Washington — U.S. Rep. Rashida Tlaib, the Detroit Democrat, is introducing legislation in Congress this week that would wipe out utility debt accumulated during the pandemic by low-income households in an effort to ensure homes aren’t cut off from essential water, electricity and broadband services.
The bill is a companion to legislation introduced in the spring by Oregon Democratic Sen. Jeff Merkley.
The bill would create a new loan-to-grant program to provide nearly $40 billion in emergency low-interest loans for water, electric and broadband providers. The loans would be forgiven in whole or in part after the utility cancels outstanding debts for residential accounts for the period covered by the public health emergency.
Forgiving the loans would be conditioned on the utilities not using punitive measures to force payments, such as disconnecting customers or charging late fees. Tlaib said the legislation also would bar loan recipients from selling household debt to debt collectors and from placing liens on households over outstanding utility debt.
“The pandemic has just exposed how these are definitely essential services that impact poverty levels throughout the district,” she said. “It costs us more if we don’t do something at the front end and prevent the shutoffs.”
Tlaib cited as an example the city of Ecorse in her district where over 40% of the residents haven’t paid their water bill during the pandemic.
“(Many of my colleagues) are realizing that a lot of our local municipalities don’t really have a way out, and that this is not money that magically can appear from any of these families,” she said.
“It’s not because they don’t want to pay. It’s literally just because the cost has gone up, and they’re trying to survive during this economic downturn.”
Trade groups representing utility companies — the Association of Metropolitan Water Agencies and the American Public Power Association — declined to comment on the bill Wednesday.
It’s not clear how much households owe in utility debt across the country, with Tlaib saying it’s difficult to get an accurate number even for Michigan.
Statewide in California, household water and wastewater debt was estimated at $1 billion at the end of 2020, with 12% of households or 1.6 million households carrying water debt, according to a survey by the State Water Resources Control Board.
The board’s survey also estimated that up to 25 small to medium water systems in the state were at extreme risk of going under and might require emergency financial assistance.
Tlaib noted a study by the University of California, Los Angeles, that found 25% to 30% of L.A. households had financial difficulties paying for basic services, and a disproportionate number of those “severely” affected were in Black and Latino communities.
Communities in Michigan were free to resume water shutoffs for non-payment in April after a statewide moratorium expired; however, some communities and water providers had said they wouldn’t soon resume them right away.
Mary Grant, director of the Public Water For All Campaign at the advocacy group Food and Water Watch, said local moratoria on water shutoffs are expiring around the country. The exceptions are a few states and cities including Detroit, which has prohibited water shutoffs through the end of 2022.
During the moratoria, households accrued billions of dollars of debt and when the moratoria end, they are hit with a massive bill, Grant said. That’s where the Tlaib-Merkley legislation comes in.
“If there’s not a support system put in place, they’re going to lose service right now, and what we’re seeing is the pandemic isn’t over. There’s an ongoing surge driven by the delta variant,” Grant said.
“We just need to make sure that people have the resources that they need to keep water service on to protect themselves, their families, their communities, but also to help get their feet back on the ground.”
Grant said the bill is structured in such a way that it could be incorporated in the Senate Democrats’ reconciliation package for infrastructure.
Tlaib said she expects to introduce the bill Friday in the U.S. House. She sent a letter to colleagues urging them to sign as co-sponsors of the legislation.
“This is the wealthiest country in the world. We move with such urgency when it comes to the big banks or when it comes to our small businesses. … They may be too important to fail,” she said.
“Even more critical, we can’t allow people to fail. We can’t allow people in our country to live without water and utilities. It’s just simply immoral and wrong.”
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