The Technical Supplement to the 2026 Budget was just released. Apart from being over 1,200 pages long, it is indeed technical — not easy to read or understand, even for someone who has interest in these matters. In particular, the mechanics of federal cash budgeting are completely sui generis — plain cash budgeting might have a certain logic, but here everything is mixed with terms and categories that reflect idiosyncratic federal practices. Federal insiders will understand the language; to be fair, they are the primary audience. Outsiders like me can only make educated guesses.

The WIFIA program shows up on pages 953-955. The screenshot above is what I think are the critical numbers. The yellow highlight is alarming. Although the WH Budget Summary of a few weeks ago did not show any cuts to WIFIA, the Technical Supplement appears to do so. WIFIA’s prior appropriation level was about $72m — $65m for loan subsidy and $8m for operations. The $8m number proposed for FYE 2026 indicates that the program can keep operating, but there won’t be any new appropriations for loan subsidy.

The brief accompanying text is consistent with this interpretation — it pretty much says in lawyer-like language that while the continued operation of WIFIA is a statutory requirement, that’s all the program will be resourced for. In effect, no new loans: [1]

This appropriation supports all activities necessary for the implementation of the Water Infrastructure Finance and Innovation program established by the Water Resources Reform and Development Act of 2014….The $8 million request to implement the Water Infrastructure Finance and Innovation Act (WIFIA) program is for the Environmental Protection Agency’s (EPA) management and operation of the program, including contract support and associated payroll. The WIFIA program will be administered by EPA’s Office of Water.

Since WIFIA’s borrowers have very high credit quality, $65m of loan subsidy would support about $6 billion of financing — so the impact for the water sector is material.

The importance of the purple highlight is less obvious, but may actually be more concerning. Of course, the startling $1bn of mandatory appropriations for is for interest rate re-estimates, as long predicted on this site — here’s my last estimate, The Economic Cost of WIFIA’s Portfolio at FYE 2023. You can see that the sum of mandatory appropriations for FYE 2024 and FYE 2025 in the Supplement is about $1.6bn, which is in the ballpark of my estimates, though fortunately at the lower end. [2]

The concern is this: The fact that Trump Administration people focused enough on WIFIA to propose cutting $70-odd million from a successful program that finances water infrastructure means that they might also notice the $1.6-odd billion in mandatory appropriations the program has required. Ok, those don’t show up in the budget, so maybe most of the practical folks won’t care — but what about the more ideological ones? Or a technically curious DOGE boy looking to make a mark? And what about muni bond lobbyists who have more reason than ever to put potential competition in a bad light and show how necessary (and relatively efficient) their market is for delivering federally subsidized finance? [3]

I know the budget numbers will change, so it’s not likely that WIFIA cuts, if there are any, will be so drastic. It’s hard to predict where the re-estimate issue will go — there may be ways to manage the ‘narrative’ if necessary. Still — a defensive mindset might be called for.

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Notes

[1] It is possible that WIFIA has sufficient unallocated leftover subsidy to meet loan demand for FYE 2026 without needing further funding. But I somewhat doubt it — WIFIA usually gets more than enough applications to utilize its annual appropriated funding. There are about 69 ‘pending’ loans on their website — amounts aren’t given, but I’d guess the total is somewhere around $8-10 billion, which would require $80-100 million in subsidy, i.e., all of last year’s funding plus some more. Maybe the ‘unobligated balances’ line above holds a clue? Above my pay grade.

[2] I doubt anyone will dig this deep, but if you include the mandatory appropriations for FYE 2021-2023, the total to date is actually closer to $2.4 billion. The portfolio is now about 50% drawn (i.e. prior loan commitments that were drawn down into funded loans, which triggers the re-estimate), so the final total could go yet higher when the remaining old commitments are drawn, but perhaps by not so much. The actual number is not so important — it’s the ‘billion’ handle showing up in the current budget environment that might be a concern.

[3] There’s this Congressional letter from 2020 re municipal bond market support (what eventually became the Municipal Liquidity Facility). FWIW, note the signatory on page 3, as one of forty-three House members.