The Infrastructure Investment and Jobs Act: A Year of Progress But A Lot More to Do

Since the Infrastructure and Investment and Jobs Act (IIJA) was enacted last year, transportation professionals have been focused on the implementation of this landmark legislation, which provides historic opportunity to rebuild and modernize America’s aging infrastructure. Record levels of federal funding are available through increases in the surface transportation formula programs. There are also dozens of new discretionary and competitive grant programs. The IIJA offers the promise of transformative investments to maintain economic growth and global competitiveness. It also promotes environmental responsibility and equitable access to mobility and opportunity. And, the prospects for tolling and road pricing are strong and varied.  

As we celebrate the first anniversary of the IIJA and look back on the accomplishments to date, we must also recognize that challenging circumstances are affecting the ability to realize all the benefits of this law. There is much that still must be done. Many of the promising programs for toll operators and those related to road pricing have yet to be implemented and operationalized by the U. S. Department of Transportation (USDOT).  

Unfortunate Timing

As the IIJA reached its first anniversary, it is hard not to be struck by the circumstances that have affected its successful implementation.

• Record inflation is eroding the purchasing power of the federal funding levels of the IIJA. Increased cost of raw materials, freight, wages and salaries, energy, and fuel are contributing to construction project delays and deferrals. News stories of transportation projects that are challenged by increased cost estimates over the original plans are far too common.  
• Interest rate increases have curtailed state and local borrowing capacity, compounding the difficulties of federal grant applicants to meet local match requirements.  
• Supply chain volatility has added to the cost complexities and project risks. Costs of asphalt, concrete, and other construction materials are increasing bids for road projects. This has created long-term price uncertainty. Prices of energy and crude iron for steel production have been also impacted by the war in Ukraine.
• Workforce shortages and tight labor markets emerged just as the IIJA funding became available. The industry is facing historic shortages of construction workers and increased difficulty in attracting international workers, who have been a key source of engineering, design, and contractor positions. Net migration in the U.S. has fallen from 1.06 million in 2016 to 244,000 in 2021.  

Slow Discretionary Program Implementation and Decision Making

The big problems affecting the IIJA are slow decision making and implementation of discretionary programs.

• Federal formula grant programs prioritized getting money in the “pipeline” for state programming and spending. This has left many of the new competitive and discretionary grant programs that are of greatest interest to toll organizations (other than state departments of transportation) awaiting action on implementation.  
•  Build American, Buy American requirements may add to project delays and cost increases for IIJA-funded projects. New requirements related to the domestic content of construction materials and the possible addition of Buy America requirements to manufactured products has created confusion within the construction industry and state and local government project sponsors.
• Federal Highway Administration (FHWA) leadership is now in place. On December 8, 2022, the Senate confirmed Shailen Bhatt to be the FHWA Administrator. IBTTA petitioned Senate leadership to take prompt action for approval this year, since FHWA is responsible for the largest part of IIJA transportation infrastructure programs. IBTTA leadership looks forward to working with FHWA to move forward on key provisions of IIJA that are still pending implementation.
• Programs of interest to the tolling and road pricing community have lagged in their implementation. With new leadership at FHWA and the 118th Congress coming in January, we have an opportunity to communicate our interest in seeing action on programs still pending Notices of Funding Opportunities (NOFOs) and program guidance, including those captured in the table below.  

Public Awareness and Concern Is Lacking

Polls show that only 24 percent of voters are aware that the IIJA became law last year. Despite the Biden Administration’s touting of the law as a victory and critical accomplishment, infrastructure investment and revenue does not seem to resonate as a priority in the minds of most Americans. This is an issue at all levels of government. Experience shows a better record of support for transportation revenue initiatives at the state and local levels. Increasing public understanding and awareness of the importance of infrastructure investments and revenue at a grassroots level may be most beneficial. Education, communication, and engagement with road users and the public must be amplified at the state and local levels to gain policy insights and public acceptance for solutions to the nation’s transportation revenue problems.

Sustainable Transportation Revenue Is Still Needed 

Despite its historic investment focus, IIJA did little to address the transportation revenue crisis that transportation professionals have cited for decades. The IIJA was not paid for with new revenue. Instead, it transferred $118 billion from the General Fund to the Highway Trust Fund (HTF). A total of $272 billion has been transferred to the HTF since 2008 to pay for surface transportation programs. The absence of new federal revenue only continues the solvency crisis of the HTF. It will also widen the gap between dedicated HTF revenue and spending at the end of the IIJA. This means:

• Current federal motor fuel taxes are unsustainable as a funding source to sustain current spending from the Highway Trust Fund.  
• There is a growing gap between surface transportation revenue and investment needs, which are estimated to exceed $195 billion over the next 10 years.
• The political nature of General Fund transfers to maintain HTF solvency creates uncertainty and risk for long-term infrastructure investment planning.

Tolling, Road Pricing, and User Payments Are Part of a Sustainable Solution 

The levels of federal funding in the IIJA should be applauded. However, policy makers, stakeholders, and the public must understand that the condition of our transportation infrastructure and systems still requires more investment. Even with the healthy levels of spending planned during the life of IIJA, a significant backlog of state-of-good-repair and asset modernization projects will remain unfunded. 

Tolling and road pricing offer supplemental sources of revenue for project finance and ongoing operations and maintenance in a targeted, direct, and sustainable manner. The principle of user payments is a compelling foundation for transportation revenue rooted in fairness. User payments may also be crafted to address financial and equity goals. 

Congress recognized the importance of shifting to a more sustainable funding system when it renewed its commitment to the Strategic Innovation for Revenue Collection program and created the National VMT Fee Pilot Program. These programs offer the potential to transition us away from the motor fuels tax in favor of distance-based road use charging. This approach is a promising future for surface transportation funding. Delaying implementation of these programs impedes developing a sustainable system to fund surface transportation, which will require immediate attention in 2023.