Initial Water Infrastructure Funding Outlook for the 112th Congress

As the 112^th Congress convenes and the new legislative season begins to take shape, the picture for water infrastructure funding becomes a little clearer. At the outset, it is important to recognize that many of the new members of Congress arrived in Washington on a pledge to cut spending. This desire presents a significant risk of decreased appropriations for key programs like EPA’s state revolving loan fund and RUS’s rural water and wastewater programs. Things like the GOP pledge to return non-defense government spending to FY2008 levels and the Obama administration’s request to the agencies to trim 5 percent off of their FY2012 budgets compound the overall downward trend that federal water funding has faced over the last few decades. This decrease in the federal funds will continue the trend (perhaps by design) of shifting the burden for this infrastructure on municipalities. These municipalities however, will continue to be plagued by declining tax revenues, tightening bond markets, and competition for funding from many other programs. However, the desire to decrease funding may not stop with the appropriators. As the SRF authorization battle begins again, we may face further desire to decrease levels of funding directed at spending initiatives at the authorizing level. In addition, the SRF authorizing bills in the next Congress are likely to face the same partisan battles as in previous Congresses. On the policy side, contentious additions to the bill like Buy American and Davis-Bacon prevailing wage requirements are less likely to be added to the bills with Republicans holding the majority, but Democrats are more likely to block passage of the bills without their inclusion. Outlook for more creative funding measures is also stilted. As with appropriations, the new GOP House is anti-spending and anti-tax. We suspect that the user fees levied in this bill as it was written for the 111^th Congress will face stiff opposition. We also lost four of the 40 co-sponsors of the original trust fund bill in the 2010 election cycle. AGC supported legislation lifting the volume cap on private activity bonds for water and wastewater infrastructure projects faces perhaps the best prospects in the new Congress due to its low cost and because it allows states and local governments to leverage potentially billions in private investments. This provision was included in several pieces of legislation passed out of the House and narrowly missed being included in the final tax compromise package that extended the Bush era tax cuts. As the funding battles take shape, AGC will be on the forefront of advancing the call for adequate funding for water and wastewater infrastructure needs.