Budget proposal raises concerns over cuts to water infrastructure funds

The U.S. House of Representatives narrowly passed a tax and spending bill on May 22, 2025, with a 215-214 vote. The Senate is next in line to review the budget package.

According to the nonpartisan Congressional Budget Office (CBO), the budget would add roughly $3.8 trillion to the deficit over 10 years. The budget could change as it makes its way through the Senate.

The FY2026 budget proposal initially showed a $2.46 billion reduction in Drinking Water and Clean Water State Revolving Funds compared to 2025 – however specific details about the State Revolving Fund reductions are not prominent in publicly available documents surrounding the spending bill.

In a May 21 Senate Committee on Environment and Public Works hearing, Chairman Shelley Moore Capito stated that the State Revolving Funds (SRFs) would be a part of the cuts.

“I and many of my colleagues have long been vocal about the importance of federal assistance for water infrastructure through the State Revolving Funds,” said Chairman Capito during the hearing.

Chairman Capito stated that she hopes everyone can work together to ensure that adequate resources are available to support water systems. She later questioned U.S. Environmental Protection Agency Administrator Lee Zeldin about the cuts to the SRFs.

Administrator Zeldin stated he wants to investigate congressionally directed earmarks that take away from the SRFs, but didn’t expand on what the cuts would mean for the agency and water infrastructure.

Other cuts that could impact the water industry

The budget proposal listed a number of energy, environment and communications cuts that could affect the water industry including:

• Cancels funds for green-energy grant programs in the 2022 Inflation Reduction Act
• Repeals grant programs for purchasing electric heavy-duty vehicles
• Repeals grants to reduce air pollution, greenhouse gas emissions
• Prohibits states from regulating artificial intelligence