Water infrastructure funding adds urgency

As the battle over appropriations starts to warm up, water sector authorities are already asking Congress for a full appropriation of the Clean Water and Drinking Water State Revolving Funds, an important tool for building and maintaining public water infrastructure.

Congress decides how much funding to appropriate while the Environmental Protection Agency administers the money to the states who often use it to facilitate financing of water projects.

“Annual funding gives SRFs the ability to issue municipal bonds to generate additional funding to meet the demand for subsidized loans for water infrastructure projects and maintain very low interest rates on loans, which saves millions of dollars that would otherwise be passed onto households and small businesses through higher water bills,” said Nate Norris, manager, legislative affairs, American Water Works Association.  

Norris is quoting from a letter addressed to the leaders of both houses of Congress on August 21, 2023 signed by eighteen water sector organizations. It urges Congress to fund the Clean Water and Drinking Water State Revolving Funds to the maximum authorization in federal law, of $3 billion each for fiscal year 2024. 

“Congress clearly understands the importance of the SRFs, given the $3 billion authorization and the additional funds appropriated through IIJA,” said Norris. “We’re simply asking Congress to provide the funds that have already been authorized.” 

The letter comes in response to signals received in July from the House indicating that there would be a significant decrease in SRF’s in fiscal year 2024 to reduce EPA spending. At the same time the Senate was leaning towards keeping the spending on a flat line for the year. The possibility of a government shutdown is also clouding the future. 

“AMWA and others in the water sector are alarmed by the proposal by Republican House appropriators to slash funding for the Drinking Water and Clean Water SRFs by 60% next year, so we want to highlight the importance of full SRF funding before lawmakers begin negotiating the final 2024 fiscal year funding bill for EPA,” said Dan Hartnett, chief advocacy officer, Association of Metropolitan Water Agencies.   

Although a big chunk of federal funding is flowing to water projects, the letter notes strings that are attached to the money. Per the letter, “Nearly half of IIJA funding – $20 billion of $43 billion is restricted and can’t be used to replace, repair and rehabilitate aging water infrastructure.” The infusion of federal money is also being seen as a distraction. 

“The infusion of IIJA funding has been very helpful to local water systems, and will continue to be through 2026,” said Hartnett. “We are concerned that some in Congress may view that infusion of funds as a justification for cutting annual SRF appropriations.” 

The  sector authorities point to a legacy gap in capital funding for water projects that is expected to grow to $434 billion by 2029, per studies by the American Society of Civil Engineers. According to the letter, boosting the limit to the maximum would “fund water infrastructure projects in communities that can’t qualify or afford financing in the private sector or municipal bond market.”  

Funding for water infrastructure is also spurring debates about how big a role municipalities should be playing. At the end of August the President’s National Infrastructure Advisory Council issued a report recommending the creation of a national water strategy by establishing a Department of Water at the Cabinet level of government.