The Infrastructure Investment and Jobs Act (IIJA), also known as the bipartisan infrastructure bill, will increase federal infrastructure spending by approximately $550 billion over the next decade. , almost all through grants to state and local governments, which own much of the nation’s infrastructure. . At our annual municipal finance conference in July 2022, four experts answered several questions about the IIJA: Ryan Berni, senior adviser to Mitch Landrieu, the White House infrastructure implementation coordinator; DJ Gribbin, former Special Assistant to President Trump for Infrastructure; Shoshana Lew, executive director of the Colorado Department of Transportation; and Eden Perry, head of US public finance operations and S&P Global Ratings.
A video of the panel is posted here. Here are some highlights.
Some IIJA funds are allocated among the states according to a formula. Others require state and local governments to apply for funding. How is this process going?
SHOSHANA LEW: “There are a lot of federal discretionary programs now. Some of them are new; some of them are variants of those that have been around for several years… [W]What we’re trying to do is figure out how to write a finite number of good applications… Our federal friends are having some tough challenges running all these new programs. I would applaud the DOT [U. S. Department of Transportation] to try to combine the sources where they can. They issued one funding notice in one case for three different programs, so instead of having to apply three times, we could do it once. The more they can do this, the easier it is for people around us to avail of these programs. I think at the end of the day how they handle these projects could be difficult if it’s not very organized, because the money [flow] by different operating administrations with different rules. Making sure they buy into the upstream consolidation as much as they did upstream…would be important.
RYAN BERNI: “We really feel like we’ve hit [the] on the ground… We see this as a five to seven year undertaking, and in many cases the money will be spent over 10 and 12 years, the way things work. We started building a team in the White House to focus on delivering the project, to focus on getting the right structures in place. Each state has appointed a State Infrastructure Coordinator under our direction, with one or two exceptions. And we work very hard to ensure low-capacity communities have the resources to plan and apply for funding. The law project [has]… 375 programs of which 125 are new.
DJ GRIBBIN: “This bill is a real mess. I think Ryan is being polite…Remember where that bill came from. It’s like two handfuls of senators who got together, almost like got together over a beer and threw a bunch of stuff that was on the shelf into a bill, sent it to the House. The House did nothing about it, passed it. And now we have 125 new grant programs. We tried to make one [new] program, our urban partnership agreement in the Bush administration and it has been incredibly difficult. This bill provides for a competitive program for culverts. And I don’t know who the head of the culvert lobby is that put this in there, but that person should get a huge bounty. For those who don’t know what [a] east culvert, [it is] a pipe that passes under a road or a railway line to simply drain water from the infrastructure. There is now a new federal competitive grant program for culverts, so there is [going to] be a lot of programs, a lot of money, a lot of chaos.
What effect will rising inflation and labor shortages have on state and local infrastructure spending?
EDEN PERRY: “What’s going on with inflation, supply side disruptions, difficulty finding workers for projects, rising wages for workers? We expect states and local governments to focus on smaller, more impactful projects, or even…extend the timeline if possible…I think the concern is finding the workers…and paying their salaries. I think that’s a huge problem right now.
SHOSHANA LEW: “We are under significant pressure from parts of the industry to approve cost overruns without doing due diligence on them. We will not [do that]… [We need] to ensure that even in an inflationary environment, we get the best return on taxpayers’ investments.
Will the Infrastructure Investment and Jobs Act add to inflationary pressures?
RYAN BERNI: “The answer is no. And people on the outside said, “Yes, of course, of course, spending a little money right now can be inflationary.” But the impact of this bill is positive on the issue of inflation for several reasons. First, we’re actually going to fix the supply chains that have created much of the situation we have today in ports, railroads, airports and railways, increasing capacity production of the economy, with much of what we have. The second thing is that we’re just not spending that much money this year. A lot of money [is spent] in the years to come.
Will the influx of federal money diminish the role public-private partnerships play in state and local infrastructure projects?
DJ GRIBBIN: “[Yes]I think it is [going to] be ousted in two ways. First of all, as everyone has mentioned, there is more funding. it is [a] tsunami of funding… So there is less need to research funding alternatives than you would otherwise. And then secondly, the crowding out in terms of time. I’m sure… DOTs, cities, counties across America are asking their teams to focus on how we apply for federal funding and grants, as opposed to how we think about new innovative ways to involve the private sector in the financing of these infrastructures. ?… It’s a great tool to have in the toolbox. It can be useful, but it could be [limited in the] the current environment, given the amount of money coming in and the need to aggressively jostle for competitive grant programs…There is a common misperception that public-private partnerships will bring more funding into the ‘infrastructure. [It] does not provide more funding. It provides more funding tools so that States can accelerate these projects. Ultimately, infrastructure funding comes from two sources, users and taxpayers, period.