Four questions (and answers) about the Infrastructure Investment and Jobs Act

The Infrastructure Investment and Jobs Act (IIJA), also known as the bipartisan infrastructure bill, will increase federal spending on infrastructure by about $550 billion over the next decade, almost entirely through grants to state and local governments, which cover much of the country’s infrastructure Own the country’s infrastructure. At our annual Municipal Finance Conference in July 2022, four experts answered multiple questions about the IIJA: Ryan Berni, senior advisor to Mitch Landrieu, the White House infrastructure implementation coordinator; DJ Gribbin, former President Trump’s Special Assistant for Infrastructure; Shoshana Lew, executive director of the Colorado Department of Transportation; and Eden Perry, Head of US Public Finance Operation and S&P Global Ratings.

A video of the panel will be posted here. Here are some highlights.

Some IIJA funds are allocated to states using a formula. Others require state and local governments to apply for funding. How well 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]We’re trying to figure out how to write a finite number of good resumes… Our federal friends have a tough set of challenges to deliver all of these new programs. I would welcome DOT [U. S. Department of Transportation] for trying to combine the sources where they can. They issued a single funding notification in one instance for three different programs so that we don’t have to apply three times, but once. The more they can do that, the easier it is for the people we sit with to actually take advantage of these programs. I think the way they manage these projects could be a challenge if it’s not very organized because the dollars will do it [flow] by different operational administrations with different rules. It would be important to ensure that they were as consistent in tracking consolidation in the backend as they were in the frontend.”

RYAN BERNI: “We really feel like we scored [the] Ground Running… We look at this as a five to seven year endeavor and in many cases the money is being spent 10 or 12 years in advance given the way things work. We’ve started building a team in the White House that’s focused on project delivery and building the right structures. With one or two exceptions, each federal state has appointed a state infrastructure coordinator on our instructions. And we work really hard to ensure that low-capacity communities have the resources to plan and apply for grants. The invoice [has]… 375 programmes, 125 of which are brand new.”

DJ GRIBBIN: “This bill is a hot mess. I think Ryan is being polite… Remember where that bill came from. It’s like two handfuls of senators who got together, almost over a beer, and threw a bunch of stuff that was on the shelf into a bill and mailed it to the House. The house has nothing to do with it, it has passed. And now we have 125 new funding programs. We tried to make one [new] program, our Urban Partnership Agreement in the Bush administration, and that was incredibly difficult. This bill has a competitive program for culverts. And I don’t know who the head of the culvert lobby that put this in there is, but that person should get a huge bonus. For those who don’t know what [a] culvert is [it is] a pipe running under a road or railroad to easily divert water away from infrastructure. There is now a new competitive federal grant program for culverts, so there is [going to] be a lot of programs, a lot of money, a lot of chaos.”

What impact will higher inflation and labor shortages have on government and local infrastructure spending?

EDEN PERRY: “What about inflation, supply side disruptions, difficulty finding workers for projects, increased wages for workers? Our expectation is that state and local governments…focus on smaller, more impactful projects or even…extend the timeline where possible…I think the concern is finding the workers…and paying their wages. I think that’s a big problem at the moment.”

SHOSHANA LEW: “We’re getting significant pressure from parts of the industry to approve cost overruns without carefully reviewing them. We won’t [do that]… [We need] to ensure that we get the best return on taxpayers’ investments, even in an inflationary environment.

Will the Infrastructure Investment and Jobs Act increase inflationary pressures?

RYAN BERNI: “The answer is no. And people on the outside have said, “Yes, sure, of course it can be inflationary to spend even a little money now.” But the impact of this bill is positive on the inflation problem for several reasons. One is that we’re actually going to fix the supply chains that created much of the situation that we have today in ports and railroads and airports and railroads and increased the productive capacity of the economy with much of what we have. Second, we’re just not spending that much money this year. Lot of money [is spent] in recent years.”

Will the flood of federal money diminish the role of public-private partnerships in state and local infrastructure projects?

DJ GRIBBIN: “[Yes]I think that is [going to] be suppressed in two ways. First of all, as everyone has mentioned, there are more funds. it is [a] Financing tsunami… So you don’t have to look for financing alternatives as often as you would have otherwise. And then, secondly, the displacement of time. I’m sure… DOTs, cities, counties across America are getting their teams to focus on how we apply for federal funds and grants versus how we come up with new innovative ways to involve the private sector in funding these infrastructures ?… It’s a great tool to have in the toolbox. It can be useful, but it could be [limited in the] current environment, given the amount of money coming in and the need to aggressively seek the most competitive funding programs… There is a common misperception that public-private partnerships will bring more funds into infrastructure. [It] doesn’t bring more money. It brings with it more funding instruments for states to accelerate these projects. Ultimately, infrastructure funding comes from two sources, users and taxpayers, period.”

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