President Donald Trump vowed to follow through on another key campaign promise when he announced during a recent address to Congress that he would ask for approval of a $1 trillion infrastructure spending plan. However, Trump’s comments on increased infrastructure investment came just days after the White House outlined a FY18 budget blueprint that would reduce federal discretionary spending by $54 billion to pay for a corresponding increase in defense spending.
While additional details about the White House plan are not expected before mid-March, reports have suggested that the U.S. Environmental Protection Agency (EPA) could be in line to see its $8.1 billion budget cut by up to 25 percent. These cuts would reportedly hit all areas of EPA, including its grants to states, which are the source of SRF funds. The SRFs were funded at approximately $2.25 billion in FY16, representing more than a quarter of EPA’s overall budget.
While the president was mostly nonspecific about an actual plan for the $1 trillion investment, he did say that any spending would incorporate a combination of public and private capital. While proposals issued last year by the Trump campaign sought to make private financing central to any new infrastructure plan, the president’s latest comments about a figure of $1 trillion may necessitate a new level of direct federal spending. This could potentially translate to additional funds for the SRF – which the Trump campaign called for tripling – and the Water Infrastructure Finance and Innovation Act (WIFIA).
For now, the White House’s proposed reduction in discretionary spending may contradict the president’s plan for increased infrastructure dollars.
Although many of the details of the White House budget plan remain to be filled in, numerous Democrats and Republicans on Capitol Hill have already suggested that any proposal that includes such massive across-the-board cuts to EPA and other federal agencies will be dead on arrival in Congress. This bipartisan reaction indicates that Trump’s proposal could ultimately receive the same Capitol Hill treatment as most presidential budgets, which are typically set aside before Congress gets to work developing its own budget plan that reflects lawmakers’ own ideas on appropriate programmatic funding levels.
In a letter to the EPA’s Office of Management and Budget, the American Water Works Association (AWWA) is urging that water infrastructure needs be addressed in the federal budget for fiscal year 2018.
“Water infrastructure is vital to our nation’s well-being,” wrote Tracy Mehan, AWWA executive director of government affairs, in the Feb. 27 letter. “It protects public health and the environment, supports local and national economies, protects us from fires, creates jobs and brings us a higher quality of life.”
Specifically, AWWA recommended the budget:
- Fund WIFIA at $45 million, which is the amount authorized in the Water Resources Reform and Development Act of 2014;
- Fund the Drinking Water State Revolving Fund (DWSRF) at $1.8 billion;
- Maintain funding at the levels found in the Further Continuing and Security Assistance Appropriations Act of 2017 for research that assists EPA in preparing sound regulations related to drinking water; and
- Maintain funding at levels found in the Further Continuing and Security Assistance Appropriations Act of 2017 for EPA’s Office of Ground Water and Drinking Water within the Office of Water to support development of sound regulations related to drinking water.
Congress funded WIFIA for the first time in the 2017 budget, appropriating $20 million for the loan program. WIFIA lowers the cost of large water infrastructure projects by providing low-interest, long-term federal loans to communities. AWWA noted in its letter that based on estimates from the Senate Environment and Public Works Committee, funds appropriated through the WIFIA program could be leveraged at a ratio of 67:1. If the program were to receive the $45 million authorized for fiscal year 2018, it could cover over $3 billion in credit assistance.
Earlier this year, Democrats proposed their own plan for funding infrastructure renewal. In January, Senate Democrats unveiled their own $1 trillion spending plan in which water and wastewater infrastructure funding programs at EPA and the U.S. Department of Agriculture (USDA) would receive an additional $110 billion over the next 10 years.
A Blueprint to Rebuild America’s Infrastructure proposes major funding boosts for a broad range of infrastructure sectors, including roads and bridges, rail and transit, public schools, broadband, hospitals and airports. But with Republicans having control of both chambers of Congress, the Democrats’ blueprint stands little chance of fully advancing.
The plan appeared to be inspired by Trump’s campaign-season pledge for new spending on infrastructure centered on implementing new tax incentives to spur private-sector infrastructure investments. The Senate Democrats’ plan, in contrast, would require new direct federal spending on infrastructure. The proposal was mostly viewed as an initial attempt to influence any infrastructure package brought forward by the Trump administration.
While specific legislative language was not provided, a summary of the blueprint says that the $110 billion in new water and wastewater spending would create 2.5 million new jobs across the country. The money would go toward “major investments in the Clean Water and the Drinking Water state revolving funds, and USDA water programs” in addition to “increase[d] funding for the Water Infrastructure Finance and Innovation Act.” Policy reforms in the proposal would “give states new flexibility to provide communities with more [SRF] grants rather than loans,” and would decrease the 20 percent state match that applies to SRF capitalization grants.
Some information contained in this news appeared in the Association of Metropolitan Water Agencies’ weekly news briefs. For more, visit amwa.net.