Water revolving funds take hit in House appropriations draft bill
3 min read
Bloomberg News
States would face double-digit cuts in water infrastructure funding they receive through state revolving funds, which make up a significant corner of the municipal bond market, under a draft bill that advanced Tuesday.
The House Interior-Environment Appropriations Subcommittee approved its
The water revolving funds, which fall under the Environmental Protection Agency budget, face deeper cuts.
The Drinking Water State Revolving Loan Funds next fiscal year would be funded at $894.7 million, down from $1.1 billion in fiscal year 2025 — a 19% reduction.
The Clean Water State Revolving Fund would be funded at $1.2 billion, down from $1.6 billion in 2025 — a 25% cut.
The appropriations include just over
The House reductions are moderate compared to the 90% cut in President Trump’s proposed 2026 budget. The president’s spending plan would essentially eliminate the programs, with $305 million for states to find “alternative funding sources for their water infrastructure.”
State revolving funds for drinking and wastewater act as the primary federal funding for states, which then often leverage the money by issuing municipal bonds, most of which feature triple-A ratings, to make low-interest loans to cities, counties, water districts and other governmental entities to finance infrastructure projects.
The EPA estimates that drinking water, wastewater and stormwater systems need at least
“As Congress works to rein in unnecessary spending and restore fiscal responsibility, the House Appropriations Committee remains committed to ensuring taxpayer dollars are spent responsibly and efficiently,” Interior and Environment Chair Mike Simpson, R-Idaho, said in a statement when the bill was released Monday.
“The Fiscal Year 2026 Interior and Environment Appropriations Act does just that by right-sizing federal agencies, promoting domestic energy and mineral production, and reversing harmful Biden-era policies.”
Democrat Ranking Member Rep. Chellie Pingree, D-Maine, said the bill “accelerates the climate crisis, upends our national parks system, and leaves local communities to fend for themselves.”
“Instead of correcting course, the bill released today delivers more of the same: it cuts water infrastructure funding, slashes EPA programs, and wipes out environmental justice and climate initiatives,” Pingree said in a statement.
The bill leaves intact the popular Water Infrastructure Finance and Innovation Act loan program and the Reducing Lead in Drinking Water and Midsize and Large Drinking Water System Infrastructure Resilience and Sustainability grant programs.
The legislation provides a total of $7 billion for the EPA, 23% below the 2025 enacted level, according to the Democrats’
“The Drinking Water State Revolving Fund is the backbone of federal infrastructure assistance for water systems, providing critical resources to help maintain compliance with drinking water standards,” Tom Dobbins, CEO of the Association of Metropolitan Water Agencies, which represents publicly owned water systems, said in a statement.
“While the House’s FY26 appropriations bill avoids the most extreme SRF cuts proposed in the president’s budget request, its 20% reduction to DWSRF funding would undoubtedly restrict water systems’ already strained budgets and ability to maintain current levels of service,” Dobbins said. “AMWA supports fully funding the DWSRF, but at a minimum, Congress should avoid any cuts in a final appropriations package.”
The measure now moves to the House Appropriations Committee, which hasn’t yet scheduled a full committee markup of the bill. The Senate has yet to release its Interior-EPA bill, and the two chambers will need to resolve any differences before sending it to the president.
Separately, a group that includes the U.S. Chamber of Commerce and U.S. Conference of Mayors wrote a
