Much is at stake in Congress’ upcoming budget negotiations for state and local water agencies

As congressional negotiators try to reach a deal on a spending bill to avert a government shutdown at the end of September, one of the widest gulfs between Senate Democrats and House Republicans is over how much to send state and local governments to improve drinking water and mitigate water pollution. 

Even under the best-case scenario, Senate Democrats are only pushing to keep funding for two key water programs the same as this year, after President Joe Biden and Republican House Speaker Kevin McCarthy agreed to keep spending flat as part of their deal to avoid a default on the nation’s debt in June. 

Though the funding would come on top of the separate nearly $4.8 billion for the water programs in the 2021 bipartisan infrastructure law, associations representing water agencies say even the Senate’s proposal isn't nearly enough as they grapple with climate change and decades-old infrastructure.

The concern as Congress heads into the negotiations is that the amount being proposed by the Senate could potentially be dragged down. House Republicans are pushing to drastically cut the two programs, according to analyses by two separate associations representing state and local water agencies.

The spending proposal passed by the U.S. Senate Committee on Appropriations would keep spending at $1.2 billion for the Clean Water State Revolving Fund, which provides low-interest loans to local water districts to fund clean water projects like wastewater treatment and mitigating stormwater runoff. 

But the House GOP proposal would send states only a tiny fraction of that, about $62 million, according to the Council of Infrastructure Financing Authorities, an association representing state water agencies.

A separate analysis by the American Business Water Coalition, made up of several local water districts, puts the figure at roughly the same amount—$61 million, or 5% of the Senate’s proposal.

Republicans are also pushing for major cuts to the Drinking Water State Revolving Fund, which provides funding to states for projects like improving drinking water treatment, fixing leaky or old pipes and improving water supply sources. The Senate would provide $826.7 million for the fund. But, according to an estimate by the council, the House proposal would cut that to $32.6 million, or 4% as much as the Senate’s proposal. (The coalition’s estimates are slightly different, putting the Senate’s proposal at $852.8 million, and the House’s at $48 million or 5% as much.) 

The amount of money states would receive under the two proposals would vary dramatically. California, for instance, would receive roughly $91 million for clean water projects under the Senate proposal, but only $4 million under the House proposal, according to the two analyses.

“There's no doubt that there are projects that will not get funded if we go with the House numbers,” said Mae Stevens, chief executive officer of the American Business Water Coalition. Already, she adds, “we’re not spending enough on our water infrastructure in the U.S. You're seeing cities around the country failing to keep the water safe because they just don't have the funding to be able to do it.” 

Republicans, though, are adamant about reining in what they consider to be excessive spending during the Biden administration, with a group of conservatives saying they are willing to shut down the government unless they get the cuts they want.

“Cutting funding is never easy and it can often be an ugly, arduous process,” said Rep. Mike Simpson, an Idaho Republican, when the House appropriations committee passed a spending proposal in July that would also cut funding for the Environmental Protection Agency by $3.96 billion or 39%. “But with the national debt in excess of $32 trillion and inflation at an unacceptable level, we must make tough choices to ensure we do not saddle our children and grandchildren with overwhelming debt.”

But Wesley Sydnor, chief of government and public affairs for the Louisville Metropolitan Sewer District, said cutting the funding would impact ratepayers. The district, which provides wastewater collection and treatment, stormwater management and flood protection for portions of five counties in Kentucky, has a $1 billion capital plan over the next five years to replace pumps on the Ohio River that were built in the 1950s and upgrade the district’s largest water treatment plant. 

“We have some pipes and systems that are in place that were built in the 1850s that are still in use today,” he said. “With the increased frequency of intense storms that we're seeing here in Louisville, we're finding more of a need to upgrade and invest in inland drainage and start inland flood mitigation.”

Should funding for low-interest loans through the programs be cut, Sydnor said, the district would not abandon the project but pay for them by issuing bonds. The higher interest rates would have to be passed on to ratepayers, although the district would try to keep rates affordable. 

“It’s concerning,” Sydnor said of the looming budget fight. “We'll definitely be advocating for more rather than less and just hoping there's some value placed on clean water, and that's reflected in the amounts that get allocated for this.”

In Texas, a spokesperson for the state’s Water Development Board called the state revolving funds “critical programs” and that “there is a tremendous need for more funding for water infrastructure projects in Texas.” Cutting the funds, she said, “impacts our communities and Texas as a whole.”

The state plans to spend the federal funding on several projects, including upgrading Abilene’s wastewater collection system as it is “capacity deficient” and needs improvements to reduce the risk of system overflows. A wastewater pumping station in Alamo that “has deteriorated, is in poor condition and needs to be replaced” would be prioritized, as would clay sewer lines in the city that “are deteriorating and causing stoppages and spills of raw sewage onto existing streets and alleyways.”

According to the analysis by the Council of Infrastructure Financing Authorities, Texas would receive $58.6 million under the Senate proposal and $2.8 million in the House proposal.

Brad Wong, a spokesperson for Seattle Public Utilities, also said the funding was critical and that it still needs more. “If Congress goes the other direction and diminishes their commitments,” he said, “[it would hamper] our abilities to address aging and seismically at-risk infrastructure.”

For instance, it could take away funding to reduce flooding in the city’s South Park neighborhood. “Heavy rains and high tides, exacerbated by sea level rise, cause frequent winter flooding in South Park, which only hurts residents, their homes and local businesses,” he said.   

While budget negotiators are not expected to cut the funding as much as House Republicans are proposing, it remains to be seen if negotiators will spend as much as the Senate wants.

Frustrating the council and the American Business Water Coalition, as well, is that more money would be going to states had Congress not decided two years ago to divert hundreds of millions for the programs to pay for earmarks, requested by members of Congress for projects.

States could be getting $880 million more under the House proposal for the two revolving funds if the money wasn’t diverted for earmarks. The Senate proposal diverts $588 million.

The earmarks back home, do pay for water projects like $3.2 million for a water pipeline in Arvin, California, requested by Republican Rep. David Valadao or $2 million for a sanitary sewage improvements in Ashtabula County, Ohio sought by Republican Rep. David Joyce.

But by taking away the money that would have gone to the revolving funds, Congress is weakening the ability of states to use the money on what they think are the greatest needs, said Deirdre Finn, executive director at the Council of Infrastructure Financing Authorities. The money for earmarks would be spent on Congress members’ “handpicked projects” instead of spending it on projects states prioritized “based on public health, environmental protection and affordability,” she said.

The council hasn’t yet analyzed in detail the impacts of the earmarks called for in the House and Senate proposals. But in an analysis last year, 36 states did not receive enough in earmarks to make up for what they would have received in revolving fund dollars had the money not been diverted.