On November 15, 2021, President Biden signed the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) into law. Now, much of the $550 billion in new spending included in the bill will eventually make its way to state and local governments for implementation in one way or another.
Getting IIJA signed into law was just the first step. Next there’s an enormous challenge facing government leaders at all levels: funnel the money into impactful projects, and do it as quickly as possible. The task is as hard as it sounds.
Our hope is that this handbook will empower state and local government leaders to navigate their way successfully through the uncertainty surrounding implementation of IIJA. Each individual section features the specific funding areas most relevant to state and local governments included in the legislation – e.g. Broadband Expansion, Resilient Infrastructure and Transportation – and examples of the types of projects that could be funded in those areas.
While details will become clearer over the coming weeks and months, one thing is clear right now: the law represents a massive opportunity for state and local governments to invest in their communities and build better cities.
Right now, there is massive implementation uncertainty: how will the money actually be spent? The funding criteria, the timelines, the strings attached…most of these crucial details have not been announced yet. As a result, many state and local government leaders feel paralyzed by inaction and are unsure where to start in getting the funding their communities need. But they know that once federal agencies announce funding details and requirements (phase 4 in graphic below), they will need to act fast to get applications submitted. It’s stressful!
This is why it’s crucial that so many state and local government leaders are doing preparatory work now to position their organizations for the coming influx of federal money.
Despite overwhelming uncertainty, there is much we do know about IIJA, both from the legislation itself, as well as how other large federal infrastructure packages like the 2009 American Recovery and Reinvestment Act have been spent.
Now that the bill has been signed into law, the extensive rule-making process is underway – the process where relevant federal agencies – Department of Transportation, Environmental Protection Agency, Department of Energy, Federal Emergency Management Agency, National Telecommunications and Information Administration – make policies, regulations and compliance standards for state and local governments.
While much is uncertain, much is not. And the state and local governments who are readily able to best position themselves for funding are more likely to see money sooner and in bigger amounts.
Right now, we know a few things for certain….
We know that the funding for state and local governments will come with strings attached – it always does. Much of the funding will be competitive – we know that from the law itself – and will need to be spent on pre-specified (i.e. short!) timelines and on specific types of infrastructure projects.
We also know that funding going through certain types of programs will be distributed faster than funding distributed by other types.
For instance, state and local governments will see money sooner for lead service line replacements than they will for broadband. That’s because the federal government is adding more money to existing state revolving funds for service line replacement, whereas there is no existing program to funnel the money included in the law for broadband projects – the agencies are largely starting from scratch. That requires complicated and lengthy processes for rulemaking and developing guidance documents.
Below is a breakdown of the different funding mechanisms included in IIJA and their corresponding speeds. Each includes program examples from the law itself.
Existing federal formulas, including suballocations by population size.
Existing grant and loan programs.
State and local governments will likely start seeing this money in Q2 and Q3 2022. This money takes longer to get out the door than formula funds because of the application processes required for grant and loan programs. Examples in IIJA include:
New Federal Programs.
State and local governments are not likely to see this money until 2023 and in some cases, 2024. Anything that requires the building of a new program or entity to distribute the money will take a long time. Examples in IIJA include:
For more information about the funding mechanisms included in IIJA, refer to NaCo’s Legislative Analysis of IIJA.
Author’s Note: Rachel Angulo (Content Marketing Manager at The Atlas) provided writing and research support to this section. Mark Funkhouser (Former Mayor of Kansas City, MO), Shalini Vajjhala (Executive Director of the San Diego Regional Policy & Innovation Center) and Erik Caldwell (Director of Data Strategy at The Atlas and former Deputy Chief Operating Officer at the City of San Diego) generously reviewed this section.