FY2016 Budget Request Shifts the Debate on Clean Water Investments

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The debate over what federal programs to fund for the upcoming fiscal year that begins in October got underway earlier this month when the Obama Administration released its FY 2016 Budget Request.  Acknowledging what many federal budget watchers have argued for two years, the Administration decided to jettison the budget handcuffs of sequestration, which imposed across the board budget caps on all federal spending regardless of the merits of any particular program, in favor of a budget that restores funding for many of its priorities, including the environment and infrastructure investment.   Thus, the Administration is proposing that overall spending for the U.S. Environmental Protection Agency (EPA) increase by $460 million to $8.6 billion and that overall spending on investments in water and wastewater infrastructure remain near FY 2015 levels at $2.3 billion. 

NACWA is pleased to see that the Administration has requested spending for the State Revolving Fund (SRF) programs remain nearly intact as it is an acknowledgement that the need for strong investment in our water and wastewater infrastructure is indeed great.  More practically, since Congress has restored investment in these programs for the past several years despite the Administration’s requested attempts to reduce it, the Administration realized it is pointless to try to use the money elsewhere.

The Administration’s budget, however, proposes shifts in spending in the SRF programs which Congress may or may not agree to.  Specifically, the Administration is requesting a $333 million cut to the Clean Water State Revolving Fund (CWSRF) and a $279 million increase to the Drinking Water State Revolving Fund (DWSRF), dedicating $1.118 billion and $1.186 billion respectively to these programs.   The Administration is also requesting $50 million for technical assistance, training, and other efforts to enhance the capacity of communities and states to plan and finance drinking water and wastewater infrastructure improvements, of which $5 million would be used to administer the Water Infrastructure Finance & Innovation Act (WIFIA)

For years, annual appropriations for the CWSRF exceeded spending for the DWSRF by approximately $500 million likely due to the fact that authorization levels were traditionally smaller for the drinking water program and the fact that costs associated with building and maintaining wastewater treatment plants and collections systems were far greater than those for drinking water systems.  However this view point, at least within the Administration, is clearly being questioned and we may be entering into a new spending era of parity between the two programs.   There are likely several reasons for this shift in perspective.  One reason could be concern that drinking water supplies may not be as safe as once assumed them to be after the crisis last summer over nitrate levels the City of Toledo’s drinking water supply, provided by Lake Erie, exceeded public health standards set by the EPA, forcing Toledo’s businesses and residents to go without water for several days.   Another reason could also be the result of issues raised during last year’s debate over establishing the WIFIA program during which advocates argued that the current DWSRF program is not adequate to finance many large metropolitan drinking systems and therefore a new federal financing mechanism was needed.  Debate over WIFIA raised the profile of the state of our water and wastewater infrastructure in general and drinking water systems in particular.  A third reason could also be concern over the adequacy of current drinking water supplies in many regions experiencing persistent drought due to climate change and the need to invest in alternative water supplies, including water reuse.   

Whatever the reasons for the Administration’s proposal, Congress will need to determine whether the shift in spending toward drinking water systems is in fact warranted and necessary.  Certainly EPA’s regulatory focus on clean water agencies is not diminishing and in fact, the Administration continues to issue many new regulations for which wastewater agencies that will continue to drive up costs for these agencies, including new rules regarding sewage sludge incineration and addressing mercury from dental offices, and continued wet weather enforcement. 

While NACWA stands with its drinking water brethren in applauding the Administration’s request for more money to ensure our drinking water supplies remain the safest in the world, we will continue to ensure Congress understands that this increase cannot come at the expense of clean water.  Stay tuned….   

 

 

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