A Wise Investment: Convincing Congress Of State Revolving Funds

The Drinking Water and Clean Water State Revolving Funds (SRF) are federally administered financial programs that assist states with the creation of drinking water and wastewater infrastructure projects. Combined, the programs have provided tens of billions of dollars in low-cost financing towards water quality infrastructure since the Clean Water SRF was introduced as part of 1987’s Water Quality Act and the Drinking Water SRF as part of the 1996 amendments to the Safe Drinking Water Act.

Naturally, there is debate about how much the government should invest in the SRF. Advocates point out that there are few things more valuable to the nation than clean, affordable water and that any investments made in infrastructure end up as net positives for the country. Critics wonder how wisely the hundreds of millions of dollars that go into the funds every year are spent and how much of the budget is enough.

These critics were bolstered when the Obama administration proposed a budget that would cut funding to the SRF by a combined $257 million in 2017. But the advocates aren’t without their own defenses.

In early May, the Water Environment Federation (WEF) and the WateReuse Association released a joint “economics benefit analysis” of increased funding for the SRF. Among the findings: an investment of $34.7 billion of federal SRF funding spent over a five-year period would yield $102.7 billion in total economic input and create more than 500,000 domestic jobs.

“The SRF programs have been among the most successful federally-backed infrastructure programs ever, but their legislative authorization has expired and funding for them fluctuates annually due to larger federal budget challenges,” WEF and WateReuse said in a joint statement about the analysis. “But there has not yet been an analysis of the broader economic effects of the SRF programs or how the SRF impact the economy and the federal treasury as spending ripples through the economy. The analysis will demonstrate to Congress that the SRF programs have a broader benefit to our economy and there should be strong support for increasing funding for them.”

While the SRF have been around for decades and instrumental in countless water quality efforts throughout the country, the level of funding each year is dependent on continued support from Congress and overall federal budget considerations. That precarious future bolstered an analytical study that might convince Washington that the larger the SRF are, the better.

The need for the analysis was put forth by the United States Senate Committee on Environment and Public Works (EPW), a congressional group responsible for environmental and infrastructure issues (members include Jeff Sessions, Barbara Boxer, Bernie Sanders, and Jim Inhofe). To produce the analysis, WEF and WateReuse enlisted a team of economists and the consulting firm Abt Associates.

The team used an economic model called IMPLAN, originally developed by the U.S. Forest Service, according to WEF and WateReuse. The $34.7 billion figure was input at the behest of the EPW as a potential future amount for the SRF programs over a five-year funding period to take place from 2017 to 2021. $14.7 billion was allocated for the Drinking Water SRF and $20 billion for the Clean Water SRF.

“We determined that the U.S. EPA’s ‘Needs Survey’ for drinking water and clean water infrastructure projects will clearly define how future SRF dollars will be spent,” the joint statement said, referring to an EPA survey that projects the future needed spending for drinking water, wastewater, and stormwater infrastructure. “Then, using IMPLAN, we were able to capture direct, indirect, and induced spending from SRF dollars, and calculate national numbers for economic benefits, job creation, and tax revenues as that spending rippled through the economy.”

With the provided inputs, IMPLAN projected the $102.7 billion yield and the creation of 506,000 jobs. The analysis found that the average income for these jobs would be $60,000 per year and that they would mostly be skilled, licensed positions. The initial round of proposed SRF spending would primarily support jobs in the water utility, engineering, environmental consulting, and construction sectors.

WRF and WateReuse are aware that they are asking for a lot, but are optimistic that Congress will see that the benefits outweigh the costs and that now is the time to strike.

“The SRF programs have been funded at a combined total of $11.59 billion over the last five years and we are recommending triple that amount,” said the joint statement. “The analysis has shown that for every dollar of federal SRF spending, 93 cents returns to the federal treasury in the form of tax revenues… Congress is becoming increasingly aware of our national water infrastructure crisis. There is more bipartisan support for taking significant steps to address the problem than in previous years.”

The analysis was conducted and released to gain widespread awareness and support for the SRF. Armed with more information, local authorities who benefit from SRF funding are in a better position to advocate for it.

“WEF and WateReuse conducted this analysis to help policy-makers obtain a more complete understanding of federal funding for the SRF programs,” the joint statement said. “With this analysis, hopefully Congress will place a higher value on providing more funding for the programs and a long-term vision for them. Additionally, we urge stakeholders in the SRF programs, such as utilities, companies, other associations, and the public to use this analysis to advocate for the SRF programs.”