State and Local Push on Infrastructure Finally Pays Off

It was a big moment for state and local governments when Congress late last week sent a roughly $1 trillion infrastructure bill to President Biden’s desk for his signature.

State and local advocates have long pushed for greater federal investment in infrastructure—like bridges, transit, water pipes and broadband. It was a goal that seemed at times close, but always out of reach during the Trump years. So, when the House on Friday passed bipartisan infrastructure legislation with about $550 billion in new spending, it marked a significant win.

“We worked hard on this bill,” Dayton, Ohio Mayor Nan Whaley, the president of the U.S. Conference of Mayors, said in an interview on Sunday. “We haven’t had any infrastructure investment from the federal government for so long, to make sure that it was large enough to really have an impact in communities was a big deal.” 

Seven leading organizations that represent states and localities—the Conference of Mayors, the National Governors Association, National Conference of State Legislatures, Council of State Governments, International City/County Management Association, National Association of Counties and National League of Cities—issued a joint statement applauding the bill’s approval. 

“This package will provide the investments we need to expand and repair our nation’s infrastructure,” they said.

The public works legislation follows the American Rescue Plan Act, the coronavirus relief law enacted earlier this year that funneled $350 billion in direct aid to state and local governments to help with pandemic recovery efforts. Taken together, the bills amount to a massive infusion of new federal funding that states and localities will be able to tap in the coming years.

Much of the added spending in the infrastructure bill, about $284 billion, will go towards transportation. Importantly, the bill provides certainty for the next five years with funding levels for the Highway Trust Fund, the main federal account for roads and transit. Although the package does not fix structural problems with the fund’s revenues, primarily fuel taxes, falling short of spending it supposed to support.

Outside of transportation, the legislation will make billions in new investments in other public assets, like waterworks ($55 billion) and broadband ($65 billion).

Local governments did not get everything they wanted. For instance, Whaley said that while there’s significant money in the package for water infrastructure, there are still concerns that it’s not enough to fully close the gap in that sector. “But it’s a big step,” she said.

Jessica Jennings, the National Association of Counties’ associate legislative director for transportation and infrastructure, noted how the bill includes notable funding increases that will help counties cover the cost of keeping bridges in good repair. This is significant for counties because they own about 38% of the nation’s bridges.

The bill will boost what’s known as the “off-system bridge set-aside” by about 5%, or $330 million, to just over $1 billion per year, according to an analysis of the legislation by NACo. 

Jennings also flagged dollars available through a new $2.5 billion, competitive grant program for upgrades meant to improve safety and cut down congestion at rail crossings.

Getting more dollars flowing directly from the federal government to the local level—as opposed to through states—to pay for infrastructure projects has been a longstanding priority for many local leaders. This bill does not radically change federal policy in this way. 

It does, however, appropriate about $150 billion to the U.S. Department of Transportation for grants to state and local governments. Of this funding, according to a recent Eno Center for Transportation analysis, roughly $50 billion is set to be distributed under funding formulas. But the balance, about two-thirds of the total, will flow through competitive grant programs.

That means the Transportation Department, led by Secretary Pete Buttigieg, a former midsize city mayor, will have sway over how upwards of $100 billion in competitive grants are awarded.

“This is orders of magnitude more discretion than has ever been given to a secretary of transportation before about being able to pick and choose which projects to fund,” Eno Center senior fellow Jeff Davis noted during a Route Fifty event last month.

Davis said that while there are criteria in the bill to guide how DOT evaluates applications and awards funding, the grant programs give Buttigieg “a huge ability to put a thumb on the scale in favor of priorities that the administration has in selection of these projects.” 

How much funding doled out under these competitive grant programs goes to areas like transit, as opposed to highways, or local versus state agencies, will be something to watch.

Important Work Ahead for States and Localities

While the infrastructure spotlight in recent months has shined on Congress, much of the spending in the U.S. on roads, transit, and water and sewer systems happens at the state and local level, and is paid for with revenues from taxpayers and ratepayers in those places.

The Congressional Budget Office issued a report in 2018 showing how between the 1970s and 2017, the share of annual state and local, inflation-adjusted, spending on transportation and water infrastructure rose from the $150 billion ballpark to $342 billion, while federal investment hovered in the $100 billion range.

Yonah Freemark, a senior research associate at the Urban Institute, emphasized on Twitter over the weekend that state and local governments, in making choices about policies and projects, will play a major role in determining how the new federal funding is spent.

“If we want better transportation policy choices nationally, we need to look to state & local governments to set different priorities,” he wrote, adding that advocates need “to push change at state capitals. The federal government is not going to be able to do that for them.”

Referring to the grant funding DOT will oversee, he added: “If you want the federal government to select good transportation projects to fund ... state & local governments need to submit good transportation projects for consideration. It doesn't work any other way.”

Corinne Kisner, executive director of the National Association of City Transportation Officials, described passing the bill as a “first step.”

“Now begins the hard work of selecting the projects–and building the surrounding programs for them,” she said. "How states spend the funds they receive, and how USDOT designs, administers, and selects projects for its grant programs will determine if the Administration will meet its safety, climate, and equity goals," Kisner added.

Asked for an example of why the funding was important for Dayton, Whaley highlighted a project to redo Salem Avenue, a major, four-lane artery in the city. “It has taken us an entire decade to fund that sucker,” she said. The project was too expensive, she explained, for the city to take on by itself. “We had to get federal dollars,” she added. “But we had to wait forever.”

Whaley expects that cities like hers will now be able to move at a quicker pace rehabbing streets and taking on other projects as a result of the new bill. “That, I think, is really exciting.”