By Andy Sullivan
(Reuters) - Glen Ullin, North Dakota, was first in line for money to replace its leaky water pipes before Washington cut funding by one-third this spring. The reason: Congress is yet again diverting money to pet projects known as "earmarks.
Advocates say these earmarks allow lawmakers to direct money where they believe it is needed most.
But they leave less money for everybody else.
Water projects in West Virginia, Alaska and Oklahoma will get more than twice as much money this year as last, thanks to earmarks secured by their congressional representatives.
That leaves states like North Dakota that did not get earmarks unable to fund as many projects as they had anticipated -- even as President Joe Biden's infrastructure law has secured $50 billion more for that purpose.
"Earmarks are a problem I wish people could see. It's just quite drastic -- winners and losers," said DeAnn Ament, who heads North Dakota's public-finance authority.
Earmarks serve as legislative “sweeteners” that build support for major bills by allowing lawmakers to steer federal dollars to projects in their districts, bypassing the bureaucracies that usually distribute federal aid.
A series of corruption scandals and concerns about wasteful spending prompted Congress to abolish earmarks in 2011. But as partisan funding battles led to repeated government shutdowns over the following decade, some lawmakers pushed for their return, arguing they could build support for the massive spending bills that keep government running.
Democrats included new safeguards when they brought earmarks back last year. Lawmakers have to post their requests online and certify that they do not have a financial stake in the projects they propose. Earmarks are capped at 1% of discretionary spending, and cannot go to for-profit entities.
The annual government spending bill Biden signed in March included 4,983 earmarks, ranging from $133 million to upgrade port facilities in Alabama to $4,000 to buy a vehicle lift for the Huntington, West Virginia, police department.
That money was not distributed evenly: Alaska and Vermont pulled in more than $300 worth of earmarks per resident, according to a Reuters analysis, while North Dakota, Wyoming and Montana got no earmarks at all.
Congress increased the overall funding to some programs to cover the costs of earmarks.
That's not the case with the two Environmental Protection Agency programs that fund local drinking-water and wastewater projects.
Congress provided $2.76 billion for the 2022 fiscal year, a slight increase over the prior year. But that included $841 million in earmarks, which reduced by 30% the amount available to state-run funds, which weigh criteria like affordability and health risks when they decide which projects to support with grants and low-interest loans.
Some states say that is not a problem.
The infrastructure law provides an additional $3.8 billion each year for water projects over the next five years, along with money to remove lead pipes and tackle "forever chemicals" that have emerged as a new environmental concern.
That means even states like North Dakota and Arkansas that did not secure water-system earmarks will have twice as much money this year, the Reuters analysis found.
"We're doing much better than previous years," said Chris Colclasure, who heads Arkansas' natural-resources office.
Others say the cuts will have a lasting impact.
"Those projects that got the earmarks really did jump in front," said Keith McLaughlin, head of Colorado's water-development authority. Even with the extra infrastructure dollars, his state's water funds will probably run out of money in the coming year, he added.
Earmarks allow local governments to bypass those state-run funds.
In New Jersey, several towns that would be normally too affluent to qualify for state grants secured earmarks anyway.
Saddle River, a New York City suburb where the median household income is two and a half times the national average, won a $1.1 million earmark to build a sewer line to a new housing development. The town would not qualify for a grant through the existing state program and did not apply for low-interest financing, according to a state official.
Saddle River did not respond to a request for comment. Democratic Representative Josh Gottheimer, who helped secure the earmark, said he believed it was his duty to steer as much federal aid as possible back to his district.
"The more of our federal tax dollars that we get back to Jersey towns, the less our towns and families have to carry the burden in local taxes," he said in a statement.
That wasn't an option in North Dakota, whose congressional delegation did not submit any earmark requests this year or last.
Republican Senator Kevin Cramer said he has asked to ensure that states like his don't get less funding if they do not secure earmarks. The state's other senator, Republican John Hoeven, said he has been able to adequately fund North Dakota's needs without earmarks.
That would have been the case for Glen Ullin, located 54 miles (86.9 km) west of Bismarck, had North Dakota gotten he same amount of money it did last year.
The city ranked first on the state's list of eligible projects, due to the poor condition of its water system and a median household income that is half the national average.
State officials said they planned to award the city a grant of $2.2 million and a low-interest loan to cover the remainder of the $4.5 million project.
In May, the state learned it would only get $7 million for its drinking-water fund, down from $11 million the prior year.
That forced it to slash its grant for Glen Ullin to $1.4 million. Glen Ullin probably won't qualify for infrastructure dollars because those are distributed using different criteria, officials say.
The city has scaled back its plans. Backhoes could start digging up some streets next spring to install new pipes, but nobody knows when they'll be able to finish the job.
"Of course it's not fair. But I wouldn't be whiny about it," said Vicki Horst, the city auditor. "We'll keep working and see what we can do."
(Reporting by Andy Sullivan in Washington; Editing by Scott Malone and Alistair Bell)