In FY2027, Congress will need to make two separate decisions about the State Revolving Funds (SRFs). Appropriations set how much funding the programs receive in a given fiscal year; a continuing resolution is holding spending at FY2026 levels until December 11, but SRF appropriations levels are not yet set. Authorization prescribes funding levels over multiple years, along with rules governing how those funds can be used; the multi-year SRF authorization expired at the end of FY2026. At the same time, five years of supplemental funding provided through the Infrastructure Investment and Jobs Act (IIJA) end after FY2026.
Since FY2022, Congress has funded water earmarks from within SRF appropriations rather than as a separate budget line, which reduces the amount EPA uses to calculate each state’s capitalization grant. In FY2026, earmarks accounted for approximately 55% of the Clean Water SRF appropriation and 65% of the Drinking Water SRF appropriation. IIJA funding helped offset that reduction for five years. It will not in FY2027.
This policy update explains what is decided and what is still open, the questions shaping FY2027, and recommendations for Congress.
For more information, please see: policyinnovation.org/state-revolving-fund-earmarks
