US Government Shifts Focus on Infrastructure

FRIDAY, MARCH 19, 2021

In wake of the President Joe Biden’s signing of the $1.9 trillion COVID-19 relief package, members of Congress are now shifting focus to create a job and infrastructure package.

However, Democrats are unsure if Biden’s agenda will attract Republican support.

Outlining Expectations

To get things rolling for the nation’s infrastructure, in December, Biden announced his nomination for Pete Buttigieg to serve as the 19th Secretary for the United States Department of Transportation.

Buttigieg was a 2020 presidential candidate and the former Mayor of South Bend, Indiana.

“Mayor Pete Buttigieg is a patriot and a problem-solver who speaks to the best of who we are as a nation,” said Biden at the time. “I am nominating him for Secretary of Transportation because this position stands at the nexus of so many of the interlocking challenges and opportunities ahead of us. Jobs, infrastructure, equity, and climate all come together at the DOT, the site of some of our most ambitious plans to build back better. I trust Mayor Pete to lead this work with focus, decency, and a bold vision—he will bring people together to get big things done.”

During his campaign, Buttigieg unveiled a $1 trillion infrastructure plan that pledged to direct federal funds to state and local governments to revitalize the nation’s transport networks, clean the water supply and expand the broadband internet. Specifically, the plan reforms the capital gains tax, repeals the 2017 GOP tax overhaul and raises estate tax, with a top rate of 65% for billionaires.

At the time, the plan was expected to create 6 million jobs and included the following:

  • $100 billion to establish a fund to address lead in water, paint and soil;
  • $150 billion to improve public transportation, including $100 billion for states and cities to repair existing systems and expand their rail and bus services, and $12 billion for rural public transit;
  • $80 billion to a school repair program, allocating grants and loans to states based on poverty levels;
  • $80 billion to expand internet access to unserved and underserved communities; and
  • $165 billion into the Highway Trust Fund to ensure its solvency through 2029.

Members from the American Society of Civil Engineers were also reported to be optimistic over its assessment of the new secretary.

In January, the Senate Commerce, Science and Transportation Committee held a hearing regarding Buttigieg’s nomination, where he further outlined his plans for America’s infrastructure.

According to reports, Buttigieg was received favorably by lawmakers from both parties as he outlined his vision for infrastructure reform should he be confirmed as transportation secretary. During the hearing, Buttigieg noted that there was a “generational opportunity” awaiting the nation’s infrastructure.

Specifically, he pointed to Biden’s goals on climate change, racial justice, job creation and pandemic recovery.

However, reports indicated that these tasks would not be easy as the new secretary will also have to adopt myriad measures upon taking office, including implementation of COVID-19 legislation as well as infrastructure investment, promoting transportation safety, further advancing transportation innovation, including autonomous vehicles and drones, and building upon U.S. transportation networks such as restoring Amtrak service along the Gulf Coast where it was halted after Hurricane Katrina some 15 years ago.

In addition to the challenges the pandemic creates, Buttigieg also plans to integrate climate resilience, work with U.S. manufacturers to increase the rollout and take-up of electric vehicles, both personal and public transit, as well as expanding the network of charging stations, and pledged to make aviation manufacturing and safety a priority.

Regarding the funding necessary to make all of this possible, Senators noted the difficulties and questioned Buttigieg’s support on rising federal gas taxes. While not opposed nor committed to the idea, Buttigieg said that “all options need to be on the table” and that in the short term, a solution that could provide predictability and sustainability was needed.

The following month, American Association of State Highway and Transportation Officials released an estimate of apportionment for state DOTs based on Highway Infrastructure Programs in the 2021 Division M of the Coronavirus Response and Relief Supplemental Appropriations Act.

According to AASHTO, the Federal Highway Administration must apportion the funds for state DOTs within 30 days of the bill’s enactment—which was signed into law by former President Donald J. Trump on Dec. 27, 2020—in addition to each state’s share of obligation limitations within the recently extended FAST Act.

The top ten states’ funding amounts and percentage shares are as follows:

  • California $918,466,948 (9.33%);
  • Texas $914,423,725 (9.29%);
  • Florida $473,166,962 (4.81%);
  • New York $419,932,789 (2.27%);
  • Pennsylvania $410,118,478 (4.17%);
  • Illinois $355,482,847 (3.61%);
  • Ohio $335,097,292 (3.41%);
  • Georgia $322,679,026 (3.28%);
  • Michigan $263,212,651 (2.67%); and
  • North Carolina $260,622,083 (2.65%).

On the opposite end of the spectrum, Washington D.C., is expected to receive the least about of funding ($39,885,144), alongside New Hampshire ($41,299,573) and Hawaii ($42,276,602). A full list of state DOTs and its estimated funding can be viewed, here.

Of the remaining funds for transportation, $115 million will go to the Tribal Transportation Program, $36 million to the Puerto Rico Highway Program and $9 million to the Territorial Highway Program.

By the end of the month, the U.S. Department of Transportation announced that it was officially seeking applicants for its Fiscal Year 2021 round of the Infrastructure for Rebuilding America (INFRA) discretionary grant program. The competitive program has allotted approximately $889 million in funding and includes some new criteria for states, cities and other applicants, made by the Biden administration.

Traditionally, the grant program works by utilizing select criteria to promote projects with national and regional economic vitality goals while leveraging non-federal funding to increase the total investment by state, local and private partners. Eligible projects would include highway freight corridors on the National Highway Freight Network, highway or bridge projects on the National Highway System and projects expected to increase capacity on Interstates and other intermodal or rail projects.

However, while supporting the economic vitality at national and regional levels is the USDOT’s top propriety, this year the Department is also seeking INFRA projects that address climate change and environmental justice. Project applications are slated to be evaluated on support strategies to reduce greenhouse gas emissions as well as whether they were planned as part of a comprehensive strategy to address climate change.

Projects will also be rated on the extent that they apply innovative technology, delivery, or financing methods with proven outcomes to deliver projects in a cost-effective manner.

“The new areas of interest for INFRA are consistent with the values and priorities of the Biden administration and I am certain there will be no lack of worthy projects that can meet its new criteria,” said Susan Howard, American Association of State Highway and Transportation Officials' program director for transportation finance.

In addition, the Biden administration has added that applications will also be considered based on racial equity, to the extent that project sponsors have completed equity-focused community outreach, and projects are designed to improve connections to underserved communities to reduce barriers to opportunity. The Department will also consider whether the project is located in a federally designated community development zone, including qualified Opportunity Zones, Empowerment Zones, Promise Zones, or Choice Neighborhoods.

The Department plans to award both small and large projects this year, with at least $25 million awarded per large project and a minimum $5 million in grants per small project award. Under statutory requirements, 10% of available funds are reserved for small projects, and at least 25% of funding must be awarded to rural projects.

Most recently, the American Society of Civil Engineers released its 2021 Infrastructure Report Card, revealing a mediocre, but passing grade. The report is issued every four years. This year, the nation received a C- for the condition and performance of its infrastructure, a slight improvement from the 2017 report.

The ASCE also pointed out that while strides are being made in the infrastructure sector, the long-term investment gap continues to grow. Over the last 10 years alone, the gap has increased from $2.1 trillion to nearly $2.59 trillion. In its 2021 study, "Failure to Act: Economic Impacts of Status Quo Investment Across Infrastructure Systems," the ASCE predicts that by 2039, infrastructure could cost American households $3,300 a year, or $63 a week.

In addition to creating that sense of urgency to find solutions in rehabilitating and rebuilding various infrastructure across the nation, the ASCE suggests that investments from all levels of government and the private sector from 2.5% to 3.5% of the U.S. Gross Domestic Product by 2025, among other suggestions made in relations to leadership and action, investments and resilience.

Of the 17 categories making up the overall grade, 11 were in the D range, indicating “significant deterioration” and that the structures are “approaching the end of their service life.” The categories included aviation, public parks, dams, roads, schools, hazardous waste, stormwater, inland waterways, transit, levees and wastewater.

Areas receiving higher grades include bridges, which dropped from a C+ to a C in 2021, energy, drinking water and solid waste. The remaining categories: ports and rail, received a B- and B, respectively.

“This report card is a warning and a call to action,” Transportation Secretary Pete Buttigieg told The Associated Press. “A generation of disinvestment is catching up to us, and we must choose whether to allow our global competitors to pull ahead permanently, or to invest in the safety, equity, resilience and economic strength that superior infrastructure can bring to Americans.”

The full report can be viewed, here.

Infrastructure Goals

While continuing to be developed, House Speaker Nancy Pelosi has hinted that broadband coverage would be among the priorities outlined in the upcoming infrastructure package, noting that while the package will be “fiscally sound” members of Congress can also expect what she’s called, a “big, bold and transformational” infrastructure plan.

Although Republicans are not in favor of President Biden’s focus on the environment and or the possibility of financing any program with debt, given all the money the government has already borrowed to alleviate economic effects from COVID-19, Pelosi hopes that Congress will reach a bipartisanship.

“Building roads and bridges and water supply systems and the rest has always been bipartisan, always been bipartisan, except when they oppose it with a Democratic president, as they did under President Obama, and we had to shrink the package,” said Pelosi.

In addition to addressing climate change, ending the digital divide and creating unionized jobs as the nation repairs its infrastructure, as Biden has outlined in previous accelerated investments and plans, the new package could also include policy changes, specifically on green energy and immigration.

While Democrats were reported to have used reconciliation to approve Biden’s recent relief plan (without Republican support), passing the infrastructure legislation is predicted to be more difficult.

Already, Sen. John Barrasso (R-Wyoming) has voiced that he would like to see bipartisan support for an infrastructure legislation, however, noted on when the House refused to embrace a recent $287 billion bill unanimously passed by a Senate committee and changed it in a way that Republicans could not accept.

“What did the House do? They replaced our highway bill with the Green New Deal,” Barrasso said. “So they ignored what we have done in a bipartisan way. If they would take the model that we came up with in the committee in the Senate for highway and transportation, I think that’s a very good start. I talked with the Secretary of Transportation, Pete Buttigieg, about it, and I think that is the model on which we should move forward on transportation and infrastructure.”

Multiple reports have also touched on the legislation’s other major hurdle: cost. While there is little political interest in increasing the federal gas tax, like Buttigieg, Pelosi has also declined to state whether tax increases would be required for the package.

“This is about broadband. It’s about water systems. It’s about mass transit, it’s about good paying jobs all over the country,” Pelosi said. “It’s also about schools and housing and the rest. ... So the goal is to promote good growth, creating good-paying jobs as we protect our planet and are fiscally sound.”

Reports indicate that an infrastructure package could roll out as early as April.


Tagged categories: Department of Transportation (DOT); Funding; Government; Infrastructure; Infrastructure; NA; North America; President Biden; Program/Project Management; Project Management

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