Congress Mulls FY2014 Budget, SRF Funding

With fiscal 2014 approaching, Congress was in its usual scramble to cobble together a federal budget - including funding for the state revolving funds (SRFs) that are important to the drinking water and wastewater sectors.

By Patrick Crow, Washington Correspondent

With fiscal 2014 approaching, Congress was in its usual scramble to cobble together a federal budget - including funding for the state revolving funds (SRFs) that are important to the drinking water and wastewater sectors.

As it returned from its August recess, Congress had yet to complete any of the dozen annual appropriations bills necessary to continue the operations of federal departments, agencies and programs.

With control of Congress split between competing political parties, the usual budget standoff was a prospect. Over the past 30 years, only three times has Congress managed to deliver its slate of appropriations bills on time.

Congress routinely resorts to just continuing funding at existing levels. House Speaker John Boehner (R-Ohio) already has said he would seek a short-term continuing resolution (CR) that would extend fiscal 2013 funding levels (which were somewhat reduced by a sequester) through fiscal 2014.

A group of water associations have warned congressmen that such rote funding is unacceptable for the two SRFs, which fall under the Environmental Protection Agency's (EPA) budget.

Their joint letter to all members of Congress was signed by the National Association of Clean Water Agencies, the U.S. Conference of Mayors, the National Association of Counties, the National League of Cities, the Association of Clean Water Administrators, the Association of State Drinking Water Administrators, the Council of Infrastructure Financing Authorities, the Association of Metropolitan Water Agencies, the American Public Works Association, the American Water Works Association, and the Water Environment Federation.

President Obama's proposed budget would have trimmed $472 million from the SRFs. The House Budget Committee went even further, proposing a nearly 70-percent slash.

The groups urged Congress to maintain the SRFs at 2013 funding levels: $1.45 billion for the clean water program and $909 million for the drinking water program.

They said, "Communities across the country face enormous challenges in providing their residents with safe and clean water, and while we understand the nation faces difficult fiscal decisions, disinvesting in our nation's public health infrastructure should not be the solution.

"The water and wastewater infrastructure needs of this country are well known: our drinking water utilities and wastewater utilities face needs upwards of $1 trillion or more to fund their systems over the next 20 years.

"Communities rely on the state revolving fund programs to obtain low-cost financing to meet these needs - ratepayers cannot shoulder this burden alone."

The groups conceded that congressional committees face difficult appropriations choices, but said, "We cannot allow the job of maintaining our critical water and wastewater infrastructure to become a budget casualty. It must be seen as an investment."

According to the EPA, that investment is falling short. In its latest drinking water infrastructure needs survey, released last June, the Agency reported that the nation needs to invest $384 billion over the next 20 years, of which $247.5 billion would be for the refurbishment or replacement of aging water lines.

The other major investment needs cited in the report were for projects related to treatment ($72.5 billion), storage ($39.5 billion) and source development/upkeep ($20.5 billion). Of the $384 billion, large water systems (serving more than 100,000 people) accounted for 38 percent ($145.1 billion) of the needs identified in the survey.

The agency noted, "The nation's water systems have entered a rehabilitation and replacement era in which much of the existing infrastructure has reached or is approaching the end of its useful life."

Last summer, the EPA issued allotments to guide the distribution of drinking water SRF funds to the states for fiscal years 2014 through 2017. Although each state and the District of Columbia are guaranteed at least 1 percent of the annual drinking water funding each year, the EPA uses its water infrastructure needs survey to determine which states need additional funding. The allotments are adjusted quadrennially.

The House of Representatives may also include a Water Infrastructure Finance and Innovation Authority (WIFIA) pilot program (already approved by the Senate) in its Water Resources Reform and Development Act; and the U.S. Conference of Mayors, the National League of Cities and the National Association of Counties are lobbying to defeat attempts to eliminate or cap the deduction on tax-exempt municipal bond interest. They say the 100-year-old exemption is essential for financing critical infrastructure, including water projects.

About the Author: Patrick Crow covered the U.S. Congress and federal agencies for 21 years as a reporter for industry magazines. He has reported on water issues for the past 15 years. Crow is now a Houston, Texas-based freelance writer.

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