As the dust settles and more details emerge from passage of the massive $1.2 trillion Infrastructure Bill (“The Infrastructure Investment and Jobs Act”), it is clear that both good and not so good elements were included in the final package. While most of the headlines centered around the bitter partisan fight (which turned out to be a bipartisan vote), and the total dollar amount – with some concerns regarding the percentage being spent on “traditional” or typically defined as infrastructure (particularly transportation related), there were other policy and spending elements in the bill that will have important impacts. The Reason Foundation has reported on a number of these elements.
(1) The total $1.2 trillion includes all the funds authorized for five years of the federal surface transportation program. That means, the net new monies authorized amounts to approximately $550 billion (or about half the total).
(2) Federal-Aid Highway Program’s annual authorizations are approximately 26% above the FAST Act levels, when both new and old money is counted.
(3) Transit dollars are up a larger 38% as well.
(4) The new law also includes a $15 Billion increase to the “cap” on tax-exempt private activity bonds (PABs) that are often used in conjunction with P-3 projects.
(5) TIFIA loans have also been continued, although at a slightly lower funded level.
(6) The law as passed also includes a policy which avoids mandating Davis-Bacon prevailing wage provisions for projects issuing PABs.
(7) A new Congestion Relief Program is funded, offering grants to urban areas seeking to implement integrated congestion management systems.
(8) The Act also codifies the important regulatory streamlining approach of “One Federal Decision” that was implemented in the Trump term.
Less than Positive Aspects:
(1) The large amounts of federal funds (cash) included that will undercut the use of long-term financing for major projects.
(2) Impacts on the bond markets from federal cash being used to directly pay for projects.
(3) The likely off-loading of state and local jurisdictions committing their funds to important infrastructure projects – by instead relying on federal dollars to cover the need.
(4) Similarly, toll-financed P-3 bridge replacements may be shifted to the new federal “Discretionary Bridge Program” – which is only short term and not meant to finance ongoing maintenance.
(5) The bill’s silence as to the future needs of the most important transportation asset, i.e. – the Interstate Highway System (other than the select 10 bridge projects).
(6) Unprecedented large “discretionary” spending program that shifts authority and priorities to the federal bureaucracy and away from the state and local officials.
(7) The Infrastructure bill paves the way for expanded use of Project Labor Agreements (PLAs) – which generally include other provisions that align with labor interests, including: that union hiring halls refer all workers to the project; that workers referred to perform project work pay union dues for their time on the project; and that contractors contribute to union trust funds for workers’ retirement and health care.
(8) Finally, with this large amount of money being authorized, combined with a number of union labor mandates, it is likely to drive-up the expenses of everything, especially in record-high inflationary times for construction.