Federal agencies, states, local municipalities, and water industry professionals are all concerned that our national spending on clean water infrastructure has fallen behind current and projected needs. EPA currently estimates this funding gap for total water spending amounts to as much as $22 billion per year.¹³

In 1987, recognizing both the importance of clean water and the need for more funding, Congress stepped in. The Clean Water State Revolving Fund, a program established through an amendment to the Clean Water Act, was created to help states address developing clean water needs.

The revolving fund parcels out seed money to states, which contribute a mandated 20 percent in matching funds. States then use those funds to issue communities low-interest loans, allowing them to undertake clean water projects. The terms of these loans vary, but their rates are typically less than half the market average, facilitating substantial cost savings.¹⁴

Communities use revolving fund loans to improve wastewater treatment, safeguard estuaries, prevent or mitigate nonpoint source pollution, and improve surface water quality. Projects are funded according to a state’s Intended Use Plan, which lists and prioritizes community requests.

Today, thanks to state contributions, returning principal and interest from loans, and leveraged bonds, every federal dollar provided under the program is met by an average of $1.28 from non-federal sources.¹⁵ Congress initially intended this returning capital from loans to permit a drawdown in federal spending, and federal contributions were to have ceased entirely in fiscal 1994.

Things worked out differently. As the program’s expiration date approached, it was obvious that states’ clean water needs would continue to far exceed their funding capabilities. So the program was extended, and the federal government continues to fund the CWSRF on a year-to-year basis.

While this arrangement has kept the program afloat, it has come at the cost of adequate funding. The appropriations process is an intensely politicized one even in the best of times. High-value, low-visibility programs such as the Clean Water State Revolving Fund are often mistakenly cast as fat to be trimmed from pork-stuffed federal budgets.

Improvements in clean water infrastructure “remain a top priority if we are to reclaim our water resources,” claims the president’s Office of Management and Budget, charged with overseeing federal agencies and explaining the administration’s fiscal policy.¹⁶ Yet it is difficult to square the administration’s rhetoric with its actions.

“Well, it all comes down to politics,” Maine’s McLauglin said. “The president sets the spending priorities, and apparently the Clean Water SRF isn’t one of them.” ¹⁷

Over the course of the previous decade, presidential budget requests have continually sought to shrink the federal government’s role in addressing clean water needs. The most recent such requests have allotted the fund a mere $688 million.

Members of Congress have often responded by funding the CWSRF above administration requests. Yet even with Congress appropriating additional resources, federal involvement in clean water spending has declined precipitously.

Federal funding for the fund peaked in fiscal 1991, when Congress provided the program just over two billion dollars. In that year, the CWSRF went fully operational, completely replacing the construction grants previously used to fund clean water projects.

Since then, federal financial support has atrophied. Appropriations fell six percent between 1989, when money from the program was still accompanied by construction grants, and 2006. Since 1991, funding has fallen by more than $1.16 billion, or 57 percent.¹⁸

These are large numbers, but the drop is even starker than it may first appear. When adjusted for inflation, federal funding fell 39 percent between 1989 and 2006 and 70 percent since 1991. At the same time, construction costs have increased by an average of three percent per year and grew six percent in 2004.

The executive branch points out that the CWSRF has provided communities with assets far beyond those originally envisioned, noting that the program has been capitalized at a level three times the authorizing legislation.²⁰ True, but context is everything.

The federal government has provided $24 billion since fiscal 1988 for clean water funds. States, meanwhile, spend more than two and a half times that sum – approximately $63 billion – every year.²¹ As a proportion of overall efforts, 78 percent of clean water spending in 1978 came from the federal government. Today, it is contributing only three percent. Federal spending on clean water lags behind its total infrastructure spending, where it contributes around 25 percent of funding for transportation, energy, and solid waste management.²²

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