Revolving loan funds may fall victim to Republicans' 'contract with America.'

WASHINGTON -- The Republican-controlled Congress won't try to dismantle the state revolving loan funds used to help finance wastewater facilities, but if the GOP agenda goes through there may be no money for the funds, lobbyists said yesterday.

The Republicans' proposed agenda will "clearly put tremendous pressure on the budget, but we would hope [the revolving loan program] would sell itself as a good, cost-effective way to leverage investments," said Tom Curtis, director of natural resources at the National Governors' Association.

As pan of the Republicans' pre-election promises, the party's House candidates signed a "Contract with America" calling for, among other things, a balanced budget amendment to the Constitution, tax cuts, and increased defense spending.

In the last Congress, efforts to reauthorize the wastewater and drinking water treatment regulations failed, but the revolving loan fund program that is part of the sewage treatment measure was kept alive through the appropriations process. The drinking water measure would have created a new revolving loan fund that states could use to leverage federal loans by issuing tax-exempt bonds, but the legislation to create the new fund was not enacted.

Prospects for beth revolving loan programs in the next Congress may not be too bad because Republicans have a "better appreciation that we need to deal with protections, but that we don't have to provide perfection," said Carol Kocheisen, National League of Cities counsel.

"I think [Republicans] also have a better appreciation that we have limited resources and that we have to make the best use of those resources," Kocheisen said.

The revolving loan programs have had bipartisan support on Capitol Hill, but the fact remains that the stated Republican agenda will dry up federal resources and thus keep the Congress from funding any program that is not seen as a priority, said James N. Smith, executive director of the Council of Infrastructure Financing Authorities.

"It's really too early to tell," but reauthorizing the laws governing wastewater treatment and drinking water treatment is "likely to be a second-tier order of business" in the next Congress, said Curtis of the governors association.

The coalition of state and local interest groups supporting reauthorization of the two water infrastructure bills intend to lobby Congress to take up the bills as soon as possible, Kocheisen said. Whether the groups will be able to get the new Congress to focus on these issues is unknown, she said.

"It's a whole new ball game, and we're dealing with a whole lot of new people in leadership positions. We don't have a history of how they make decisions, so I'm a little reluctant to say it'll be the first thing out of the box," Kocheisen said.

The water infrastructure debate will "emerge" next year, but the Republicans have "bigger fish to fry in their overall agenda," Smith said. It is likely that the debate on the water infrastructure reauthorization bills "will be played out over the next two to four years," he said.

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