Trump’s Infrastructure Plan Underinvests in Water

Trump's infrastructure plan doesn’t put its money where its mouth is. As a result, it’ll barely make a dent in our water infrastructure needs.

Much of America’s water infrastructure is in bad shape, and President Trump’s new infrastructure plan would do little to fix that problem.

Our drinking water, wastewater, and stormwater infrastructure brings clean water into our homes and prevents dangerous pollution from spilling into our waterways. We need it to keep our families healthy and our environment sustainable.

But today, after decades of neglect, it’s no longer in good working condition. According to the American Society of Civil Engineers, the U.S. wastes six billion gallons of clean drinking water each day (or 14% of total water use) because of leaky pipes in need of repair. And the Environmental Protection Agency estimates that up to 3.5 million Americans fall sick each year from swimming in waters contaminated by overflowing sanitary sewers.

Yesterday’s blog post—the first in a three-part series—described what the Trump infrastructure plan needed to contain in order to bring America’s water infrastructure into the 21st century. First and foremost: financial investment in our water systems. They’ll need an estimated $660 billion over the next twenty years to meet environmental and public health standards.

While that sounds like a big number, water infrastructure spending yields a huge return on investment. It creates good jobs broadly accessible to American workers, and it can spur billions of dollars in economic activity across the country.

The Trump administration claims to agree with this idea—the plan released this week touts the benefits of infrastructure investment for the American economy and workforce. But the plan doesn’t put its money where its mouth is. As a result, it’ll barely make a dent in our water infrastructure needs.

Today’s post breaks down the plan’s financial approach to water infrastructure investment and identifies the ways in which it comes up short.

The plan promises federal investment but forces others to foot the bill  

Trump’s plan is to invest $200 billion in federal funds, which will “stimulate” $1.5 trillion in total infrastructure spending. This is a fancy way of saying that the plan will force other entities—state and local governments and private businesses—to bear the vast majority of the cost.

For decades, federal dollars have helped fund a significant proportion of water infrastructure project costs. For example, federal dollars make up 83% of the money available for infrastructure project loans under the Clean Water and Drinking Water State Revolving Funds, with states contributing the remaining 17%. Under "environmental infrastructure" programs run by the Army Corps of Engineers—which fund municipal water and wastewater projects—federal dollars can cover up to 75% of project costs. 

The administration’s new plan would take a different approach. Under the Trump proposal, the biggest chunk of newly available federal funds could pay for only 20% of any given infrastructure project. That means the new money would not fund any construction or repairs of water or wastewater facilities unless states, local governments, or private companies ponied up the bulk of the cost.

Cities, counties, and states have already stretched their infrastructure spending to the limit because of a lack of adequate federal funds. In 2014, state and local governments spent 24 times as much as the federal government on water and wastewater infrastructure. In other words, 96% of all water infrastructure spending is already coming from state and local governments. It's unreasonable to ask them to contribute even more. Many of them don't have more to give.

That's why state and local governments have reacted to this proposal with frustration. Phil Murphy, the governor of New Jersey, said, "This is probably a fraction of what our state needs or, frankly, the country needs." And one Philadelphia city official said, "In its current state this plan signals apathy towards urban infrastructure to the point of negligence."

The administration justifies this approach by saying that bureaucrats in Washington shouldn’t dictate infrastructure decisions to state and local governments. But there’s a big difference between giving states and locals the power make their own infrastructure choices and suddenly forcing them to foot the bill.

This approach is unjust and inequitable

Shifting the financial burden to local government and the private sector creates serious environmental justice problems. It guarantees that little or no federal money will go to low-income communities where non-federal investment is unavailable. For example, it’s hard to imagine how a city like Flint, Michigan would be able to access any of the money made available under this plan.

This is a setup for a two-tiered system where wealthy areas have clean water and disadvantaged communities don’t. It would neglect poorer neighborhoods and cities and deepen inequality across the country.

The plan doesn’t prioritize the most beneficial projects

Even in the wealthier areas that could afford to access the money, Trump’s infrastructure plan wouldn’t necessarily fund the most useful or necessary projects.

Half the plan’s investment— $100 billion—would be spent through the so-called “infrastructure incentives program.” This program would fund a wide range of infrastructure projects, chosen based on a few specific criteria. Critically, the most important factor by which projects would be evaluated is “how the applicant will secure and commit new, non-Federal revenue.” This factor is weighted at 70%, compared to just 5% for the actual utility of the project (“economic and social returns on investment”).

In other words, projects will be chosen for funding not based on the good they would do for communities, but rather how much money project applicants bring to the table. That’s not a strategic way to choose water infrastructure projects.

It would be far more sensible to focus on a project’s water quality or public health benefits. That could mean directing money to areas with the worst water quality problems, or to projects that could make the biggest difference. We should also be prioritizing resilient nature-based solutions that reduce water treatment costs and provide greater community benefits. Instead, all the administration seems to care about is cold, hard cash.

The total amount of investment is too small

Not only does the plan take the wrong approach to distributing infrastructure funds, it also falls short in the total amount of investment it would provide. $200 billion in federal investment isn’t even enough to cover our water infrastructure needs alone—but the administration proposes to divide it between all types of infrastructure, including transportation.

There’s only one pot of money in the plan that’s allocated specifically to water infrastructure. That’s an unspecified portion of a $14 billion infusion into existing infrastructure financing programs. The water financing program under the Water Infrastructure Finance and Innovation Act (WIFIA) would get a chunk of that total. But even that investment will be watered down, so to speak, because the plan would allow Superfund and brownfields clean-up projects to become eligible for funding under WIFIA. Those are important projects, but allowing them to receive WIFIA funds reduces what’s left for water infrastructure.

What the plan doesn’t contain is any money for the Clean Water and Drinking Water State Revolving Funds, which are tested and reliable programs that have been used for decades to fund water infrastructure projects. (The president’s proposed 2019 budget does include some money for the SRFs, but the level of funding remains essentially flat from previous years, and it's combined with cuts to programs that support rural water infrastructure, as my colleague Jon Devine explains.)

The plan’s investment comes at the expense of other cuts

There’s yet another problem with the plan: it doesn’t include any new money for infrastructure. According to the White House, the plan’s $200 billion in new investment would be paid for through cuts in other existing infrastructure programs.

In fact, taken alongside the White House’s budget request for 2019, infrastructure spending is actually in for a net reduction. The Center for American Progress counted $281 billion in cuts to infrastructure programs in the proposed budget. As a result, any benefits we get under this plan will come at the expense of lost investment somewhere else. That’s not the way to improve America’s infrastructure.

The plan’s short-sightedness could cost us money in the long run

Lastly, because the plan doesn’t require infrastructure investments to account for the impacts of climate change, projects could be built in the wrong place and designed for the wrong climate—wasting billions of taxpayer dollars. My colleague Joel Scata wrote more about this particular problem earlier today, which you can read here.

In conclusion, it’s clear that this plan takes the wrong financial approach in a number of ways. It provides too little money, distributed unfairly and spent carelessly. What’s worse, the meager amount of money offered is coupled with harmful rollbacks of environmental protections, to be discussed in part three of this blog series tomorrow.