Feinstein Files Amendment to Encourage Residential Water Conservation

Washington – (RealEstateRama) — Senator Dianne Feinstein (D-Calif.) today filed an amendment to the Federal Aviation Administration (FAA) reauthorization legislation to encourage residential water conservation. The amendment is cosponsored by Senators Barbara Boxer (D-Calif.) and Michael Bennet (D-Colo.).

Currently, some entities including public utilities, sewage districts and local governments provide subsidies to residents who participate in water conservation or storm water management programs. However, these subsidies are subject to income tax, something the Feinstein proposal would fix.

By making these subsidies tax-exempt, it would provide a financial incentive and therefore encourage residential water conservation and storm water management programs, which can make a difference in light of the historic drought facing California and Western states.

Feinstein and Boxer also sent a letter to Senate Majority Leader Mitch McConnell (R-Ky.) and Minority Leader Harry Reid (D-Nev.) urging them to include this provision in any tax package negotiated to accompany the FAA legislation.

“While Section 136 of the Internal Revenue Code exempts energy conservation subsidies from inclusion in gross income, there is no similar explicit exemption for water conservation measures,” the senators wrote. “The lack of clarity around whether or not these subsidies should be taxed creates a distinct disincentive for residents to participate in these critical programs. We believe they are just as valuable as energy conservation programs and should be treated equally, particularly at a time when promoting water conservation is of paramount importance.”

The full text of Feinstein-Boxer letter is below:

April 7, 2016

Dear Majority Leader McConnell and Leader Reid:

We urge you to include a provision in any tax package negotiated to accompany the FAA Reauthorization bill to exclude water conservation and storm water management subsidies from gross income.

We have written to you on this topic before, and as tax season comes to an end, it is more urgent than ever that this issue be addressed. As you know, California and the western states have been facing a severe drought. On January 17, 2014, California Governor Jerry Brown proclaimed a State of Emergency in California and on April 1, 2015, he issued an Executive Order directing the Department of Water Resources to implement an initiative to replace 50 million square feet of lawns and turf with drought tolerant landscapes. Public utilities offer such programs to promote water conservation and storm water management and to aid homeowners in lawn replacement. This is a critical component of responsible water use and a way for residents to assist in addressing the water crisis.

While Section 136 of the Internal Revenue Code exempts energy conservation subsidies from inclusion in gross income, there is no similar explicit exemption for water conservation measures. The lack of clarity around whether or not these subsidies should be taxed creates a distinct disincentive for residents to participate in these critical programs. We believe they are just as valuable as energy conservation programs and should be treated equally, particularly at a time when promoting water conservation is of paramount importance.

This proposal is supported by a significant coalition of organizations and public utilities including the Western Urban Water Coalition, National Association of Water Companies, American Water Works Association, Alliance for Water Efficiency, National Water Resources Association, Western Coalition of Arid States, Natural Resources Defense Council, Association of California Water Agencies, and the U.S. Water Alliance.

We urge you to include the attached amendment in any tax package that will accompany the FAA Reauthorization.

This simple but effective change is crucial to ensuring residents continue participating in water conservation programs that play an important role in responding to the water crisis facing the west. Please ensure it is included. Thank you for your attention to this issue.