What is WIFIA's FCRA Budgeting Issue?

A bill to amend the US EPA Water Infrastructure and Finance Act (WIFIA) loan Program is expected to be introduced in Congress soon. This short bill contains various amendments and directives that will improve the WIFIA Program. One amendment stands out. It involves the federal budgetary treatment of WIFIA loans under the Federal Credit Reform Act of 1990 (FCRA). FCRA treatment requires a federal loan program to utilize something akin to accrual accounting for loans instead of the cash-based budgeting used elsewhere by the federal government. This results in far more realistic reporting and has effectively been standard operating procedure for all federal loan programs since FCRA was enacted.FCRA treatment is now an issue at WIFIA due to a new but increasingly important area of lending for WIFIA and other federal infrastructure loan programs, loans to projects with some degree of federal involvement.The need to clarify FCRA treatment for WIFIA and other program loans to federally involved projects recently prompted a Congressional directive that required the Office of Management and Budget (OMB) to develop criteria based on FCRA law and original budgeting principles. OMB’s published criteria, however, are fundamentally flawed and should be rescinded. In contrast, the proposed FCRA amendment is consistent with FCRA law, original principles, and Congressional intent. Successfully addressing this issue will set an important precedent for the future development of federal infrastructure loan programs