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A closer look at water funding in the Infrastructure Investment and Jobs Act

January 2022

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In November 2021, President Biden signed the Infrastructure Investment and Jobs Act (IIJA). This historic $1.2 trillion bill allocates $55 billion for our country’s water infrastructure. This investment includes funding for drinking water and wastewater treatment projects in hopes to expand access to drinking water to people across the country.

The IIJA includes significant opportunities for our clients and partners in the water market. Comparing the legislation to previous funding levels, it’s easy to see the increases from past financial support. The numbers show a significant increase in funding for water-related projects, including drinking, clean, storm, and delivery. For instance, the authorization of drinking water funds to the State Revolving Fund (SRF) is approximately 2.8 times more than previous appropriations. The funding authorized for clean water is approximately 1.8 times more than previous appropriations, and the U.S. Army Corps of Engineers’ (USACE) civil budget continues to steadily grow and is approximately 55% more than the 2017 appropriation levels. Some traditional federal water programs, such as funding for the Bureau of Reclamation, are not showing significant increases, however, they did not lose ground and still have an authorized increase in funds.

Another change in the IIJA to our legislative water past is the significant focus for funding in underrepresented communities, which include small cities (<10,000 people), towns, and rural regions. We are interested to see how small communities and underrepresented communities will take advantage of these new funding opportunities. Hopefully, the number of regulations attached to the federal funds will not be a deterrent to communities that don’t have the resources to complete the necessary grant and proposal requests. If communities need help with regulatory requirements or proposal writing, Garney and its industry partners can provide assistance or direction as to how our stakeholder communities can navigate the federal aid process. Some of the new federal programs now allow for an outright grant of funds, whereas before, those same funds may have been provided as a loan. In addition, some of the loans are now at significantly reduced interest rates—or in some cases, zero interest. If underrepresented and marginalized communities can develop the proposals, these rule changes will make it easier and more cost-effective for them to build projects.

As for timing—when will we see these funds in tangible projects? Considering the amount of regulations, grants, and proposal writing required for the funds to flow through projects, it is reasonable to assume that the majority of these funds will not have a big impact on our market until 2023.

As a final point, whether the additional federal funding is for water/wastewater work or other areas of heavy infrastructure, the amount of funds available in the next five to ten years for projects in the infrastructure space will significantly increase. This infers that more labor resources will be required in the industry to execute the projects that are an outcome of this additional funding. Finding and developing enough craft workers and project management capable of executing in the construction industry will be a challenge and a requirement for bettering infrastructure in the United States for years to come.

Written by Jay McQuillen, Director of Federal Operations

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