State Future Funds: Investing in Community Resilience Across the United States

Firefighters watch as the Thomas Fire approaches homes in December 2017, in Montecito, California.

Climate change is no longer tomorrow’s problem. Communities across the country are already experiencing the consequences of climate change—from more intense and deadly heat waves to more powerful storms and devastating coastal flooding, droughts, and wildfires. The effects of climate change are also putting added pressure on our nation’s aging and deteriorating infrastructure, which desperately needs upgrading to safeguard the health, prosperity, and well-being of communities across the country.

From 1901 to 2016, the global average temperature increased by about 1.8 degrees Fahrenheit. This increase has triggered changes in the climate that have resulted in severe consequences for people and the planet, including warming and acidifying oceans, rising sea levels, shifts in precipitation patterns, loss of sea ice and glaciers, and more frequent and destructive extreme weather events. These changes not only threaten cities and rural areas, but they also harm the transportation, energy, and other infrastructure on which these areas rely to support local economies, businesses, and residents’ daily lives. If the United States is unable to invest in solutions to build future-ready infrastructure, the cost to U.S. gross domestic product will be $3.9 trillion by 2025.

Congress has a responsibility to ensure that the nation’s infrastructure is built to withstand climate change threats. It can do this by creating State Future Funds—federally supported revolving loan funds that support innovative and resilient transportation and energy infrastructure and flood protections in areas that need them the most, including low-income areas and communities of color.

Build future-ready infrastructure and communities

Modeled on the highly successful Drinking Water State Revolving Loan Fund (DWSRF) and Clean Water State Revolving Fund (CWSRF), State Future Funds would provide low-interest or interest-free loans and loan guarantees, while leveraging philanthropic and private capital, to expand investments in renewable energy; residential and commercial energy efficiency improvements; regional transportation services; electric vehicle charging stations; and job training programs, among other critical future-ready investments. Similar to the Resilient Communities Revolving Loan Fund that Senate Democrats proposed in their 2018 “Jobs and Infrastructure Plan for America’s Workers,” State Future Funds would offer state leaders a forward-thinking and equitable approach to modernizing infrastructure that would support state economies and help communities prepare for the future.

Prioritize communities with the greatest needs

While more extreme weather events threaten all U.S. residents, it hits hardest the communities that have historically been left behind—in particular, low-income communities and communities of color. In a world of growing inequities, it is not mere coincidence that families struggling to make ends meet are more likely to live and work in areas that have the highest levels of toxic pollution and are the most prone to flooding, heat waves, and other climate change effects. These communities are also the least resourced and able to prepare for future extreme weather. Congress must address the persistent and systemic racism embedded in federal housing policies as well as local planning and permitting decisions that have led to disproportionately greater environmental and public health risks in low-income areas and communities of color relative to white or wealthier neighborhoods. Congress can begin to tackle past inequities and unfair infrastructure practices by requiring that at least 50 percent of State Future Funds capital is invested in communities with the greatest need.

Save by planning ahead

By building 21st century infrastructure that can withstand future extreme weather threats, State Future Funds would create good jobs and save taxpayers money. According to the U.S. Department of Transportation, every $1 billion invested in modernizing infrastructure supports the creation of roughly 13,000 direct and indirect jobs for one year.

Risk management experts estimate that for every $1 invested in building resilient communities and infrastructure, $6 are saved in future costs—including the costs of economic disruptions, property damage, public health crises, and deaths that extreme weather disasters cause. In other words, a $1 billion investment in future-ready infrastructure would save taxpayers $6 billion in disaster damages.

Capitalize State Future Funds

Congress can help states begin to address their unmet resilient infrastructure needs by capitalizing State Future Funds with at least $25 billion dollars. To pay for this capitalization, Congress should work on bipartisan tax reform that prioritizes the workers, families, and communities facing the greatest challenges. Specifically, Congress should repeal and replace the Tax Cuts and Jobs Act of 2017, which gifted massive tax breaks to large corporations and the wealthiest Americans. By ending unfair tax loopholes, Congress can ensure that tax revenue is available to capitalize State Future Funds in every state.

To ensure that states are invested in their State Future Fund’s success, Congress should also require that each state match federal dollars allocated to their fund by 20 percent—similar to what is required of states for their federally supported DWSRF and CWSRF.

Ensure good governance and social equity

To support meaningful stakeholder engagement and avoid political favoritism, Congress should structure State Future Funds to meet high governance and social equity standards. For example, Congress should require state policymakers to establish a fair and transparent project review process; metrics to meet social, environmental, and economic measures; and a strong investment plan informed by local government and community leaders’ input. Congress should also require state leaders to establish diverse State Future Fund boards that have the expertise needed to ensure and support public accountability; effective fiscal oversight; meaningful community engagement; and  innovative clean energy, transportation, and flood protection projects.

Furthermore, given the nation’s affordable and workforce housing shortages, coupled with the rising cost of living in many communities, Congress should require that State Future Funds adopt project criteria to ensure that project developers work with local officials and community leaders to design and implement strategies to reduce the risk of displacing longtime residents from their communities as neighborhood improvements drive up rents. These strategies should include an expansion of affordable housing; more inclusionary zoning that breaks down long-standing structural barriers and allows for greater housing density; community land trusts to support locally owned housing and business assets; and job training programs to support access to good careers and jobs.

Conclusion

From wildfires in the West that have reduced entire towns to ash to coastal communities that are depending on seawalls and bulkheads as final bulwarks against encroaching seas, communities across the United States are being overwhelmed by the impacts of climate change. Current and future climate change effects demand immediate and effective action from state and local leaders to support resilient infrastructure and safeguard public health. Yet, as it stands, too many states and communities are ill-equipped to confront the dangerous consequences of climate change. By creating and investing in State Future Funds, Congress can help communities build resilience to the global warming effects that they are already feeling today as well as the even more daunting public health and economic threats that they are certain to face in the future.

Cathleen Kelly is a senior fellow for Energy and Environment at the Center for American Progress. Guillermo Ortiz is a research assistant for Energy and Environment at the Center.

The authors would like to thank Miranda Peterson, Tricia Woodcome, and Christian Rodriguez for their contributions to this column.