For the upcoming legislative session, the Water Infrastructure Finance Authority hopes to avoid further cuts and prove the agency’s worth to lawmakers after the Legislature cut the agency’s funding by nearly $500 million to address a nearly $2 billion state budget deficit. 

“WIFA is very well aware that we need to prove our worth and our value, too,” said Chelsea McGuire, WIFA’s assistant director of external affairs.

McGuire said the agency is not asking for a lot in its budget request for the upcoming session. Outside of $25 million to continue water conservation grants previously funded by Covid relief dollars, WIFA is making no additional requests for new appropriations. McGuire said this was an effort to protect funds that have already been appropriated. 

“It’s actually a pretty ambitious ask considering that we now have a trend of two years in a row of the state taking money from WIFA to fill gaps for other projects,” McGuire said. 

The budget Gov. Katie Hobbs signed in the recent legislative session, which WIFA officials called “short-sighted,” cut $430 million from the agency’s Long-Term Augmentation Fund. An additional $60 million was swept from water supply development projects in rural communities to address the state’s budget deficit. 

For the upcoming budget, WIFA turned its attention to its water conservation grant program, which started in 2022 after the state received $200 million from the federal government during the Covid pandemic for projects aimed at reducing water usage. 

By the end of June, WIFA had allocated all the federal grant funds to support 186 projects across the state that are expected to save up to a combined 5.5 million acre-feet of water over the lifetime of each project. 

WIFA’s five-year plan included in its budget request notes that the agency sent an informal survey to potential water conservation grant applicants to gauge the demand for additional projects. The survey revealed at least a $100 million demand for more than 110 projects, which WIFA estimated could save from one million to three million acre-feet of water.

Projects funded by the grant received up to a maximum of $3 million. The projects cover a variety of water conservation projects, including agricultural efficiency, research activities, meter upgrades and turf removal.

The $25 million request would extend over the following two fiscal years, resulting in $75 million for the program over three fiscal years. An alternative that WIFA suggested would be for the Legislature to appropriate $100 million into the program in one year, although McGuire said WIFA recognizes current budget constraints. 

The Joint Legislative Budget Council reported that state revenues are more than $400 million above the enacted budget revenue forecast in its monthly fiscal report from September. JLBC’s report published on Sept. 20 noted a preliminary estimate of the revenue forecast from the Governor’s Office was expected by Sept. 15, but had not been released at the time of JLBC’s report. 

McGuire said WIFA is encouraged by early talks with the Governor’s Office about the budget, although no specific negotiating has occurred yet.

Leaving the Long-Term Water Augmentation Fund alone is another priority for WIFA. The fund was created in 2022 to explore options with public and private entities to import water into Arizona. A promised $333 million appropriation into the fund was cut in the enacted budget and $90 million was swept from its existing balance.

“If we continue to look at WIFA’s funds as a soft rainy day fund, we can’t be a serious partner, and we can’t signal to the market that we are going to make this work and all of our hard work is going to pay off,” McGuire said.