Top water official seeks federal support

WASHINGTON — Southern Nevada’s top water official urged Congress on Thursday to preserve favorable tax treatment of municipal bonds, a key tool communities are using to improve their water structures and fight drought.

“For those of us on the ground, finding ways to make what is becoming an ever-increasing financial burden more tolerable is first and foremost on our minds,” said Pat Mulroy, the general manager of the Southern Nevada Water Authority.

A water resources bill being readied for Senate debate contains a program sought by municipal water agencies collectively facing billions of dollars in costs to upgrade infrastructure to combat drought.

The measure would provide
$500 million in low-interest loans, guarantees and other credit for large projects that bolster water systems.

Even if that becomes law, Mulroy said, water users face significant rate increases. The burden will become heavier if municipal bonds lose their tax-exempt status, she said.

President Barack Obama’s budget proposes capping the value of interest paid on the bonds.

While that would raise revenues for the government, critics say it would essentially reduce the appeal of the bonds to investors and increase borrowing costs for states and local governments that use the bonds to finance improvements.

“The impact on residents and small businesses will be staggering,” Mulroy said of the proposal, which the Obama administration has floated before without success.

“You are going to see a big push across the country, at least from my industry, saying stop it,” she said. “It becomes a backdoor way to tax local and state governments.”

Mulroy appeared before the Senate Energy and Natural Resources Committee, on a panel of drought experts.

After traveling to Washington regularly to sound alarms about the drought, Mulroy said she was heartened by the official attention.

Sen. Ron Wyden, D-Ore., the Senate committee’s new chairman, told those at the hearing that “we in fact are going to look at everything” for responses to the drought.

“Water is a critical resource, and yet so often it seems to almost be treated as an afterthought,” Wyden said.

Contact Stephens Washington Bureau Chief Steve Tetreault at or 202-783-1760. Follow him on Twitter @STetreaultDC.

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