From Finance

California’s bold proposal for statewide water bill assistance

Devils (and angels) in the details, Part 1

Governor Newsom (nice haircut in the black jacket, back to the camera) dragged his cabinet down the Central Valley to hear what folks had to say about drinking water.

In 2012, to great fanfare, California governor Jerry Brown signed into law AB 685, which declared a “right to safe, clean, affordable, and accessible water adequate for human consumption, cooking, and sanitary purposes.” Last spring I observed that the crucial but unglamorous task of turning the lofty rhetoric of rights into a pragmatic program fell to the California Water Board staff under AB401.

Fast forward seven years: the Golden State now has a new governor, and he’s eagerly established himself as a champion for water access and affordability. Earlier this month the Water Board published its draft proposal for a statewide low-income water rate assistance program with an estimated annual price tag of $606 million. As with so many other areas of public policy, California is blazing a trail that other states and communities could follow. There are lots of interesting things about the proposal. Mostly, though, it’s big and it’s bold.

The proposal

The proposal is complicated. The heart of the proposal is a three-tiered assistance program that would provide different discount of 20%, 35%, or 50%, depending on the combination of household income and monthly water prices at 12 ccf (about 9,000 gallons). Customers could qualify if their household income is less than 200% of the Federal Poverty Level (FPL).

The proposal is vague about how customers would enroll in the program, how often renewals would be required, who would make eligibility determinations, and who would be responsible for collecting and distributing benefits. The proposal smartly lays out several options for how the program would deliver benefits to participants. Eligible customers could get a water bill credit, an energy bill credit, a tax credit, or a direct payment via Electronic Benefits Transfer (EBT).

To pay for these benefits, the proposal calls for “progressive revenue sources,” including an increased tax on income over $1 million a year and sales taxes on bottled water. Under California law, these would require a supermajority vote in the legislature and a ballot referendum, respectively.

Go big or go home

The Water Board’s proposed program is remarkable in its breadth and boldness. The federal government’s LIHEAP has provided home energy bill assistance for decades, but the proposed California plan would be the country’s first statewide water bill assistance program, promising benefits targeted at low-income water utility customers (as opposed to subsidies for the utilities that serve them). The proposal envisions reaching as many as 4.3 million households. The three-tier eligibility and benefit framework is an admirable effort to match benefit levels to customers’ needs.

The proposal is also unabashedly redistributive in its aims, using tax revenue to subsidize low-income households’ water bills. This sort of redistributive approach is important for an assistance program in a state as large and economically diverse as California. The benefit levels are modest but significant, and although they provide percentage discounts, the three tiers smartly designed with absolute cost burdens in mind.

On the other hand…

Some aspects of the proposal are worrisome. Some bits are merely (and probably intentionally) vague, others could be addressed with some minor tweaks; but others are more fundamental. In the next few posts I’ll look at that other hand.

Movement on Measurement

Sometimes progress is visible in what you don’t see

Earlier this week I had the pleasure of speaking to the annual conference of the California Water Association, an organization of that state’s investor-owned water utility companies. The theme of the day was affordability. The California Public Utilities Commission and State Water Resources Control Board are working hard to craft rules and guidelines for affordability in the Golden State, with clear implications for the state’s utilities.

During the conference several speakers took to the stage to talk about efforts underway in California to ensure affordability as communities grapple with water infrastructure and supply costs. We heard from utility managers, state agency bureaucrats, and state legislators. These were not dilettantes or casual observers; these were experienced people well-versed in water policy, and I heard lots of exciting things about steps and directions the state and its utilities are taking.

But one of the most exciting things about the conference was something I didn’t hear and didn’t see. In an all-day meeting on the subject of water affordability, nobody mentioned average-bill-as-percent-of-median-household-income.

Indeed, I’m a bit embarrassed to admit that I was the first to mention the %MHI standard when I launched into my familiar attack on that miserable metric. I’ve been excoriating that metric in rooms full of water folks since 2006.

I’ve had it up to here with %MHI

I can do it in my sleep. But the attack wasn’t necessary in that room on that day. The audience was receptive to more careful measurement and analysis—even if the results weren’t pretty or comfortable.

Good policy requires good measurement. In the case of water affordability, good measurement begins with abandoning bad measurement. The California water community has apparently taken that first step; maybe it’s a sign that the rest of the nation is ready to follow. The quiet disappearance of a number from conversation might seem like the smallest of small victories, but policy revolutions begin with such changes in analytical frameworks.

Notes on America’s Water Infrastructure Act of 2018

Some observations about the new law & what it tells us about the politics of water infrastructure in America

Here’s to you, America

The Senate recently passed the America’s Water Infrastructure Act (AWIA) by a 99-1 vote; today President Trump signed it into law. AWIA is pretty slender as federal infrastructure bills go, weighing in at 332 pages and 70,000 words.

What follows are some thoughts about AWIA’s main water infrastructure provisions and what they tell us about the state of water policy and politics in America. This isn’t really a coherent essay or an exhaustive commentary; it’s a series of cursory observations on the bits that strike me as interesting.

What’s new in Title II

Titles I, III, and IV include some important provisions, but much of it is garden-variety authorizations for sundry projects and studies, along with some light regulatory housekeeping. As a careful observer of water policy, the most interesting parts to me come in Title II—Drinking Water System Improvement.

Sections 2014-2015 have received the most public attention, as they include increases in federal grants along with changes to the State Drinking Water Revolving Fund program. Those funds will help with infrastructure investment, but is really a drop in the trillion-dollar bucket of America’s water infrastructure needs. That money will make a splash ahead of the midterm elections (more on that later), but isn’t all that interesting from a policy perspective.

Here’s what I find most intriguing in Title II:

  • Sec. 2001: Indian Reservation Drinking Water. Literally the first section of Title II is a marked expansion of grant programs for tribal drinking water infrastructure—$20 million annually for the next four years.

    Indian Country needs a lot more of this

    That isn’t much in the grand scheme of American infrastructure, but it’s potentially huge for some tribal systems. My research with Mellie Haider & David Switzer has found that tribal facilities lag far behind non-tribal facilities in regulatory compliance, in part because tribes weren’t eligible for the vast federal grants available in the 1970s and 1980s. Sec. 2001 is a step toward correcting that. More generally, it’s fascinating that this program is the very first thing in Title II.* Hopefully this prominent spot in the AWIA presages greater efforts to build tribal drinking water capacity. 

 

  • Sec. 2002: Intractable Water Systems. In substance, Sec. 2002 isn’t terribly exciting—it just funds a study on water systems that consistently fail to meet regulatory requirements. But this section (along with Sec. 2010, discussed below) signals that Uncle Sam is interested in doing something about perennially poor water systems. Of particular interest are the tens of thousands of small utilities that serve fewer than a thousand customers, many of which lack the financial, physical, and human capacity to operate modern drinking water systems.*

 

  • Sec. 2006-7: School lead testing & drinking fountain replacement. Section 2006 authorizes $75 million over three years to support lead testing in school drinking water lines. Sec. 2007 provides $15 million for school drinking fountain replacement. These programs remain voluntary, however, so its effectiveness will depend on local officials participating proactively. Federalism! As with most aspects of national drinking water policy, this only works insofar as local governments make it work.

 

  • Sec. 2010: Ownership provisions. Innocuously named “Additional Considerations for Compliance,” this section empowers state regulators to “require the owner or operator of a public water system to assess consolidation or transfer of ownership… to achieve compliance with national primary drinking water regulations.” This section is aimed at repeat violators of the Safe Drinking Water Act, and although it’s weak in substance—it doesn’t actually require consolidation or change in ownership—it signals something about the potential direction of future water regulation. More frequent consolidation, privatization, and/or public condemnation of failing water systems may be on the horizon.*

What AWIA tells us about the politics of water infrastructure

AWIA provides more evidence that water infrastructure remains an very hot issue at the moment. A 115th Congress that has been historically contentious—it might struggle to pass a resolution that puppies are cute—just passed an infrastructure law with near consensus. The timing is noteworthy, as well: AWIA arrives just in time for midterm elections. Credit-claiming opportunities abound!

Crucially, none of the funding authorized in AWIA will turn into actual water infrastructure until Congress appropriates funds for it. Conveniently for the 115th Congress, the task of appropriating money for all of that water infrastructure will fall to the 116th.

 

 

*Has somebody in Congress been reading my research on tribal facilities, small system human capital, and water utility ownership?