deployed to help communities re-build their water infrastructure with an investment of only $31 million over 5 years, $184 million over 10 years.

With its low price tag and impetus for the creation of green-collar jobs, this creative financing initiative is an important and attractive option.