Associations Debate Water Tax Issue

By James Laughlin

There is a debate boiling on how to help cities pay for the cost of funding drinking water and wastewater infrastructure improvements. One suggestion that's causing a rift in the industry is the concept of a federal water tax.

While everyone agrees that there is a huge need for additional funding for water infrastructure, there is little agreement on how that need should be filled. Members of the Water Infrastructure Network have called for the establishment of a federal trust fund to provide an automatic appropriation for water infrastructure, but again, how to fund that appropriation is unclear.

The Association of Metropolitan Sewerage Agencies has suggested that some sort of tax on water might be the answer. In the last few months the association has released two papers that discuss funding mechanisms for wastewater infrastructure.

AMSA argues that wastewater treatment systems have an impact far beyond the borders of a specific city or town, especially in this age of watershed management. As an example, the association talks about a generic city upstream from a sensitive estuary and public beach.

With no wastewater treatment, the city pays nothing, but pollution could destroy the ecosystem and drive people away from the beaches. On the other hand, properly treating the wastewater is a financial burden for the city and its residents.

Is it fair to make the city's residents pay the full cost of preserving an ecosystem that other, non-paying citizens enjoy?

AMSA compares wastewater – and its associated watershed management – to highways, transit systems, airports, and inland waterways, all of which are supported by federal tax dollars.

A water tax is not a new idea. Other countries and some regions have such a tax. And there's no doubt a water-use tax could raise a significant amount of money. By some estimates, Americans use 25 trillion gallons of water a year. Even at $1 per thousand gallons, such a tax could generate far more than the estimated "gaps" that exist in current funding for water infrastructure.

Sounds like a reasonable idea, right? Of course, the money would sink into a federal bureaucracy and would be a nightmare to administer. And the money filtering back to the individual utilities would no doubt come with strings attached – in the form of onerous federal rules.

And what about drinking water? I don't know that the same arguments in support of a wastewater tax apply for drinking water. Typically, drinking water is used and financed locally. Yet, in many ways, the need is just as great.

Drinking water associations, however, are very much opposed to a tax on drinking water. The American Water Works Association, the Association of Metropolitan Water Agencies and the National Rural Water Association have all come out against such a tax.

In fact, the issue threatens to tear apart the Water Infrastructure Network.

Although I see the need, and understand AMSA's arguments, I tend to side with the drinking water folks. No tax is a good tax, in my book. And one thing is guaranteed, if you institute a tax to solve a problem, the problem may go away but the tax never will!

James Laughlin, Editor