Washington Report: AWIA sets the course for next wave of water infrastructure financing

By Diane VanDe Hei

It has been a popular talking point recently in Washington, D.C. to call for action on some sort of “infrastructure bill” that could stimulate the economy, put Americans to work, and begin to rectify the state of our nation’s roads, bridges, and even our water systems. However, those who have not been watching Capitol Hill closely may have missed the news that last fall Congress approved, and President Donald Trump signed into law, one of the most significant drinking water infrastructure bills in a generation. But even with this sizeable accomplishment, the U.S. Environmental Protection Agency’s (EPA) water infrastructure programs remain at risk of future spending reductions.

Last year’s bill, America’s Water Infrastructure Act, or AWIA, was the latest iteration of biennial water policy legislation known as the Water Resources Development Act, or WRDA. Since the 1970s, Congress has, with mixed success, aimed to enact a new WRDA bill every two years for the purpose of authorizing various flood control, navigation and environmental resource projects carried out by the U.S. Army Corps of Engineers. Starting with the 2014 WRDA bill, however, lawmakers began to demonstrate a growing willingness to use WRDA as a vehicle for approving broader drinking water and wastewater infrastructure initiatives. The 2014 WRDA, for example, created the Water Infrastructure Finance and Innovation Act (WIFIA) program on a five-year pilot basis. The 2016 WRDA authorized several programs to reduce lead in drinking water. Finally, the 2018 WRDA – AWIA – reauthorized WIFIA and the Drinking Water State Revolving Fund (DWSRF) program, thus setting funding targets for congressional appropriators through the 2021 fiscal year.

As enacted, AWIA authorizes Congress to spend more than $4 billion on the DWSRF through fiscal year 2021, including $1.3 billion in the upcoming 2020 fiscal year. This marks the first formal reauthorization of the DWSRF in its 25-year history; the program’s previous funding authorization lapsed after the 2003 fiscal year. And while lawmakers continued to appropriate funds for the program even after it expired, this new reauthorization represents a renewed commitment to the DWSRF and provides House and Senate appropriators with a concrete funding target as the annual spending bills are put together.

“Of course, authorizing aspirational program funding targets is one thing. Actually appropriating the necessary dollars is another challenge.”

AWIA also delivered an important vote of confidence in WIFIA, the pilot program that was otherwise scheduled to expire with the 2019 fiscal year. AWIA eliminated WIFIA’s pilot status – thus removing any perception of it as a temporary measure – and extended its authorization through 2021 to the tune of $50 million per year. WIFIA’s unique 100-1 leveraging ability means that a $50 million appropriation would translate into roughly $5 billion worth of loans to support major water and wastewater projects across the nation.

This will allow the nation to build on WIFIA’s initial success. Already, EPA reports that it has closed eight WIFIA loans delivering over $2 billion in credit assistance to help finance water infrastructure projects nationwide, and the agency has invited another 42 projects in 17 states and the District of Columbia to apply for their own WIFIA loans. Plus, an additional $6 billion worth of loan funding was unlocked when Congress passed EPA’s fiscal year 2019 appropriations bill earlier this year. Enactment of AWIA means that WIFIA’s impact will only continue to grow in the coming years.

Of course, authorizing aspirational program funding targets is one thing. Actually appropriating the necessary dollars is another challenge. We are fortunate that Congress has been consistent in its funding support for the DWSRF and WIFIA, but a constrained budget environment in the years ahead could threaten some of this progress.

These looming challenges are exemplified by the president’s FY2020 budget request to Congress, which proposed slashing overall EPA funding by nearly one-third. The DWSRF and WIFIA were not immune from the axe, with the president suggesting trimming funding for both by a total of nearly $350 million. Such drastic cuts to EPA’s overall budget are unlikely to survive congressional scrutiny, but the agency’s water infrastructure funding programs are at real risk of seeing their appropriations reduced. This is why the Association of Metropolitan Water Agencies and other national water and wastewater groups have been contacting House and Senate appropriations committee leaders to fund the programs at their fully-authorized levels.

The prospect for water infrastructure funding cuts so soon after passage of AWIA can be traced to a two-year budget framework that Congress agreed to early in 2018. The deal, which applied to the 2018 and 2019 fiscal years, called for spending an additional $10 billion in each of those years on a variety of infrastructure programs to benefit various infrastructure sectors, including water and wastewater. In fiscal year 2019, this directly resulted in more than $700 million in additional funding flowing to EPA’s budget for the Drinking Water and Clean Water SRFs, WIFIA, and other water infrastructure efforts. But with that budget agreement expiring at the end of the 2019 fiscal year, this additional budget authority for infrastructure initiatives will come off the table. In other words, the high levels of water infrastructure spending envisioned by AWIA may be difficult to sustain going forward in the absence of a new budget plan with a dedicated infrastructure component that would take effect in the 2020 fiscal year.

AWIA represented a major victory for every American who relies on water from the tap. The new law set an ambitious course for the next several years of water infrastructure spending, but now Congress and the White House need to come through again with a plan to actually deliver the dollars to the communities that need them.

Diane VanDe Hei is the CEO of the Association of Metropolitan Water Agencies (AMWA), the organization representing the largest publicly-owned drinking water systems in the United States. AMWA’s membership serves more than 140 million Americans with safe drinking water. AMWA is the nation’s only policy-making organization solely for metropolitan drinking water suppliers. VanDe Hei is a frequent contributor to Water Finance & Management.

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