Making Water Investment Go Further
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MAKING WATER INVESTMENT GO FURTHER
Much of the conversation about water infrastructure focuses on how much money we need—and for good reason. But just as important is how we put that money to work. Do federal policies support better, faster results? Do state agencies have the capacity and well-designed programs to help communities move projects forward? Do those communities have the tools and support to turn public dollars into lasting improvements in water service?
A clear need and an available funding source do not guarantee that a project will happen. A community may need help organizing financial records, evaluating options, or completing an application. State agencies need staff, reliable information, and workable processes to guide investment and manage competing water demands. Making water investment go further requires attention to both the dollars available and the programs and people that put them to work.
Our work with communities through EPIC’s Funding Navigator gives us a direct view of how water financing works in practice. We bring those lessons into our policy work to help improve the programs communities rely on.
This month’s stories explore how congressional earmarks affect long-term water financing, how financial audits helped a small town qualify for infrastructure financing, and how TAP50 is being designed to help states turn better water data into better decisions.
FUNDING AND FINANCING
By Ekta Patel
FY2027 is not a routine budget year for the Clean Water and Drinking Water State Revolving Funds (SRFs), two core federal programs for financing water infrastructure. Five years of supplemental SRF funding from the 2021 Infrastructure Investment and Jobs Act end after FY2026. At the same time, Congress has funded water earmarks—one-time grants for specific projects—from the annual SRF budget. Together, those changes create a funding cliff: the supplemental funding goes away while part of the annual funding is directed to earmarks before it reaches SRFs. Congress’s next FY2027 funding deadline is December 11, when the current continuing resolution expires.
Why does that matter? SRFs are designed to revolve and make federal dollars work more than once. Federal funds provided to state-run programs are loaned to communities for water infrastructure projects, repaid, and re-lent again. Through 2023, about $81 billion in federal capitalization grants supported nearly $230 billion in assistance—nearly three dollars in financing for every federal dollar.
Earmarks change that math. Since FY2022, Congress has funded water earmarks from within SRF appropriations. Those grants do not revolve. In FY2026, earmarks took about 55% of the Clean Water SRF appropriation and 65% of the Drinking Water SRF appropriation. For the Drinking Water SRF, Congress authorized $3.25 billion, appropriated $1.126 billion, and directed $733 million for earmarks, leaving just $393 million to be divided across all 50 states.
We estimate this structure will reduce SRF financing capacity by $19.4 billion over 20 years nationwide, even after accounting for earmarks states receive. Earmarks also reduce “set-asides,” or portions of SRF funds available for administration, staff salaries, technical assistance, drinking-water oversight, and project development. In recent years, that loss averaged $247.1 million per year. Losing those resources can leave states with less capacity to administer their programs and communities with less help preparing projects and meeting funding requirements.
Earmarks also do not guarantee faster access to funding. In its July 2026 report, EPA’s Office of Inspector General revealed that 44% of FY2022 and FY2023 water earmarks—more than $1 billion—had not been awarded to recipients as of September 2025.
FY2027 is thus a pivotal year for the SRFs. We recommend sustaining recent federal investment, funding water earmarks through a separate, additive budget line, protecting set-asides, and applying clear award and reporting timelines. States can also make the value of SRF investment more visible by coordinating award announcements with congressional delegations and recognizing both federal and state contributions. For a financing system built to stretch every federal dollar, Congress has to protect both the amount invested and the revolving structure that allows it to keep working.
FROM THE FIELD
By Mary Samar and Tessa Edelen
For small communities, accessing funding and financing for critical water infrastructure can sometimes feel like navigating a maze. One of the biggest hurdles is financial capacity: many state and federal programs, including State Revolving Funds (SRFs), require municipalities and utilities to demonstrate sound financial management, often through audited financial statements.
For communities that have never undergone an audit or have fallen several years behind, meeting that requirement can take significant time and resources. But an audit can do much more than open the door to funding. Done well, it can give local leaders a clearer picture of their finances, strengthen day-to-day management, and build confidence for future infrastructure investments.
That’s what happened in a small Mississippi town that received technical assistance from EPIC through the Funding Navigator program. EPIC supported the town in completing three years of financial statement audits, an effort that uncovered practical opportunities to strengthen its financial management.
The audit process highlighted the importance of maintaining an accurate inventory of fixed assets, from vehicles and machinery to fire hydrants. Records of asset age, condition, and useful life support financial reporting and help communities anticipate replacement needs, providing a stronger foundation for long-term capital improvement planning.
The town also learned to use its accounting software more effectively and establish consistent recordkeeping practices that can continue through changes in staff and elected leadership. And perhaps most importantly, the completed audits provided the missing piece needed to become eligible for SRF financing for wastewater system improvements.
The experience raises questions beyond this town. Where do financial requirements become stumbling blocks for small communities? Could clearer or streamlined requirements or earlier assistance help communities meet them so improvements happen faster?
Through the Funding Navigator, EPIC sees firsthand how funding requirements work in practice. We use that perspective to help states and funding agencies maintain sound financial safeguards while making programs easier to navigate.
WHAT WE’RE BUILDING
By Surabhi Shah and Christopher Putney
States as different as California and Texas make tough decisions every day about drinking water, irrigation, wetlands, flooding, and drought. Yet the data they rely on is often fragmented, outdated, or hard to access. Population growth, economic development, and the need to protect ecosystems under increasing stress all shape states’ water decisions. Extreme weather and aging infrastructure add urgency to understanding where water supplies and systems are under pressure - and acting before problems escalate.
Some states are already improving how they collect, manage, and use water data to support public health, water management, and economic development. But better data alone does not produce better outcomes. State agencies need the staff, expertise, and processes to interpret information, coordinate across programs, and put it to work.
Building on progress by individual states and contributions from the Internet of Water Collaborative and other partners, we’re designing TAP50 for and with states. The starting point is practical: what decisions does a state need to make, and what information would help? Priorities could include updating a state water plan, targeting funding and technical assistance, or assessing water availability and infrastructure capacity to inform economic development. TAP50 will provide tailored assistance at no cost to states, helping agencies connect and use their data, coordinate policies and programs, and secure the resources and tools to put decisions into practice.
New Mexico, an early state to convene a TAP water data workshop, shows what becomes possible when agencies develop a shared understanding of their data and priorities. Stacy Timmons, Associate Director of the state’s Bureau of Geology and Mineral Resources, described how that understanding began to shift within weeks of the workshop: “After our workshop, each of us could finally see how our data fit into the bigger water data picture. That gave us a real vision to make the changes we needed to make.”
That shared understanding helped participants coordinate around common needs and develop projects that went on to secure over $1.5 million in WaterSMART Applied Science grants from the U.S. Bureau of Reclamation. The funding supported technology that changed how a critical water resource is managed. One project replaced an irrigation district’s paper field sheets and ad hoc phone calls with real-time telemetry that alerts state staff when a well needs attention. The payoff came from connecting those steps: understanding the data, coordinating across organizations, securing investment, and putting better tools into everyday use.
EPIC and New America are developing TAP50 to help states turn better water data into better decisions. TAP50 will combine support tailored to states’ priorities with opportunities to learn from peers and adapt successful approaches. Help shape what comes next: learn more, and get involved.
DIVE DEEPER
By Jessica Lamb
Explore the research and examples behind this month’s stories:
The Hidden Cost of SRF Earmarks. See how using State Revolving Fund dollars for earmarks instead of revolving loans can reduce the long-term financing capacity those federal dollars provide.
Funding Navigator Case Studies. See how EPIC’s Funding Navigator is helping communities identify funding opportunities, strengthen applications, and move water infrastructure projects forward through real-world examples from across the country.
TAP50: What States Need to Modernize Water Data. Explore how TAP50 will help states build the data, technology, policy, funding, and governance capacity they need to turn better information into better decisions and investments.
