Increase funding for the Clean Water and Drinking Water State Revolving Fund (SRF) Programs

Action Needed

Counties urge Congress to continue the historic federal commitment to our nation’s water infrastructure by reauthorizing the Drinking Water and Clean Water SRFs at or above the funding levels from the Infrastructure Investment and Jobs Act (IIJA; P.L.117-58). Counties also encourage Congress to appropriate separate funding for Congressionally Directed Spending SRF projects while maintaining robust annual SRF appropriations.

Background

Congress established the SRFs to provide a consistent funding source for local drinking water and wastewater infrastructure projects. The Clean Water State Revolving Fund (CWSRF) was established by the 1987 amendments to the Clean Water Act (P.L. 100-4) while the Drinking Water State Revolving Fund (DWSRF) was established by the 1996 amendments to the Safe Drinking Water Act (P.L. 104-182). The SRF programs provide below-market rate loans to fund infrastructure improvements to water systems to protect public health and ensure compliance with federal water quality standards. The DWSRF and the CWSRF programs are federal-state partnerships administered by the U.S. Environmental Protection Agency (EPA) and state water quality agencies.

The IIJA invested $43.4 billion into the SRFs in addition to annual appropriations. Despite this historic investment, the need for sustained federal investment in water infrastructure is evident in counties across the country. According to recent EPA estimates $1.2 trillion is needed to keep drinking water, wastewater and stormwater infrastructure in compliance with federal water quality standards through 2040. Congress must act as Fiscal Year (FY) 2026 is the last year of the additional IIJA funds and the SRFs are an effective vehicle for federal investment in local water infrastructure.

In 2021, Congress resumed the practice of appropriating funds for specific projects requested by individual members, ending a 10-year moratorium that had been in place since 2011. Previously called earmarks, this practice is now called Congressionally Directed Spending (CDS). Since Congress resumed appropriating funds for CDS projects, the SRF project requests have increased every fiscal year. According to NACo analysis, CDS requests accounted for 13.3 percent of SRF appropriations in FY 22 and increased to 49.5 percent in FY 26. While NACo supports counties applying for SRF funding through the CDS process, Congress should fund SRF CDS projects separately from the appropriations for the SRF programs. Taking CDS funding off the top of the annual appropriations reduces the amount of funding that is available for states to administer their SRF programs and limits funding opportunities for counties that cannot secure SRF funding through the CDS process.  

Key Talking Points

• As owners, users and regulators of water resources counties are directly impacted by federal investments in water infrastructure  
• Counties support reauthorization of the CWSRF and DWSRF at or above funding levels from the Infrastructure Investment and Jobs Act (IIJA)
• If SRF funding is not maintained, water system maintenance costs and the compliance costs of underfunded federal mandates will make water less affordable for counties and individual ratepayers
• Congress should fund SRF CDS requests separately from annual SRF appropriations to maximize federal investments in local water infrastructure