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Board reviews 2026–27 Clean Water SRF Intended Use Plan and flags looming funding reductions
Summary
At a workshop staff proposed the 2026–27 Clean Water State Revolving Fund Intended Use Plan (loans, Prop 4 water recycling grants, stormwater set-asides and small‑community wastewater grants), recommended adding 10 projects to the loan fundable list, and warned that federal IIJA funds will end in 2026 and congressional earmarks are reducing base capitalization grants, signaling a shrinking pool of grant/principal-forgiveness funds in coming years.
The State Water Resources Control Board on May 19 held a workshop on the proposed 2026–27 Clean Water State Revolving Fund (CWSRF) Intended Use Plan (IUP), reviewing loan fundable lists, Proposition 4 water recycling commitments, stormwater and small-community wastewater funding, technical assistance (TA) investments, and multi-year projections that show a narrowing pool of non-repayable grant funding after IIJA (Infrastructure Investment and Jobs Act) funding ends.
Division of Financial Assistance staff recommended a Clean Water SRF loan fundable-list cutoff under "Scenario D" (cutoff score 13) to add 10 projects and meet federal equivalency requirements this year. Lisa Hong and Mike Downey described how updated scoring criteria incorporate affordability considerations that modestly expanded support for small-dollar projects.
On water recycling, staff proposed maintaining a $15 million construction-grant maximum per project (with phased $15 million allowances for very large programs delivering >10,000 acre-feet/year) and creating a planning/design-only pathway with up to $5 million per phase to support large multi-phase recycled-water programs. The IUP anticipates $90 million available for construction grants from Proposition 4 appropriation this year.
Staff reviewed stormwater and municipal reuse set-asides and emphasized that a separate Prop 4 stormwater solicitation would come later this summer. For small-community wastewater, staff laid out available near-term funding (roughly $264 million from multiple sources in the coming year) but cautioned that rising project costs and the likely loss of IIJA supplemental capital will cause a funding gap: staff proposed tightened project caps, encouraged partial grant-plus-loan packages for secondary-priority projects, and asked communities to consider loan options where feasible.
Staff also described recent TA investments: five master agreements, an ~$6 million augmentation last year that led to three new work plans and 12 supplemental plans, and an estimated wastewater-TA capacity of roughly $27 million when combined with rollovers. Staff urged continued investment in TA to prepare projects for construction.
Presenters warned of fiscal uncertainty ahead. "The president's budget proposed zeroing out the SRF," one staff member noted, and staff emphasized that after 2026 the program will primarily rely on the base federal allocation, which has been eroded in recent years by congressional earmarks. They urged applicants to finish planning and apply in the near term because multi-year projections indicate less grant funding will be available going forward.
Stakeholders from Sacramento Area Sewer District, the City of Chico and Water Reuse California provided public comment, supporting IUP proposals, describing local projects being considered (including Harvest Water and Chico septic-to-sewer regionalization) and thanking staff for engagement. Staff invited written comments by May 27 and said they intend to bring the proposed IUP back to the board for adoption on July 7, 2026.
Board members and staff agreed to continue outreach to affected communities and to consider program design changes next year as the multi-year funding picture becomes clearer.
