California Review Board Assesses 2025 Financial Outlook for Clean Water Programs

The State Water Resources Control Board convened on June 17, 2025, to discuss the Intended Use Plan (IUP) for the upcoming fiscal year, focusing on the financial outlook for various water-related programs. This meeting highlighted the importance of funding mechanisms for clean water initiatives, particularly in light of ongoing federal budget uncertainties.

The primary focus of the meeting was the Clean Water State Revolving Fund (SRF), which has been a critical source of financing for water infrastructure projects since its inception in 1989. The board reported that over $3.8 billion has been appropriated through federal funding, with a state match required for every federal dollar invested. The 2025 financial outlook anticipates a total of $305 million in federal funding, which includes $140 million for loans and $147 million for principal forgiveness, a form of grant funding.

A significant concern raised during the meeting was the potential impact of proposed cuts to federal appropriations for the SRF in the 2026 budget. If these cuts materialize, the board anticipates a reduction in the program's capacity to issue loans, which could drop to approximately $500 million initially, and potentially lower over time. This would directly affect the availability of principal forgiveness funds, which are crucial for supporting smaller communities and projects that may not have the financial resources to cover upfront costs.

In addition to the SRF, the board discussed funding for small community wastewater projects, which are set to receive a substantial boost from Proposition 4, recently passed in November 2024. This proposition allocates $610 million over several years for wastewater and drinking water projects, with an expected $90 million earmarked for wastewater initiatives in the current fiscal year.

The meeting also addressed the water recycling funding program, which has seen fluctuating appropriations in recent years due to budget constraints. The board proposed a maximum grant of $15 million for water recycling projects, emphasizing the need for robust funding to support these critical initiatives.

Stormwater management was another key topic, with the board proposing $20 million in principal forgiveness for stormwater projects, alongside additional federal grant opportunities. The board acknowledged the challenges in motivating applicants to pursue stormwater funding and expressed optimism about future appropriations.

As the meeting concluded, the board emphasized the importance of public engagement and feedback on the draft IUP, with comments due by June 30. The final IUP is expected to be presented for adoption in early August, incorporating any changes from the state budget once finalized.

Overall, the discussions underscored the ongoing challenges and opportunities in securing funding for California's water infrastructure, highlighting the critical role of state and federal collaboration in addressing the state's water needs. The board's proactive approach in navigating these complexities aims to ensure that essential projects continue to move forward, despite the uncertainties in federal funding.