Clean Water Current

The White House released its proposed Fiscal Year 2023 (FY23) Federal Budget on March 28. The long-awaited proposal lays out the President’s request for how to advance the Biden Administration’s priorities through annual spending in the federal fiscal year beginning October 1.   

The President’s Budget is a proposal to Congress, which ultimately holds the responsibility of drafting annual spending bills. Of interest to NACWA members, the budget proposes a nearly 25% increase in EPA’s current overall funding level from $9.5 billion to $11.9 billion, which would involve implementing funding for water infrastructure that was provided through the Bipartisan Infrastructure Law, as well as direct new spending for related areas including environmental justice and climate change. As a result, much of the proposed funding for clean water remains level compared to FY22 enacted levels.  

Specifically, the budget would provide the Clean Water State Revolving Fund (CWSRF) with level funding at $1.64 billion and the Drinking Water State Revolving Fund (DWSRF) at $1.13 billion, and requests that not less than 10 percent of the CWSRF and 14 percent of the DWSRF be used by states to provide grants, principal forgiveness, and negative interest loans. Note that this annual spending is on top of the major SRF influxes provided through the Bipartisan Infrastructure Law, so total funding to the SRFs in FY23 will be far above a typical year.   

However, while the baseline SRFs do not see a boost in the budget, other important water programs do see increases.  Notably, the Water Infrastructure Finance and Innovation Act (WIFIA) program would be funded at $80 million, and the Sewer Overflow and Stormwater Reuse Grants would receive a major increase to $280 million in FY23. Getting significant funds to grow that program has been a key NACWA priority.  

Another priority, EPA’s Workforce Grants program, would also see a sizeable plus up to $17.7 million – compared to less than $5 million received so far. The budget also proposes a new $25 million water sector cybersecurity grant program. Additionally, the Alternative Water Source Grants Pilot Program is funded at $25 million, which would help with water reuse and recycling projects. These are all important programs and NACWA commends the administration for prioritizing them.   

On environmental justice (EJ), EPA requests a major increase in funding – $300.8 million – to stand up a new national office led by a Senate-confirmed Assistant Administrator that would guide policymaking for the national program offices and assist EJ implementation efforts within the regions.  

To supplement the budget, EPA also released an FY 2022-2026 Strategic Plan, which serves as a marker for the Agency’s priorities over the next four years.  

Beyond EPA priorities, the proposed budget includes a significant increase in funding for the Building Resilient Infrastructure and Communities (BRIC) program, which supports states, local communities, tribes, and territories as they establish hazard mitigation projects with the goal of reducing the risks faced by disasters and natural hazards. The Federal Emergency Management Agency’s (FEMA) Pre-Hazard Flood Mitigation Assistance Grants program would also stand to gain greatly from an increase of funding from $9 million in FY22 to $88 million in the proposal.  

Additionally, U.S. Department of Agriculture (USDA) conservation programs, including the Environmental Quality Incentives Program and Conservation Stewardship Program, would see increases to make up a combined pot of funding of approximately $1.7 billion for FY23.  

The budget also proposes a continued funding for low-income household water customer assistance. The budget proposes a modest increase for the Low-Income Home Energy Assistance Program (LIHEAP) and would allow water bills to be eligible alongside energy through that program – a similar but more controversial approach than the current emergency water assistance available through the Department of Health and Human Services. NACWA staff is reviewing this proposal and discussing with other impacted stakeholders.   

The budget submission comes on the heels of a recent response from EPA to NACWA’s February 24th letter to Administrator Michael Regan outlining the Association’s budget priorities for the coming year.  

Congress has had a slow start to developing FY23 appropriations bills after recently passing the FY22 Omnibus, but activity for next year will likely begin in the coming weeks. This also means that the FY23 earmarks process is getting underway – an area of increasing interest for NACWA members. Utilities are encouraged to engage now with their Congressional delegation on funding priorities if they seek earmarks for clean water projects.   

NACWA stands ready to promote the Association’s priorities as the FY23 process advances. NACWA staff continues to study the proposed budget and will provide updates on the budgetary process as they develop. Contact NACWA’s legislative team with any questions or to discuss further.