MA Officials Call On Congress to Reject Proposed Water Bill
House Measure Would Threaten Massachusetts Funding for Clean Water Projects
Treasurer Steven Grossman and Massachusetts Water Pollution Abatement Trust (MWPAT) Executive Director Sue Perez today called on the Massachusetts delegation in the U.S. House of Representatives to reject proposed legislation that would threaten funding for water projects in the Commonwealth.
“We have to ensure the availability of federal funding for critical water projects across Massachusetts,” said Grossman. “Unfortunately, this proposal would shift money away from important priorities throughout the Commonwealth and could threaten our ability to properly maintain some of the oldest water infrastructure in the country.”
Presently, states receive their federal clean water grants through the State Revolving Fund (SRF) predicated on a needs-based formula. MWPAT uses these grants to collateralize tax exempt bonds that it issues to fund low-interest water project loans to municipalities. The arrangement allows MWPAT to leverage three times the grant amount in the bond market. The below-market-rate loans to municipalities provide an estimated 30 percent subsidy on interest due compared to what these borrowers could achieve in the regular market.
The proposed legislation would reduce clean and drinking water SRF grants substantially and create a new program that would favor states with a need for new water systems rather than those with existing systems in need of repair. The new program would also disallow the use of tax exempt bonds to fund water projects, putting a strain on municipal officials to find private sources for investment and ultimately pushing more costs onto the ratepayer.
“The MWPAT has a Triple A bond rating, allowing us to sell in the tax-exempt bond market at very favorable rates,” said Perez. “This proposed legislation would disrupt a funding system with a proven track record, and it would penalize Massachusetts for forward-looking water infrastructure investments that it has been making for decades.”
Grossman said that the proposal would almost certainly raise residential water rates in Massachusetts and called it, “particularly destabilizing to taxpayers as we work our way out of recession.”
Both Grossman and Perez pointed to the MWPAT’s record of success as justification for maintaining the present system, noting that an estimated 97 percent of the Commonwealth’s population has benefited from MWPAT financing. They also said that the agency makes $350 million in loans to municipalities and helps create an estimated 2,100 jobs each year.