State Government Readiness Influences Expenditures

INFRASTRUCTURE from page 1 investment, according to the association’s Transportation InvestmentAdvocacy Center (TIAC).

Arizona approved a $9 billion program focusing on state highways I-10, I-17 and Route 260, to improve safety on these stretches.

“The I-10 expansion is about both today’s traffic demands and what we anticipate in the decades ahead,” ADOT’s Garin Groff said. The state also will preserve 400 mi. of highway pavement rated in fair or poor condition, reported kold.com.

One of the most aggressive transportation packages was signed in Minnesota. It sets a new retail delivery fee, raises sales tax benefitting transit, increases the vehicle sales tax and indexes the gas tax to inflation. It is believed that the recently signed bills will produce $1.3 billion over the next two years, according to ARTBA’s TIAC.

The center reported Florida loaded $4 billion into its project general fund, while Hawaii instituted a new usage fee for electric vehicles.

Missouri combined almost $3 million in general fund revenue and bonds to renovate and expand I-70 across the state.

Indiana’s gas tax was extended for an additional three years, and new EV fees were instituted in Montana and Texas.

“This funding will … increase the quality of life for everyone in Arkansas,” the state department of transportation told Yahoo Finance. “[It] will provide much-needed funding for improvement and support of our state highway system.”

The agency said the funds will help take care of the existing system and will allow planning for future projects of economic benefit.

Where Money Is Coming From

In addition to IIJA earmarks, states are going through surplus general funds, COVID relief and bonds to get projects off the ground.

Electric vehicle fees are among the most popular categories being explored by state legislatures, noted TIAC.

It tracked 35 bills, or 16 percent of 2023 transportation funding legislation introduced in the first five months of year. That marks a notable increase when compared with the eight bills tracked in the previous year, said the organization.

“The expenditure is influenced by readiness of state governments to move quickly,” Joseph Schofer, Northwestern University, told Yahoo. “Those that were better organized — had their priorities lined up and projects ready to go — will show larger expenditures early.”

He said this large tranche of infrastructure money is making up for insufficient past investment especially in big and growing states.

Funding Floodgates Opened or Closed?

Many in Washington argue that a divided federal government will put a stop to big policy measures such as infrastructure funding.

“It’s true that a divided Congress should mean a less productive and less ambitious legislative calendar,” wrote the Brookings Institute. “But Washington has only begun to execute all the work created by the previous Congress — and nowhere is that more true than infrastructure policy.”

Brookings Institute Fellows write that for infrastructure, “the era of big government isn’t over — it’s just getting started.”

Most of the $1.25 trillion earmarked is still sitting in the federal government’s bank account, said the fellows. The funds are just waiting to strengthen and modernize the country’s economy and communities.

“Yet even at this early stage, governments and industry partners have little time to get their infrastructure plans in place,” wrote the Brookings staffers. “And achieving their goals won’t be easy — any one of multiple challenging economic conditions could limit the number of projects that get completed.”

The organization observed that Pres. Biden has framed the next 10 years as America’s “infrastructure decade.”

“The chances of it being remembered that way may well be decided in the coming year, and there’s no time to lose,” according to Brookings.

The IIJA’s one-year anniversary rolled around last fall, marking a low point in terms of expected annual spending, said Brookings. Funding recipients have had to update capital spending plans to higher levels and write rules for the many new federal programs.

“Still, the initial tranche of awards confirms just how much power Congress gave to the states and other major formula grant recipients.”

Measured by total funding awarded by federal agencies, formula programs received 92 percent of the IIJA’s first-year awards. Every state saw more than 80 percent of total awards distributed through formula programs. And state governments are the primary beneficiaries of these formula programs.

States directly receive these funds through Federal Highway Administration programs and the EPA. State-controlled funding will grow as the $42.5 billion Broadband Equity, Access and Deployment (BEAD) formula funding starts to move, noted Brookings.

The institute pointed out that that’s not to say competitive grants aren’t sizable or important.

“Major awards … are all significant projects that can influence economic activity and environmental performance for decades to come.”

Competitive grants also are attractive for cities, counties and other local governments, said Brookings. These government entities prize direct access to federal funding, without the need for allocations from their states.

“And there’s plenty more of the competitive money coming,” wrote Brookings staff members.

By October 2022, only 7 percent of competitive funding had been awarded. Brookings advised that if local practitioners want to maximize their chances to receive federal funds, they should partner with states.

“State officials control larger pots of funding and may not require detailed applications to access that funding,” the institute said. “By contrast, federal competitive programs