House hearing highlights tricky rollout of infrastructure grants

Bonds

As the Infrastructure Investment and Jobs Act nears its midpoint, the massive uptick in discretionary grants for transportation infrastructure threatens to undermine the law’s effectiveness because of chronic delays and bureaucratic confusion.

That’s what county and state representatives told lawmakers Thursday during a House Transportation & Infrastructure hearing on the rollout of the IIJA’s discretionary grants. The solution, according to one state transportation official and several Republicans, is to increase the amount of formula funding in future bills to avoid similar problems.

The $1.2 trillion IIJA allocated $196 billion over five years for up to 75 new and existing competitive grant programs, the most ever administered by the U.S. Department of Transportation.

Discretionary grant dollars make up 30% of the law, said House chair Rep. Sam Graves, R-Mo. As Congress prepares to tackle the next surface reauthorization bill in 2025, “it is important that we continue to ensure the best use of our infrastructure funding and find ways to improve the grant process,” Graves said.

The biggest problems, witnesses said, are delays between grant announcement and actual funding; a sluggish pace of notice of funding opportunities postings; confusing criteria; and challenges facing smaller governments forced to competed with larger entities.

Congress should increase the amount of formula funding and decrease discretionary grant programs in the next surface transportation bill, said Florida transportation secretary Jared Perdue.

Florida Department of Transportation

“Many [transportation agencies] are not considering pursuing federal grants because of the financial risk of having to wait so long,” said Florida transportation secretary Jared Perdue. It takes 18 to 24 months to go from award announcement to execution of a grant agreement, Perdue said.

“Every public transportation provider is dealing with [rising costs] especially over the last three years,” he said. “The discretionary grant process as a whole, from the time you decide to pursue the grant to when you can access the funds, that’s potentially three years,” he said. “This is not an efficient or effective way to deliver infrastructure.”

Alan Winders, commissioner of Audrain County, Missouri, who spoke on behalf of National Association of Counties, said his county has tried repeatedly to win a Rebuilding American Infrastructure with Sustainability and Equity, or RAISE, grant, but each time has been rejected for different reasons, with the project’s score getting dinged lower every year.

“Ratings can vary based on the reviewer, creating immense uncertainty for applicants,” Winders said. Small counties and local governments can find it prohibitively expensive to apply for competitive grants, he added. “We do need to find ways and support ways that our federal partners can help us gain capacity to go through [notice of funding opportunities] and navigate the things that have to be done,” he said. “But in addition, we would be supportive of the concept of making things more simple and making the objectives clear.”

One local Indiana agency opted to give the money back to the DOT because the bureaucracy took so long that the project cost tripled, according to Rep. Rudy Yakym, R-Ind.

When a grant is awarded, there’s “a splashy press release, but then it takes six to eight months to finalize it,” Yakym said, adding that it took 16 months on average to reach a full grant funding agreement for a 2021 RAISE grant. “At each hearing on the IIJA, I only grow more concerned that the American people are not getting enough bang for their buck,” he said. “In Indiana we aren’t — we’re dead last in getting IIJA grants.”

Problems with the discretionary grants is behind the rising “August redistribution” puzzle that’s troubling state DOTs, according to Rep. Rick Crawford, R-AR., and Florida’s Perdue.

Each August, the DOT redistributes unused discretionary grant funding to the states, who then have to obligate it before the end of September. The allocation is then taken off of the state’s formula funding the following year, Perdue said.

“We’re halfway through the IIJA and only 30% of grants have been awarded at this time,” Perdue said. “That discretionary grant balance continues to grow, and we as a state are being asked to take on more and more, and all that does is draw down on the formula funds that we can spend in the future.”

Perdue repeatedly advocated for increasing the proportion of formula funding and decreasing discretionary grant dollars, saying formula funds are the most efficient way to finance transportation capital projects.

Most Democrats on the committee appeared to agree that the grant rollout has been thorny. But Rep. John Garamendi, D-Calif., blasted the witnesses for complaining about the process.

“Cry me a river — you guys have never had it so good,” ” Garamendi said. “There’s a river of money flowing from the federal government to the states both in formula as well as in grant funding,” he said. “Nobody gets everything they want, but I do know the opportunity to get it exists today.”

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