LOC News
Federal Infrastructure – We have a Deal…Maybe
On Thursday, the U.S. Senate voted 67-32, with all 50 Democrats supporting and 17 Republicans voting, to advance debate over the Infrastructure Investment and Jobs Act. The package has only $550 billion in new spending for a mix of infrastructure investments, well short of what Senate Democrats have been advocating for, which would have pushed the investment beyond $3 trillion. The Senate will take up the package, debate elements, consider additional amendments, and vote on a final measure before the August recess. Democratic Senate and House leadership still have their eyes on a separate $3.5 trillion investment package, but would need every Senate Democrat to support it. Currently news reports suggest they are short of the needed votes.
The additional steps to get this package through Congress involve navigating House leadership, which also wants a reconciliation bill in hand, and this could lead to significant delays in its momentum. Senate Republicans and moderates are concerned about the $3.5 trillion price tag of a reconciliation package, and with an evenly divided Senate, there is no margin for error with the entire package.
The National League of Cities (NLC) released this Twitter statement Thursday, which outlines the NLC’s effort and advocacy for the entirety of the package.
Infrastructure Package Details
While not every priority of local governments was included in this agreement, the NLC and the broad coalition of interests successfully advocated for the inclusion of many programs and policies that could benefit cities, towns and villages. The Infrastructure Investment and Jobs Act will bring $550 billion in new federal investments in America's infrastructure, adding two million jobs per year on average to the national economy. (Note: Details of this proposal have been pulled from NLC communications.)
Transportation
The bill incorporates the surface transportation legislation already passed by the Senate Commerce and Environment and Public Works committees. It includes a surface transportation topline funding level of $110 billion, with $36.7 billion for bridges, $7.5 billion for RAISE (formerly BUILD grants), $5B for multi-modal grants, and $3.2 billion for the INFRA grant program. The bill also includes $66 billion for passenger and freight rail, including intercity passenger and freight rail funding, safety improvements, and railroad crossing hazard elimination. The package also includes $39.15 billion for public transit, including for maintenance, rehabilitation, capital investment, and for the purchase or lease of zero- or low-emission buses. It also incorporates $5B for state and local "vision zero" plans and improvements to street safety.
Water
The topline funding level for water infrastructure is $55 billion. This includes $23.4 billion for the bipartisan Senate-passed Drinking Water and Wastewater Infrastructure Act (DWWIA), although no details are available on how that will be divided among the programs. (See NLC's summary of the DWWIA.) The bill also provides additional funding for addressing PFAS drinking water contamination and lead pipe replacement, but no details have been disclosed on the amounts for each, or whether it will be in the form of loans or grants for local governments.
Resiliency and Energy Infrastructure
The bill provides $46 billion in funding resilience and energy infrastructure. This includes funding for cybersecurity that will address critical infrastructure needs, waste management, flood mitigation, wildfire, drought, coastal resiliency, ecosystem restoration, and weatherization. Many of these programs come from the bipartisan Energy Infrastructure Act passed by the Senate Energy and Natural Resources Committee, which is incorporated into the Infrastructure Investment and Jobs Act. Additionally, the bill would strengthen the electric grid, support energy efficiency and renewable energy for residential and commercial buildings, industrial and manufacturing sectors and schools, and address western water resilience and infrastructure.
Broadband
Broadband is allocated $65 billion to close the digital divide, through a combination of federal broadband infrastructure grants, financing, and grants for digital inclusion and affordability. The proposal includes: $40 billion for a state block grant program to reach unserved and underserved locations; $600 million to finance projects in rural areas; $2 billion for the U.S. Department of Agriculture's ReConnect rural broadband program; a "middle mile" broadband infrastructure grant program; and an additional $2 billion for the National Telecommunications and Information Administration's Tribal Broadband Connectivity Program. It also includes $2.75 billion for the Digital Equity Act, which provides state and competitive grants for digital inclusion planning and programming, and additional funding for the Emergency Broadband Benefit program, to extend a subsidy for broadband subscriptions to low-income households for an additional five years at a lower $30/month rate.
Cybersecurity
The Infrastructure Investment and Jobs Act includes support for cybersecurity, in recognition of the increasing threat of cyberattacks to critical infrastructure such as ransomware. The package includes a new dedicated $1 billion, five-year grant program to support state, local, tribal and territorial cybersecurity. The package also includes supplemental funding for the U.S. Department of Homeland Security's Science and Technology Directorate for Research and Development, the Cybersecurity and Infrastructure Security Agency, and the Office of the National Cyber Director, to provide research, coordination, and assistance to federal agencies, state and local governments, and private infrastructure owners to prevent and respond to cyberattacks.
Workforce
There is a significant shortfall in expected workforce training investments. Only $60 million has been allocated in to training for the energy and construction sectors.
Bonds
The bill raises the cap for surface transportation bonds from $15 billion to $30 billion, as currently $14.98 billion has been issued or allocated. This increase will allow state and local governments to enter additional public-private partnerships to supplement future surface transportation projects with private investment.
Private Activity Bonds
Local governments can finance certain projects that benefit private entities, but still receive tax-exempt status on the bonds. There are currently 27 categories that qualify as eligible "qualified private activities." The Infrastructure Investment and Jobs Act would add broadband as an allowable use for private activity bonds. This could speed the deployment of broadband to rural areas. In addition, carbon capture technology and direct air capture technology would be eligible qualified private activity. This would help bring down the cost of commercializing the technology by allowing for lower interest rate bond financing.
Remaining Unknowns
The Infrastructure Investment and Jobs Act will recapture $205 billion in unspent COVID relief funds, the act's largest funding source. The top-line summaries do not provide any additional details on exactly where the money will come from, but also does not indicate that it will come from the American Rescue Plan Act that provided direct aid to cities, towns and villages.
More details of the bill will be coming forward, so stay tuned for updates from the LOC and our national partner, the NLC.
Contact: Jim McCauley, Legislative Director - jmccauley@orcities.org
Last Updated 7/30/21