Ari Neumann, RCAP Policy Director

As of press time, the federal funding outlook for the new fiscal year, set to begin October 1, is murky at best. The Senate and the House have each passed Continuing Resolutions that would keep the government open until the end of the year so that they can pass regular appropriations bills. However, the House version contains a ban on funding for the Affordable Care Act (also known as “Obamacare”), while the Senate version fully funds the ACA’s implementation.

The two sides are fundamentally opposed, and as of now, it is not clear how the stalemate will be resolved. We expect there to be last-minute negotiations that will hopefully lead to some resolution, but there may well be a government shutdown in early October.

In the event that there is a shutdown, all non-essential government functions will temporarily cease. USDA Rural Development state and area offices will be closed, and EPA, USDA-RD, HUD, and other federal employees will be forced to stay home. So, federal agencies that normally provide funds for rural infrastructure will not be able to process applications for the duration of the shutdown.

Depending on how the funding dispute is resolved—whether the government is shut down or not—we expect to see either a Continuing Resolution or the full slate of appropriations bills passed this fall that will fund the government for Fiscal Year 2014. Then, we will start the budget and appropriations processes again next January for Fiscal Year 2015 (beginning Oct. 1, 2014). Once Congress provides some certainty about spending levels for the next year, agencies will begin to process applications again and proceed with the development of rural infrastructure projects.

Since most infrastructure projects are long-term in nature, we encourage communities to continue the planning process so that you are ready when the fiscal situation is resolved. As federal funds become scarcer, those communities who are best prepared stand the best chance of receiving limited funds. And, as always, we encourage you to look for funding from state and local governments, as well as private sources of capital (where available) to supplement the costs borne by the ratepayers.

The federal funding picture is murky, but regardless of how the current spending debate is resolved, the federal budget as a share of the national economy is almost certain to shrink over the next decade. That will mean less money from the federal government for water infrastructure and an emphasis on direct and guaranteed loans, rather than grants.