Economic Development

Waste Not, Want Not: How Lawmakers Can Make the Most of Federal Infrastructure Funds

After significant pushback from US senators and 16 governors, the Department of Transportation has clarified its guidance on how infrastructure funds from the 2021 Infrastructure Investment and Jobs Act will be distributed to states. Secretary Buttigieg said that states will decide how to prioritize “formula dollars,” while the infrastructure discretionary funds will be dispersed differently, noting that “when it comes to discretionary grants… administration priorities… will certainly guide me within the parameters of the law in our decisions.”

With the majority of the infrastructure funds being distributed via formula, the ball is now in the states’ courts (not the judicial kind) to determine how to spend the funds. There is a plethora of ideas, ranging from expanding broadband infrastructure in Utah to a financial assistance loan repayment agreement in Arizona. Some states are considering using the funds for new bridges like the Calcasieu River Bridge in Louisiana, while others like Kentucky are considering using the infrastructure funds to address oil and gas issues, including the “plugging and abandonment of wells and the remediation and reclamation of associated pipelines, facilities, and infrastructure.” 

To ensure that these federal dollars are appropriated wisely on behalf of American taxpayers, state lawmakers should consider the following reforms and safeguards. 

One such reform is ALEC’s Establishing a Public-Private Partnership (P3) Office Act. This model policy creates an office—answerable to the governor and other state agencies and departments—dedicated to identifying and reviewing potential public-private partnerships in a state. By having such a focused office, a state can “more efficiently and effectively provide public services, including by generating additional resources.”

Another reform that ensures good stewardship of infrastructure funds is ALEC’s Open Contracting Act. This model policy would prevent labor requirements from being included in public work contracts. It would also block government subdivisions and agencies from entering into agreements with or issuing grants to recipients with labor requirements. This is especially important since 87.3% of builders and contractors are not union members. Under the Open Contracting Act, these workers can join public work negotiations, and states can secure competitive pricing that benefits local taxpayers.

Finally, states can take the “an ounce of prevention is worth a pound of cure” approach with the ALEC Long Term Asset Management Act. To help prevent American infrastructure from reaching critical levels of disrepair and decay before any federal action is taken, this model policy encourages the Department of Transportation to “develop and implement long-term asset management strategies and programs for all transportation infrastructure assets.” 

As each state spends its multi-billion-dollar slice of the Infrastructure Investment and Jobs Act, state lawmakers can be good stewards of these funds by ensuring taxpayer dollars are used efficiently and responsibly. Reforms like those mentioned above can help to reduce waste while making the formula-determined funds go further and serve more people. 

In Depth: Economic Development

The United States is among the most developed economies in the world. This has led to a standard of living that is simply unmatched throughout the world or throughout history. Even in such a developed and comparatively wealthy nation, policymakers still must allocate resources appropriately to encourage further economic development…

+ Economic Development In Depth