Revolving No More: How Earmarks Undermine Funding for Water Infrastructure
By Katy Hansen and Janet Pritchard
The State Revolving Fund (SRF) programs—the Clean Water SRFs and the Drinking Water SRFs—have provided more than $200 billion of financing for water infrastructure over the last several decades, yet Congress has circumvented the SRF process through earmarks, also known as congressionally directed spending. This practice has fundamentally altered water infrastructure funding to the clear detriment of the vast majority of states. EPIC’s analysis is the first to quantify how members of Congress are unintentionally causing long-term reductions in funding for their own states, even when they are successful in getting earmarks:
Unlike traditional SRF-funded projects, earmarks are issued as grants, not loans, and do not return principal and interest to the state revolving funds, so each earmark permanently eliminates future financing for a similar-sized water project in the same state.
Even congressional offices that are very successful at earmarking often end up reducing the total amount their states will have for water infrastructure. For example, Florida legislators locked down almost $300 million in clean water earmarks in 2023-2024, but the state will receive millions less in funding over the next 20 years than if they had left the SRFs alone.
Earmarks fund projects in larger and more affluent communities, compared to SRF assistance allocated by states.
States are losing approximately $55 million each year in resources to run their SRF programs.
Earmarks reduce the amount of technical assistance and principal forgiveness states provide, primarily hurting the small and rural communities most likely to receive principal forgiveness and technical assistance.
EPIC’s report on earmarks provides thoughtful, compelling data and policy analyses to support actionable recommendations for how Congress could make earmarking less harmful to their own states. The SRFs are one of America’s best ideas in infrastructure finance. The most striking conclusion from this work, however, is that there is almost no way for Congress to earmark a loan program and not do damage to its long-term sustainability.
As EPIC’s report clearly demonstrates, most congressional offices that secure earmarks are actually reducing the total future funding for their state.