Boozman: Trust Fund Is Not A "Silver Bullet"

Press Release

The U.S. Government Accountability Office (GAO) today released a report highlighting the difficulties in identifying viable revenue sources that could generate about $10 billion annually to support a clean water trust fund. Regardless of the revenue options that might be selected, significant implementation obstacles would have to be overcome.

The GAO report, entitled "Clean Water Infrastructure: A Variety of Issues Need to Be Considered When Designing a Clean Water Trust Fund" (GAO-09-657), has been posted in its entirety at www.gao.gov.

Concerned that a potential $150 billion to $400 billion gap between future needs and current spending for wastewater infrastructure could develop over the next decade, U.S. Rep. John L. Mica (R-FL), Republican Leader of the House Transportation and Infrastructure Committee joined Committee Chairman Oberstar, Water Resources and Environment Subcommittee Chairwoman Johnson, and Rep. Blumenauer in asking GAO to obtain stakeholders' views on the issues that would need to be addressed in designing and establishing a clean water trust fund, and to identify and describe potential options that could generate about $10 billion in annual revenue to support such a trust fund.

"The GAO report confirms that there is no silver bullet for creating and funding a Clean Water Trust Fund," Mica said. "Although a trust fund has the advantage of providing a dedicated source of funds for wastewater treatment, how to structure the tax that would feed the fund remains a challenging task. There is no doubt that the nation's water infrastructure needs are significant and growing. We need at our disposal a wide range of funding mechanisms and funding sources to meet our considerable clean water needs."

U.S. Rep. John Boozman (R-AR), Ranking Member of the Water Resources and Environment Subcommittee, agreed with Mica, adding, "Local governments need new and more innovative tools to help them deal with their clean water infrastructure needs than what these trust fund proposals would provide."

GAO found that stakeholders identified three main issues that would need to be addressed in designing and establishing a clean water trust fund: how a trust fund should be administered and used, what type of financial assistance should be provided, and what activities should be eligible to receive funding from a trust fund.

While a majority of stakeholders said that a trust fund should be administered through an EPA partnership with the states, they differed in their views on how a trust fund should be used. Stakeholders variously stated that a trust fund should be used only to fund the existing Clean Water State Revolving Fund (CWSRF), that it should support only a new and separate wastewater program, or that it should support both the CWSRF and a separate program. Some did not support the establishment of a trust fund at all.

A number of taxation or user fee options have been proposed in the past to generate revenue for a clean water trust fund, but GAO identified obstacles to implementing these options, including defining the products or activities to be taxed, establishing a collection and enforcement framework, and obtaining stakeholder support for a particular option or mix of options.

GAO estimated the revenue that could potentially be raised by various taxes on a range of previously proposed products and activities, and found that it may be difficult to generate $10 billion annually from any one option by itself. Rather, it probably would require a combination of taxes on more than one of the evaluated options to reach the $10 billion target level.

Mica has requested that GAO conduct an additional study to analyze funding and investment mechanisms and revenue sources from potential alternative public or private sources that could be used to fund wastewater infrastructure and other water pollution control activities under the Federal Water Pollution Control Act.

"There is a tremendous amount of capital from other public and private sources potentially available for investment in our infrastructure, and we need to learn more about innovative and alternative ways of accessing it," Mica added.

"We can provide our communities with more tools in the tool box to better help them finance the critical wastewater services they need," Boozman said.

GAO's report of this new study is expected to be finalized in several months.

Source