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State health officer briefs Finance committee on SRF loans, forgiveness and $8.9M match request
Summary
Dr. Edney told the Senate Finance Committee the state revolving fund has loaned about $324 million since 1997, carries largely low‑interest, long‑term loans with significant forgiveness options, and needs an $8.9 million state match this year to draw the maximum federal funds.
Dr. Edney, the State Health Officer, told the Senate Finance Committee that the state revolving fund (SRF) — which the department has run since 1997 — provides low‑interest, long‑term loans and has been used extensively by rural community water associations.
"These are not grants, but it is a very favorable, loan program," Dr. Edney said, explaining regular loans carry interest rates below 2% and average 20 years, with 30‑year terms allowed only for infrastructure whose useful life exceeds the loan term.
He described the program's forgiveness structure: a minimum 26% forgiveness element on loans, a 23% discretionary forgiveness pool the state can target for policy incentives, and a maximum forgiveness level of about 49% for eligible projects. "There is opportunity for us to provide some incentives ... by increasing loan forgiveness up to a maximum of 49%," he said.
Dr. Edney provided portfolio figures: 57 active SRF projects with about $153 million in awards, 197 improvement loans in repayment, roughly $324 million loaned since 1997, approximately $158 million repaid, and about $89.5 million of principal forgiven over the life of the program.
The chair asked how repayments flow back into state finances. Dr. Edney said loan repayments return to the SRF program and do not go to the state general fund, and that repayments help offset the forgiveness component.
On funding needs, Dr. Edney said the amount the state must commit this year to receive the maximum federal drawdown is $8.9 million. He attributed higher match requirements in recent years to expanded federal infrastructure funding in 2022 and said the match requirement should ease as enhanced federal funds taper off.
Committee members pressed for repayment cadence and capacity. After a numerical check, Dr. Edney clarified repayment timing and said repayments are material to the fund's revolving capacity (he noted a clarified repayment figure of about 1.3, corrected during the exchange).
Dr. Edney also told senators the EPA is encouraging consolidation among water associations and that the SRF's discretionary forgiveness could be used to incentivize consolidation or governance improvements. He warned many associations operate on very old infrastructure and that some are nearing collapse, increasing demand for SRF financing as ARPA grant funds run their course.
The presentation concluded without formal committee action; the committee moved on to the next agenda items.
