Water quality funding plan moves forward

DES MOINES - Legislation to redirect an existing tax on water is an 'important and significant first step” toward helping cities' improve water quality, Gov. Terry Branstad said Thursday.

But the governor, who made water quality one of his priorities for this legislative session, said the need remains for a long-term funding source to address municipal water and wastewater issues as well as a nutrient reduction strategy.

The legislation, House Study Bill 2451, formerly House Study Bill 654, would eliminate the 6 percent sales tax on metered water and replace it with a 6 percent excise tax that would raise about $28 million a year.

While the cost to consumers is the same, the excise tax revenue would be dedicated specifically to water quality efforts. The funds would be distributed to communities in the form of grants for improvements to water and wastewater treatment facilities - but only up to $500,000 apiece, and made according to a set of priorities.

The House Ways and Means Committee approved HF 2451 Thursday.

It will go next to the House Appropriations Committee where Chairman Pat Grassley, R-New Hartford, said money from the Rebuild Iowa Infrastructure Fund to address agricultural-related water quality issues likely will be added. He doesn't know yet how much RIIF money will be put into water quality initiatives, but said the funding won't pit existing projects against a new effort.

While the House plan is the only one moving in that chamber, there are other ideas for funding water quality initiatives.

'We think we ought to try and do something significant this year, but there are lots of different approaches,” said Senate Majority Leader Mike Gronstal, D-Council Bluffs.

Some of his members want to use the three-eighths cent sales tax Iowa voters endorsed in 2010 when they approved the Iowa Water and Land Legacy.

'There are some who would say the governor's plan with some significant adjustments might be a framework for doing something and others with other ideas,” he said.

He has proposed using money from the ending balance 'whenever the state treasury was healthy, the cash reserve funds were full and the ending balance was over X amount.”

'That kind of mechanism, in most years, would probably provide significant resources,” Gronstal said. 'If done over last decade, we probably could have done $250 million over six or seven years.”

One argument against HF 2541 is that the $28 million a year it would generate when the excise tax is fully phased in after five years is a fraction of what's needed. Floor manager Rep. Peter Cownie, R-West Des Moines, said estimates are Iowa's water and wastewater infrastructure needs top $10 billion.

So $28 million a year, doled out in grants of no more than $500,000, 'is a drop in a bucket,” said Rep. Patti Ruff, D-McGregor.

Rep. Todd Prichard, D-Charles City, agreed that water quality problems won't be solved in one year, but wished for a more comprehensive bill than HF 2451.

'Let's think big. Be ambitious,” he said.

The Ways and Means Committee approved HF 2451 19-3 with Democratic Reps. Dave Jacoby of Coralville, Sharon Steckman of Mason City and Jerry Kearns of Keokuk voting no.

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