The Sky is Falling…Again

Extreme budget storm

It must be difficult to be a progressive.

I mean, the sky is always falling, raining down upon your head, you’re forced every day to swallow a steady diet of identity injustice, or maybe it’s intersectional exploitation, your sandals are water-logged from having to wade through all that rising sea level, and the fascists are out to try and poison all the clean water.

Yikes.

Last week, Tony Evers, the governor formerly known as Liked-by-Democrats but now excoriated as a cardboard cutout, was back in true progressive form, freaking out about all those things, especially about the clean water part.

In a June 19 letter to the state’s congressional delegation, Evers yelled “Fire!” Or was it, “The sky is falling!” Maybe I’m mixing metaphors. Anyway, the governor fired off a long letter urging the representatives to reject a series of proposed Trump administration budget cuts affecting everything from tribal assistance and forestry grants to emergency and disaster response.

Hmmm. I guess we should at least try to see what the hell he was ranting about, so let’s start by looking at the Clean Water State Revolving Fund (CWSRF). Basically, that’s a state-managed “water bank” (started in 1987) that uses federal seed money to make low-interest loans for storm water and wastewater projects, with repayments recycled into future loans.

The Trump administration would cut them by close to 90 percent, and Evers threw a fit for all to see, which immediately exposed the starting point of all progressive thought: The government must fund and thus control everything, all the time. We are incapable of individual action or responsibility, or of any self-government through our democratically elected state and local governments. Here’s Evers’s version of that:

Always more government control is the answer. See, for example, the state’s Stewardship Fund, for which Evers wanted to spend $100 million a year scooping up land through perpetual conservation easements to practice his lord-and-vassal politics. But conservation easements in perpetuity simply mean feudal bondage forever for the people of Wisconsin, and the same goes for the revolving loan funds, which have been transformed into vehicles for political favoritism through earmarks and for the infiltration of climate change ideology into infrastructure planning and implementation.

Not to mention that such massive forever funding was never the intent of the revolving loan programs, much like eternal land-buying was never the intent of the Stewardship program.

And so the fight over Wisconsin’s revolving water funds isn’t really about clean water. It is about whether a federal program created almost 40 years ago should function as Congress originally designed it, and, as such, whether states should assume greater responsibility.

That said, the governor’s words of doom and gloom are not entirely without merit. His warning that the proposed Trump administration would jeopardize billions in drinking water, wastewater, and stormwater projects and threaten infrastructure investment has a grain of truth but only because, over the last 40 years, the government has lured those communities into its web in a way that has made them dependent upon it.

Evers, then, is asking the wrong question. The question isn’t whether the program should be gutted. The question is whether it should finally transition into the state-run revolving fund that Congress originally intended and that the Trump administration’s budget proposal would compel. Congress designed the programs as seed money—not permanent federal subsidies or a traditional grant program. The idea was to capitalize state loan funds that would recycle repayments indefinitely, and, over time, as those programs matured, states would take control of them. Here’s how the president’s 2027 budget proposal puts it:

And that’s the other side of the debate. Evers portrays Trump’s array of proposed cuts as an assault on environmental protection, housing, infrastructure, cybersecurity, and disaster preparedness, but they are, in fact, part of a broader effort to shrink domestic spending, return responsibilities to states, and focus federal agencies on core missions. Naturally, all those are reasonable goals and, just as naturally, Evers despises them.

Suddenly, the sky was blue

Not only that, but turning the clean water program over to the state would not gut anything. As of June 30, 2025, the program’s annual report showed $21.5 million in remaining federal Clean Water SRF capitalization grant balances.

True, the DNR has warned of high demand and loan-capacity pressure, and Wisconsin has drawn down virtually all of the federal grant money Congress appropriated over those years. That $21 million is only about 1.4 percent of the total the state has received. But the other truth is, Wisconsin may be exactly the example Congress envisioned of a state turning seed money into a mature state-run program. Nearly all historical capitalization grants have already been spent, and repayments and investment earnings now exceed the original federal contribution. That’s what was supposed to happen.

And then there is this. In 2017, in a little detail Evers leaves out, the state undertook an investment-loan restructuring that created hundreds of millions of dollars in future repayment capacity. Or more specifically, as the 2025 CWSRF annual report states:

Let’s rinse and repeat that: Wisconsin moved $358 million of equity plus $165 million in bond proceeds into investment loans expected to generate approximately $623 million through 2033. According to Wisconsin’s SFY 2026 Clean Water Fund Intended Use Plan, the investment portfolio is expected to generate $37.4 million during fiscal year 2026 for new Clean Water SRF loans and debt service on EIF revenue bonds. That is state-managed revolving capital, not unspent federal capitalization grants. Thus, while the federal capitalization grants are spent, the revolving loan fund itself is sustained by a potpourri of interest earnings, leveraged bonds, investment loans, and state matching funds.

Through such investments, Wisconsin has transformed some $1.5 billion in federal capitalization grants into more than $4.1 billion in water infrastructure. There’s also the Infrastructure Investment and Jobs Act of 2021 (IIJA), which included $50 billion for the EPA to strengthen the nation’s drinking water and wastewater systems. The IIJA provides two appropriations for the CWSRF for each federal fiscal year 2022 through 2026.

And so the sky is hardly falling. The numbers suggest Wisconsin no longer operates a simple pass-through for federal dollars but rather a mature revolving loan fund that is less dependent on annual federal appropriations than it was in the 1980s and 1990s, and the evidence suggests Wisconsin is far better positioned than critics acknowledge to assume greater responsibility.

None of this suggests Wisconsin could absorb a 90 percent federal reduction overnight. It does suggest that the state’s revolving fund is far more financially mature than critics sometimes acknowledge.

Still, Evers has a legitimate point: Demand remains high. Without new capitalization grants, Wisconsin would continue making loans, but probably fewer of them over time unless the state increased its own investment or leveraged additional financing. However, even that claim is conditional because of the federal dependency that has been encouraged for decades and because, if we look at the actual science (and we will), fewer loans would be needed.

A debate over the program’s future is exactly what needs to happen because transitioning entirely to the state would not only stabilize the funding stream but force the state to debate the program’s underlying assumptions, especially the need for hundreds of millions of dollars for climate-driven infrastructure projects designed for worst-case scenarios.

Progressives are scared to death that this debate will take place, and it won’t as long as the program remains deep inside the federal deep state.

Can’t hear common sense

No one can seriously talk about the SRFs, or yell that the sky is falling, without talking about the rot of earmarks. Over the years, Congress has quietly changed the program’s rules to allow them, diverting billions of dollars nationwide away from the formula-based revolving funds. Between 2024 and 2026, Wisconsin has received dozens of earmarked projects worth about $68 million ($45 million for Clean Water and almost $23 million for Drinking Water).

But those earmarks came at the expense of reductions in predictable state formula funding.

Instead of strengthening a permanent revolving loan system, Congress increasingly distributes one-time grants, and that undercuts the very model Congress originally established.

According to the Council of Infrastructure Financing Authorities (CIFA), between 2022 and 2024, Congress diverted $3.73 billion in annual federal funding (or 45 percent) from fiscally responsible state-run SRF loan programs for water infrastructure to create a massive new federal grant program for congressional earmarks at the U.S. Environmental Protection Agency (EPA). Practically speaking, it was a redistribution of federal funding from 33 states to 17, CIFA observed, and Wisconsin was among the biggest losers. Between 2022 and 2024, the Badger state’s net loss (state revolving funds plus earmarks) was $30.9 million.

The other big problem is, congressional earmarks (officially the pork is called Congressionally Directed Spending, or CDS) don’t offset cuts to annual federal funding for the SRFs. In other words, instead of revolving loans, Congress increasingly writes one-time grants to specific projects. That money disappears after it is spent because there is no repayment of the grant dollars. In fiscal years 2024 and 2026, according to the Great Lakes Commission, Wisconsin’s formula CWSRFs were reduced by about $45 million due to CDS set asides.

As EPA administrator Lee Zeldin said in congressional testimony in May 2025, “There has been a bleeding out of funds deliberately through decisions made by Congress to earmark. It would be helpful to have a conversation about the SRF and the use of earmarks and how that has been reducing the funding through the years.”

This brings up an important point everyone should know—I should actually say Zeldin brought it up: It’s Congress that has been killing the SRF. Here’s what Zeldin says:

What Zeldin is saying here is that the new administration, in proposing a preliminary budget outlining broad policy priorities (preceding a more detailed line-by-line budget), was not zeroing out the program but including a nominal amount that could be built upon in budget negotiations.

On the other hand, he pointed out, while Evers and Democrats are accusing the Trump administration of killing the program, Congress has been doing just that through earmarks.

Indeed, formula-based revolving funds become self-sustaining because loan repayments finance future projects, while congressional earmarks finance individual projects but do not replenish the revolving pool. It’s like taking candy from the honors box without paying for it. Pretty soon, there’s no candy left, and no honor, either.

The larger policy question is whether Congress wants to rob the water bank completely and then try to blame the Trump administration for the heist.

So maybe, just maybe, Evers might want to write a follow-up letter to Congress asking that very question. The bottom line is that Evers’s letter was disingenuous on three levels. It did not acknowledge the fund’s relatively sustainable position or the state’s ability to handle a transition, nor did it bother to urge Congress to end the earmarks that are actually killing the federal side of the program.

The Third Turning

As for the third deception, well, there’s progressive ideology.

The fact is, though Evers did not mention it, the revolving loan programs are shot through and through with the mission drift of climate ideology, and, besides an ever-bigger federal government, this is one of the primary reasons that Evers and Democrats are so hopped up about the revolving funds.

They’ve even hired—wait for it—a climate specialist to “help” local communities spend the revolving loan funds. These funds are paying people to tell communities what they need to do with the financing. The problem is that the DNR continues to link to outdated and discredited models and worst-case climate scenarios to assess infrastructure needs, which invariably turns out to be the costliest but not necessarily the best option.

The 2025 annual report of the Clean Water State Revolving Fund says it all:

And DNR managers don’t wait for consensus to emerge about what is needed through discussions with affected industries, either. They just keep on spending and advising local governments on how to spend the pot of money:

The climate specialist has been busy, very busy:

At the end of the day, this sentence jumps out from Evers’s letter: “Wisconsin communities face significant costs for planning, engineering, and construction of water infrastructure to maintain service and meet water quality standards to protect Wisconsinites’ health.”

Right now, ideology is driving that SRF project list, regardless of what industry or science says, and Evers and the DNR want to keep it that way, funded with federal dollars. The question is, how much of the costs are needed. Wean Wisconsin and the state from the federal teat, and we’ll find out.

To be sure, transitioning to a state-based program will require more state dollars, but that will require justification at the state level, and that’s where the ideological foundations of the SRFs will become more exposed. If Wisconsin taxpayers are expected to shoulder more of the cost, shouldn’t Wisconsin lawmakers also decide what kinds of projects deserve financing?

Ultimately, the question is whether, after nearly four decades of federal capitalization, Wisconsin’s revolving fund has matured enough for responsibility to begin shifting back toward the state. The evidence suggests that the state has built one of the strongest revolving funds in the country. That doesn’t mean federal funding should disappear overnight—add a little weight to that skinny budget—but it should be recognized that the administration’s starting point in the skinny budget was not a realistic proposal to do so.

Congress created the revolving funds to become self-sustaining. If this isn’t the moment to begin returning responsibility to the state, then when is? And if the answer is “never,” then Congress should simply admit the revolving fund was never intended to revolve at all.