Congressional Reconciliation Package Includes Permanent Low-Income Water Assistance Program, Investments in Sewer Overflow & Stormwater Reuse Grants

Nov 3, 2021

Congressional Democratic leadership released long-awaited legislative text on October 28 outlining their latest reconciliation proposal for investment in a host of economic and social priorities.

The package addresses several top priorities that NACWA has aggressively been working to advance through the reconciliation process for municipal utilities as part of our joint Affordable Water, Resilient Communities campaign with the Association of Metropolitan Water Agencies (AMWA).

Most notably, the package builds upon the emergency COVID-19 funding that Congress previously provided for clean and drinking water customers to establish a nationwide, permanent low-income water customer assistance program. This represents a major win for NACWA and the broader water sector. 

The text of the reconciliation bill reflects intra-party negotiations between progressive and moderate Democrats – whose internal negotiations have scaled back the scope of the proposal to below $2 trillion, from earlier versions totaling $3.5 trillion or more. Key provisions in the package include:

  • $225 Million appropriated for EPA to establish a nationwide, permanent low-income assistance program to aid customers of publicly-owned treatment works and community water systems facing hardship paying their water and sewer bills. While $225 million is not nearly enough to meet the low-income need around the country, it is an excellent starting point to get the program off the ground and advocate for additional funding in future years.
  • $1.85 Billion appropriated for EPA’s Clean Water Act Sec. 221 Sewer Overflow and Stormwater Municipal Reuse Grants program, to kick-start this grant program which is just getting off the ground.
  • $125 Million appropriated for EPA’s Alternative Water Source Grants for Water Reuse.
  • $150 Million appropriated for addressing septic and decentralized systems, including septic-to-sewer connections, and septic construction, repair or replacement.
  • $6 billion appropriated for NOAA’s Coastal Resilience Program, a historic boost to help address climate resilience in communities around the U.S.

Other important funding provisions include significant investments and policy changes related to greenhouse gas reductions and environmental justice, which NACWA is analyzing for potential impacts to clean water agencies.

One significant potential concern for municipal entities in the package is that in provisions regarding the Corporate Alternative Minimum Tax (AMT), the package would impose a 15 percent minimum tax on tax-exempt bond interest for purchasers that currently hold about one quarter of outstanding tax-exempt municipal bonds.

Municipal bond issuers are concerned that this tax will ultimately be borne not by corporations but by communities in the form of higher interest demanded by bondholders. NACWA joined a letter with other municipal finance organizations this week highlighting that concern as well as the package’s omission of a reinstatement of advance refunding of tax-exempt municipal bonds, which has been another priority.   

NACWA applauds the efforts of numerous utilities that have engaged during this legislative process to communicate with their Members of Congress on these priorities, most notably low-income assistance. Providing such funding – particularly through EPA – was a significant hurdle for Congress to work through. NACWA staff has been working very closely with Congress on this issue and is very pleased this funding has made it through the latest rounds of drafting cuts and refinements.

As of press time, Democratic leadership continues working toward a final vote on both this reconciliation package and House passage of the $550 billion Infrastructure Package which previously passed the Senate with strong bipartisan support, 69-30. A final vote in the House on the Senate’s package is imminent but hinges on final sign-on among key Democrats on the reconciliation package – which could come as soon as this week.

NACWA continues to remain closely engaged with Congress as the infrastructure and reconciliation bills move forward.  Contact Kristina Surfus, NACWA Managing Director of Government Affairs or Jason Isakovic, NACWA Legislative Director, with any questions or concerns.

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