March 20, 2017 | EnviroStructure

Hidden Behind the President's Proposed EPA Cuts, an Infrastructure Silver Lining


As expected, President Trump’s recently released “skinny budget” proposes deep cuts to EPA’s 2018 fiscal year funding. The outline calls for Congress to slash $2.4 billion from EPA’s existing budget, reducing the agency’s funding from $8.1 billion to $5.7 billion. This 31 percent budget reduction would force the agency to ax over 50 programs and the equivalent of roughly 3,000 full-time jobs. Of course, Congress is unlikely to enact these cuts in full, and even many key Republicans have already indicated resistance to major pieces of the President’s proposed EPA budget.

But the Administration doesn’t propose cutting every EPA program. In fact, buried in the lead is the proposed budget’s “robust funding for critical drinking and wastewater infrastructure.” $2.3 billion is set aside to fund the Clean Water State Revolving Fund and Drinking Water State Revolving Fund (the State Revolving Funds)—a $4 million increase over the 2017 annualized continuing resolution funding level. And the budget would provide $20 million in first-time funding to the Water Infrastructure Finance and Innovation Act program (WIFIA), which is based on the successful Transportation Infrastructure and Innovation Act administered by the Department of Transportation.

Together, these programs form the backbone of federal support to state and local water infrastructure programs. Since formation, the State Revolving Funds have provided over $150 billion of water infrastructure support funding. And WIFIA aims to provide long-term, low-interest loans worth up to 49 percent of water infrastructure project costs for qualifying projects, and is designed to work “hand in hand” with the State Revolving Funds. EPA estimates that $20 million of WIFIA funding can support almost $1 billion in direct loans for water infrastructure projects across the country, through leveraging and multiplier effects. Indeed, the Department of Transportation estimates that “[e]ach dollar of Federal funds can provide up to $10 in TIFIA credit assistance—and leverage $30 in transportation infrastructure development,” so WIFIA is certainly promising.

In light of the substantial agency-wide cuts being floated by the Administration, this increase in federal water infrastructure funding, however modest, is a vital silver lining. Whatever other changes Congress makes to the balance of the proposed budget, these line items are likely safe. Administrator Pruitt is a long-time federalism advocate, and President Trump has repeatedly emphasized his desire to funnel money toward water infrastructure projects, so water infrastructure funding may be somewhat of a sacred cow to both the White House and the agency.

But while it appears that the Trump EPA will prioritize water infrastructure, it is less certain when and how the money will start flowing. Aside from Administrator Pruitt, other EPA program heads have not been appointed; having a full political team in place at EPA would seem to be a prerequisite to getting WIFIA up and running. Nor has the Administration indicated how it would dole out WIFIA funding, particularly in light of the significant proposed EPA staff cuts. In short, though the President plans to push water infrastructure development while in office, there are important unanswered questions regarding the form that development and prioritization will take. Yet despite these question marks, WIFIA stands a strong chance of moving forward. It has both White House and EPA support, it is likely to garner significant Democratic support, and it supports both urban and rural constituencies. If any Trump EPA program is likely to start off strong, it looks to be WIFIA.