Senator Dianne Feinstein (D-CA) last week filed an amendment to the Federal Aviation Administration (FAA) reauthorization legislation to encourage residential water conservation. The amendment is co-sponsored by Senators Barbara Boxer (D-CA) and Michael Bennet (D-CO).

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, which the Feinstein proposal would change. By making these subsidies tax-exempt, it would provide a financial incentive and therefore encourage residential water conservation and stormwater management programs.

Feinstein and Boxer also sent a letter to Senate Majority Leader Mitch McConnell (R-KY) and Minority Leader Harry Reid (R-NV) 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.”