Obtaining Infrastructure Funding

How does the Federal Budget Impact Rural Utilities?

The level of federal funding available for water and wastewater infrastructure may vary significantly from year to year and can have a dramatic impact your community’s ability to secure funds for a project. Whether you’re looking for a loan from the U.S. Department of Agriculture’s Rural Utilities Service (USDA-RUS), your State Revolving Funds (SRFs), or Community Development Block Grants (CDBG), the federal budget process can make or break your plans for affordable water and wastewater solutions. The process of creating the federal budget every year is complex and sometimes confusing, but it should inform your decision-making as you devise strategies to finance your project.

Every February, the president releases his budget request for the year. It’s an outline of which government programs he believes should be funded and at what level. Think of the president’s budget request as the opening argument in negotiations over federal discretionary spending for the year (some funds, like Social Security, are distributed automatically and are therefore not part of the budgeting process). Congress usually responds with its own budget blueprint and then proceeds to pass spending bills, known as “appropriations” that fund the various departments and agencies of the federal government.

Because this process repeats every year, Congress could simply choose not to fund water and wastewater infrastructure at all in any given year. Realistically, there will probably always be some level of federal funding, but the unpredictable nature of our political system means that you can’t always count on federal funds being available when you will need them. This is why having a reserve account for your utility is so important. It gives you a pool of your own funds to draw upon to prepare for your system’s future needs.

This year, the overall level of funding in the president’s budget request reflects the terms of last year’s debt-ceiling deal and is set at $1.047 trillion. The reduction in the total budget figure means many federal programs face budget cuts that will limit the amount of help they can provide to local governments. For water and wastewater programs in particular, the president’s budget proposed cuts of $360 million (15 percent) to the SRFs and $20 million (3.3 percent) to the water programs at USDA-RUS. Cuts this size would mean fewer dollars available in every state, which means less money to go around and more competition among systems for those resources.

Ultimately, Congress is in charge of the budgeting and appropriations process. The president has laid out his agenda and can use his veto power to influence the final product, but it is up to Congress to set the final spending levels for the upcoming year. You can also influence the process. How? By contacting your members of Congress. Whether you want more emphasis on rural programs or a focus on water infrastructure or economic development programs like CDBG, let your representatives in Washington, D.C., know! For more information on contacting Congress or to get locations of your delegation’s offices in your state, visit RCAP’s Legislative Action Center.

More on building the federal budget:

  • The Washington Post’s interactive explanation of the federal budget process
  • The White House provides a very visually oriented interactive graphic to show where your tax dollars and what percentage of the federal budget to different program areas under President Obama’s proposed budget for 2012 would go

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With the return of the eBulletin early in 2012, we want to rename this newsletter. We are asking you, the readers, to submit your ideas. Each subscriber to this newsletter may submit one name. Submit your entry. Include your first and last name and your location in your email. The contest will continue through this issue of this newsletter, and the new name will be announced in the April issue. The winning name will be chosen based on its relevance to the purpose of this newsletter and RCAP’s mission. The winner will receive a $100 gift certificate to an online retailer.

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