COVID-19 Relief Negotiations Begin with Parties Divided; Municipal Aid and Water Excluded in Senate Proposal

(July 30, 2020) – While the House Democratic majority pushed through its HEROES Act, a comprehensive COVID-19 relief package back in May, the Senate did not start negotiations on its next proposed phase until last week and got off to a rocky start as the Republican majority struggled to reach agreement within the party and the White House.

Late Monday (July 27), a proposal was released by Senate Majority Leader Mitch McConnell (R-KY) which constitutes Senate Republicans’ starting offer for the next package. Not surprising, Senate Democrats were swift to condemn shortcomings and concerns with the package. All signs indicate that the deliberations could take several weeks, extending into the previously planned Congressional August recess.

Municipal Aid Considered

The package includes several provisions which could provide limited opportunities to some clean water agencies. One key provision of the package builds on the Coronavirus Relief Fund (CRF) established in March at the U.S. Treasury to provide financial assistance to state and local governments. The CRF was seeded with $150 billion to cover the costs of COVID-19 pandemic response – an amount widely projected by local and state governmental groups to be far below actual needs. Eligible uses were restricted to new expenses incurred as a result of the pandemic, while lost revenues to state and local governments were expressly prohibited from reimbursement.

The Senate’s proposal addresses one of these two issues by expanding allowable uses of relief payments to states and local governments to also include revenue shortfalls from taxes, fees, or other sources relative to FY2019. However, to the frustration of a huge coalition of local and state governmental associations led by the National League of Cities, the Senate did not include any new funding for the CRF.

We anticipate that Democrats will push hard to provide new funding as negotiations advance, making odds relatively high that the CRF could be both expanded and increased. Expanded eligibility and funding, while no substitute for the direct relief for the water sector NACWA is urging, could provide opportunities for aid to municipal clean water agencies working with their local governments. NACWA has heard anecdotal success from a handful of members in leveraging the funds to cover bills for ratepayers newly unable to pay, for example. Treasury guidance indicates that CRF funds can be used in certain cases to subsidize ratepayers impacted by COVID-19.

Water Again Punted to Future Infrastructure Phase

The proposal from the Senate majority does not include direct assistance for water ratepayers. In contract, the House’s HEROES package proposed $1.5 billion for water ratepayer assistance and this provision – similar to the low-income water assistance concept NACWA has urged on a bipartisan basis for several years – has gained additional champions among Senate Democrats.

NACWA continues working to urge that similar funding be negotiated into the Senate package. NACWA is also working to ensure that any language related to a federal moratorium on water shutoffs – which has become a top push for advocate groups such as Food and Water Watch– be workable for utilities and limited to this pandemic. We urge all members to reach out to their Senate delegation over the next week to share their local experiences as it relates to delinquent accounts, suspending water shutoffs, and the resulting financial pressure on utilities.

On the whole, the Senate’s proposal largely focuses on needs of individuals, businesses, healthcare and education, with limited support for the public sector despite widespread and growing concern about municipal finances, and with no eye yet to “recovery” such as economic stimulus and infrastructure investment. These needs continue to be pushed to a later conversation – which many Members of Congress believe will be necessary as the pandemic tragically drags on.

The clean water sector is well-positioned in proposals for recovery, such as the Moving America Forward plan, but in the meantime we urge Congress to recognize and support the vital role that clean and safe water plays in protecting public health and controlling the spread of COVID-19 through meaningful relief for water and wastewater utilities. For additional letters or resources to aid in Congressional advocacy please visit NACWA’s COVID-19 Advocacy Resource page.