League and state water officials clarify HB501 substitute: mandate removed, fund-eligibility thresholds remain contested
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Summary
State water officials and league staff updated members on HB501's substitute: the explicit statewide mandate was removed and eligibility for state water infrastructure funds will hinge on reaching rate thresholds; members raised concerns about the impact on federal earmarks and affordability for small systems.
State water officials Candace Hossen Jaeger (Water Quality) and Nathan Lundstedt (Drinking Water) joined the LPC to answer technical questions about HB501, the Unified Water Infrastructure bill. Staff said a substitute is being drafted to clarify how eligibility for state funding will be measured and to phase in timelines so jurisdictions can "grow into" any rate thresholds.
Officials repeatedly clarified that the original mandate language was removed from the current draft. "The mandate is gone," a presenter said, noting the bill as drafted would apply to entities seeking state funds rather than imposing an immediate universal requirement. Presenters emphasized the substitute will specify that the threshold is a total rate (for example, 1.5% or 3%), not an additional surcharge on top of current rates, and that the substitute will likely add a timeline to reach the threshold.
Members asked whether federal earmarks or congressionally directed grants routed through state divisions would be conditioned on meeting the state thresholds; staff said that if federal funds are delivered through state revolving funds or state divisions, eligibility would be subject to the threshold rules, and that language on that point remains a gray area. Participants also sought clarity about whether revenues raised from increased rates would remain with the local entity; staff answered that revenues would stay with the local government.
Next steps: staff said a new substitute would be circulated when available and encouraged members to raise technical questions about their local systems so the League can pursue clarifications before the substitute is finalized.
