Congressional Gridlock is Threatening to Hold up $40B in Infrastructure Funding

About $40 billion in transportation funding from President Biden’s infrastructure bill that’s supposed to flow to state and local governments could become stuck in a quagmire on Capitol Hill if Congress is unable to agree on a year-long spending bill in the next couple of weeks.

A stalemate between congressional Democrats and Republicans over how much to increase spending for defense compared to domestic programs could tie up Infrastructure Investment and Jobs Act dollars for projects like installing energy-efficient streetlights, protecting highways, particularly on evacuation routes from storms, and helping transit agencies catch up on a backlog in needed repairs that  the U.S. Transportation Department pegs at more than $100 billion.

State and local agencies in Texas could see as much as $3.1 billion held up. Another $2.9 billion that’s supposed to be headed to California could stall as well.

“We can begin to fulfill the promise of the IIJA expected by the public only when full-year appropriations for Fiscal Year 2022 becomes available,” a number of alarmed groups, including the National Association of Counties, the National League of Cities, the American Association of State Highway and Transportation Officials and the American Public Transportation Association wrote congressional leaders last week.

U.S. Rep. David Price, a North Carolina Democrat who chairs the House Appropriations subcommittee that oversees transportation, said that congressional leadership is aware of the problem.

“I’m very concerned,” he said. “We worked for months to come up with a bipartisan bill.” 

Congress, having failed to reach an agreement on a spending bill for this fiscal year, passed a short-term spending measure in December to keep the government running until Feb. 18. 

With the nation again approaching a government shutdown, congressional negotiators are still trying to reach a deal to pass a spending bill for the remainder of the fiscal year, which runs through Sept. 30, but haven’t resolved their differences.

Consequences of a Stopgap Deal

As they have increasingly done in recent years, lawmakers could decide to punt again and pass another short-term measure to avoid a government shutdown.

The problem is that these “continuing resolutions” simply keep last year’s federal budget in place, explained Eryn Hurley, the National Association of Counties’ deputy director of government affairs. In this case, the stopgap spending legislation  would not include the 20% increase in the highway funding formula or an increase in public transit funding called for in the infrastructure package that averages around 30%. 

Simply continuing last year’s budget would also not include funding for new programs IIJA created, according to the letter from the state and local government associations to Democratic leaders, including House Speaker Nancy Pelosi of California, Senate Majority Leader Chuck Schumer of New York and Senate Appropriations chairman Patrick Leahy of Vermont. The letter was also sent to Rep. Kay Granger of Texas and Sen. Richard Shelby of Alabama, the top Republicans involved in the talks.

House Appropriations chairwoman Rosa DeLauro, in a statement after the passage of the short-term bill in December, said Democrats intentionally included “virtually no changes to existing funding in the continuing resolution to “build pressure” for reaching an agreement on a longer-term measure.

“It’s our understanding that there are a series of projects where they can’t release the dollars or they don’t have sufficient staffing to administer the programs,” unless the year-long spending measure is passed, said Geoff Potter, deputy director of Washington Gov. Jay Inslee’s federal affairs office.

Though Biden signed the infrastructure bill in November, the way the IIJA was written, Congress has to vote to allow federal agencies to spend the $39.5 billion in transportation funds.

If Congress does not act, “the money would just be sitting in the bank,” said ​Ward McCarragher, the American Public Transportation Association’s vice president for government affairs.

The Transportation Department details which parts of the infrastructure package are "subject to appropriations" in a dashboard of IIJA funds.

For transit agencies, a failure to pass a longer-term spending measure would keep federal funding for the agencies at $10.1 billion for the fiscal year, instead of the $13.3 billion the infrastructure bill called for.

Transit agencies are hoping to use the additional funding to catch up on long-neglected repairs, including “track repairs, rail car upgrades, more electric buses,” McCarragher said.

Uncertainty at the Local Level

Should Congress kick negotiations over a year-long measure until the spring, “it would create tremendous uncertainty” about whether agencies can make repairs they’re hoping to do during the summer, according to McCarragher. In addition, funding in the infrastructure law to help pay to make subway stations accessible to people with disabilities wouldn’t come.

Transportation Secretary Pete Buttigieg on Thursday did make available $4.7 billion in transit funding based on what the department could release by Congress extending last fiscal year’s budget through Feb. 18. Apportionment tables released by the department specify the funds are for the first four and a half months of fiscal year 2022, or from Oct. 1 to Feb. 18.

Price, the appropriations subcommittee chairman, applauded the release of the funds but said the problem remains that increases in formula funding and new programs created by the infrastructure bill cannot be released until Congress acts. “They can’t write the check until we authorize it,” said Price, who predicted the issue will get resolved.

Cook County, Illinois spokeswoman Natalia Derevyanny said the county, home to Chicago, has done planning and engineering work to get a number of transportation projects ready when the federal dollars arrive. She said the money is “critical” for major roadway projects, bridge reconstruction and transit and rail upgrades.

Los Angeles County officials are also worried. 

“The historic funding levels in the Bipartisan Infrastructure Law are urgently needed to rebuild the nation’s ailing transportation system. Without a full-year appropriations bill, the state of California will not be able to access nearly $3 billion in highway funding,” said county spokeswoman Elizabeth Marcellino.

The letter to congressional leaders said failure to reach a budget deal would hit hardest for two programs created by the infrastructure bill to reduce carbon emissions and improve the nation’s resilience to climate change and extreme weather.

The Carbon Reduction Formula Program provides $6.4 billion in funding for local governments over five years. The money can be used for public transit projects, to build trails and other projects to increase nonmotorized uses of roads, the replacement of streetlights with energy-efficient alternatives, and the purchase or lease of zero-emissions construction equipment.

The Promoting Resilient Operations for Transformative, Efficient, and Cost-saving Transportation, or PROTECT, program creates $8.7 billion in grants over five years, for projects like improving surface transportation resilience, ensuring the continuity of operations after natural disasters, and improving natural coastal infrastructure.

Also at stake is whether Congress can reach an agreement on a funding bill, said Potter of Washington state, are other funding increases the White House and congressional Democrats are trying to get into any year-long deal.

An energy and water funding bill approved by the Senate appropriations committee, which could be wrapped into an overall fiscal year funding bill, would increase funding for water and wastewater disposal grants in rural areas by $44 million. The bill would also increase funding by $1 billion to help rural electric co-ops to transition power plants to renewable energy.

Spending bills endorsed by Leahy, which could also be part of the broader package under discussion, would increase funding to improve airports by $203 million and add $1 billion for public housing, including an $851 million increase to address a backlog in repairs. Senate Democrats also want to add $50 million in funding for short-staffed public health agencies to hire more workers during the pandemic.

No News on Progress

Congressional negotiators have been tight lipped about their progress. Leahy laid out the Democrats’ differences with Republicans in reaching a budget deal during a speech on the Senate floor in November.

“My Republican colleagues made clear to us that they believed the president’s proposal for a 1.7% increase for defense programs was inadequate,” Leahy said. He said Democrats responded by proposing to increase defense spending by 5% and reduce the 16% increase in domestic programs Biden wants to 13%.

“That is how negotiations work. Each side gives a little,” Leahy said. He accused Republicans of trying to thwart a spending bill to prevent Biden from pursuing his agenda. “They seem intent on driving us toward a full-year continuing resolution. If I was a cynical person, I would be worried that delay was a political calculation to tie the hands of the Biden administration.”

Shelby has countered that it’s the Democrats who are refusing to compromise. “If Democrats want full-year appropriations bills, they must abandon their go-it-alone strategy and come to the table to negotiate,” he said. “We need a top-line agreement that does not shortchange our nation’s defense and a willingness to set aside partisan politics.”