Congress could ease rules for small cities seeking transportation money, experts say

One of the many changes that the 2021 federal infrastructure law made to transportation policy was giving local governments more opportunities to apply directly for federal grants, rather than depending on their state government.

But Congress is likely to scrutinize—and possibly change—those discretionary grant programs when they craft the next surface transportation bill, two transportation experts told a gathering at the National Conference of State Legislatures annual conference last week, in part to make the application process more user-friendly.

“We opened up grant opportunities more to local governments and to metropolitan planning organizations that have not always had the ability to directly apply for federal transportation dollars,” said Jordan Baugh, the senior policy advisor for the Democratic members of the U.S. Senate Committee on Environment and Public Works. “That’s created opportunities, but also a lot of challenges, particularly for smaller cities that don’t have a large transportation or public works department.”

The smaller organizations often don’t have the experience applying for and administering large federal grant programs. Congress might want to provide technical expertise for local communities, or help them build capacity to oversee the delivery of those projects, Baugh said.

Susan Howard, director of policy and government relations for the American Association of State Highway and Transportation Officials, or AASHTO, said state transportation departments can help local officials prepare and administer grant applications. But even state agencies are overwhelmed and need to prioritize which grants to pursue.

For local officials in smaller jurisdictions, though, the rules that come with federal grants can be difficult. “That’s been one of the big challenges with the discretionary grant programs, as you open up to a whole new universe of recipients: understanding what it means to comply with NEPA [an environmental law], Davis-Bacon [governing prevailing wages], etc,” she said.

The Infrastructure Investment and Jobs Act created more than $150 billion worth of discretionary grant programs, which gave the Biden administration a chance to put its own stamp on the kinds of projects it wanted to accelerate. President Joe Biden has prioritized efforts to combat climate change, promote racial equity, encourage the use of union labor and build infrastructure that supports alternate modes of transportation along with automobiles.

Those efforts have sometimes angered congressional and state-level Republicans, who argue that the Democratic administration has undermined the bipartisan consensus that led to the passage of the $1.2 trillion funding law in the first place.

Presidential administrations of both parties have used discretionary grant programs to promote their pet issues. For example, one popular program not only shifted emphasis but changed its name under three successive administrations. The Obama administration pushed for the creation of so-called TIGER grants in the 2009 stimulus package, which it used to fund projects in urban areas. The Trump administration rechristened the effort as BUILD grants, and prioritized rural areas. Under Biden, the program grew bigger and became known as RAISE grants, and they are evenly split between urban and rural projects.

Still, the vast majority of transportation money from the federal government is automatically distributed to states using formulas written by Congress.

One reason Congress might be interested in keeping discretionary grants, though, is that it allows federal lawmakers to promote projects important to their constituents, even if they are not high on the state’s list of priorities.

“These discretionary grant programs are satisfying an itch that earmarks once did,” said AASHTO’s Howard. “We didn’t have earmarks in the [infrastructure law], but we had a lot of programs to direct dollars to local priorities.”

Baugh, the Senate staffer, noted that the number of discretionary grant programs started expanding at the same time that Congress stopped using earmarks in its transportation bills.

“Discretionary grants do preserve some of that ability for the administration and for Congress to also direct where some of these priorities are and where some federal funding can go,” he said.

Washington state Rep. Jake Fey, a Democrat, told the panelists that the effort it took to apply for the federal grants could be immense. State and local governments go through a lot of effort to prepare an application “only to have it not funded,” he said. “A lot of resources and engineering expertise goes towards that… and a lot of that effort doesn’t result in a project at the state or local level.”

“There seems to not be a rhyme or reason,” he said. “But there’s a lot of waste that occurs in all that effort to put an application together. Maybe there’s some ways to put people into a queue so they could be assured it might not happen this year, but it might happen five years from now.”

Baugh said Congress would likely look at streamlining the application process for discretionary grants when the infrastructure law expires in 2026. Lawmakers could, for example, combine multiple grant programs so they aren’t so narrowly tailored.

“You’re not applying for 15 different grants, but you could have a little more flexibility in terms of grant size and recipient size so that you’re making the process as easy as possible for local governments,” he said. “It’s not going to be easy, because the Federal Aid Highway program is complicated, but making it easier and maybe a little more predictable and a little more user-friendly for folks that don’t have a lot of experience working directly with USDOT is something that Congress may want to look at.”

Howard credited the Biden administration for doing an “excellent job” in identifying areas that local governments need technical support for in order to apply for grants. But that only goes so far, she said. “It’s just a big ocean and a lot of little fish.”