Clean Water Act

Congress authorized the creation of state revolving funds in 1987 to help local governments and others build projects that would improve water quality. The federal government provides annual grants to the states as "seed money" to help capitalize their revolving loan funds. The states use their revolving funds to make loans to local governments and others; as the loans are repaid, the fund is replenished, and more loans can be made. All 50 states and Puerto Rico have set up state revolving funds, and through fiscal year 1996, Congress had provided more than $11 billion to those revolving funds. GAO surveyed nine states with revolving fund programs--Arizona, Florida, Illinois, Louisiana, Maryland, Missouri, Oregon, Pennsylvania, and Texas. This report provides information on (1) the amount of funds lent and the percentage of available funds lent as of the end of each state's fiscal year 1996 and (2) the factors at the federal and state levels that constrained the amount and percentage of funds lent.

GAO found that: (1) the nine states GAO surveyed increased the total amount of funds they lent from $3.3 billion in 1995 to $4.0 billion in 1996; (2) six states achieved an increase of between 15 and 29 percent, and the other three states achieved an increase of 30 percent or more; (3) seven of the nine states increased the percentage of available funds they lent, and of these seven, three states increased this proportion by 17 percentage points or more; (4) the percentage of funds lent as of the end of 1996 varied substantially among the nine states; (5) five states had lent 80 percent or more of their available funds, three states had lent between 70 and 79 percent, and one state had lent 60 percent; (6) in eight of the nine states, officials identified the expiration of the authorizing legislation, as well as federal requirements, as affecting the amount and percentage of funds lent; (7) officials in seven states said that other federal requirements, such as a prevailing-wage provision, discouraged some communities from seeking loans; (8) in two states, officials said that the decisions made by the state programs constrained lending; (9) program managers in one state decided to finance certain wastewater projects from state funds rather than from the revolving fund, thereby limiting both the amount and the percentage of funds lent from the revolving fund; and (10) in the other state, efforts to publicize the program to local officials were not effective in the early years of the program.