SRF “Additional Subsidy” and Household Affordability

State Revolving Fund “Additional Subsidy” and Household Affordability

Federal spending on local water infrastructure represents a tiny fraction of total spending across federal, state, and local governments. Nevertheless, there are various buckets of financial support available from the U.S. government, including through State Revolving Fund (SRF) programs, in the form of grants, below-market rate loans, principal forgiveness, other “additional subsidy,” and more, to help communities defray the cost of local water infrastructure and, in some cases, specifically to support household water affordability. This memo provides a brief overview of the structure of the SRFs, focusing on their “additional subsidization” provisions, and how these programs can provide direct benefits to households facing affordability challenges. As described below, the legal landscape is somewhat complex as the Clean Water Act and the Safe Drinking Water Act direct EPA and the states to implement the additional subsidy provisions somewhat differently, although both have the same intention; to ameliorate the burden of rate increases on lower income customers.