on Apr 09, 2021

Infrastructure Week is Finally Here: What is in the American Jobs Plan for State and Local Governments?

Written by Erman Eruz
 
Overview
 
On March 31, President Biden introduced his administration’s long-awaited infrastructure plan, titled the American Jobs Plan. Totaling $2.25 trillion over eight years, the Plan calls for investments in roads, bridges, water systems, broadband, the electric grid, economic development of power communities, housing, schools and community colleges, R&D in clean energy technologies, manufacturing, and more. The Plan aims to be a “once-in-a-generation investment” that will help fulfill the President’s earlier commitments to put “the United States on an irreversible path to a net-zero economy by 2050.” Plan expenditures will constitute an annual approximately 1% of the GDP over the eight-year period.

The Plan is the first part of a two-part recovery effort. The second part is set to focus on childcare, healthcare, and education, and the president will announce its details later in April.
 
Is $2 Trillion Enough?
 
The American Society of Civil Engineers’ 2021 Failure to Act: Economic Impacts of Status Quo Investments Across Infrastructure Systems outlines projected infrastructure investment gaps between 2020-2029 across a variety of infrastructure types. The amounts allocated for these infrastructure types in the American Jobs Plan would cover a significant portion of these gaps, but would not address them in their entirety. It also provides funding for capital priorities not included in ASCE’s report.
 

Infrastructure Systems	Funding Gap (2020-29), $B)	American Jobs Plan (2021-28, $B)	Difference, $B / % of Gap Remaining
Surface Transportation	$1,205	$579	($626) / 52%
Water/Wastewater Infrastructure	$1,089	$111	($978) / 90%
Electricity	$197	$100	($97) / 49%
Airports	$111	$25	($89) / 77%
Inland Waterways & Marine Ports	$25	$17	($8) / 32%
Totals	$2,456	$832	($1,795) / 68%

Source: American Society of Civil Engineers & EBP, The White House
 
How Will Cities and States Benefit?
 
Over the next few months, there will be debates over the Plan’s size, contents, and funding. Transportation Secretary Pete Buttigieg said that the President is hoping for “major progress from Congress before Memorial Day,” while Speaker Nancy Pelosi is hoping to get the Plan through the House by the Fourth of July. The details on how funds will flow to state and city governments will be clarified during the legislative process.
 
Generally, funds may be allocated through some combination of:

Direct allocation to state and local governments (similar to the direct state and local aid in the CARES Act and the American Rescue Plan);

Existing federal programs such as formula grants or block grants (with existing or new formulas or additional allocations to existing recipients);

Designation of a lead federal agency that will then set up competitive programs for states and/or local governments, or for the private sector with guidelines to operate in certain communities to fulfill certain criteria; and

New programs, guidance for which would need to be set up from scratch.

 

Click below to jump to the investment categories most important to you:
 

Affordable Housing

Broadband

Clean Energy Transition

Innovation

Resilience

Talent Development

Transportation

The Affordable Housing Proposal
 
The Plan proposes to spend $213 billion to produce, preserve, and retrofit more than 2 million affordable and sustainable units by:
 

Producing, preserving, and retrofitting more than 1 million units of affordable rental housing (equivalent to approximately 2% of today’s rental housing stock) by providing targeted tax credits, formula funding, grants, and project-based rental assistance.

Building or retrofitting 500,000 homes for low- and middle-income homeowners through the Neighborhood Homes Investment Act (NHIA), which provides $20 billion worth of tax credits over the next five years, in an effort to build wealth in underserved communities.

Investing $40 billion for public housing, to address capital investment and energy efficiency needs across the country.

Establishing a new competitive grant program that would award flexible funding to jurisdictions that take steps to eliminate barriers to producing affordable housing, including eliminating exclusionary zoning.

Upgrading homes through block grant programs, the Weatherization Assistance Program, and by extending and expanding home and commercial efficiency tax credits.

Back to list
 

The Broadband Proposal
 
The Plan proposes to spend $100 billion for broadband infrastructure and closing the digital divide. The broadband portion of the Plan is based on the Accessible, Affordable Internet for All (AAIA) Act, reintroduced in March in the Congress by House Majority Whip Clyburn (D-SC) and Senator Klobuchar (D-MN) (see here for summary). The priorities are well-aligned with the primary issues highlighted in the Broadband Equity Partnership’s nationwide survey of state and local broadband leaders on local priorities for a national broadband stimulus; namely, large-scale funding for fiber deployment, digital equity and adoption; changes in the federal funding distribution that enables local governments to have greater control on how that funding is used; and policy changes that eliminate prohibitions on local governments, utility companies and cooperatives from delivering broadband service. The AAIA proposes:
 

Establishing a new Office of Internet Connectivity and Growth (OICG) under the National Telecommunications and Information Administration (NTIA) to track federal spending on broadband, coordinate among federal agencies to conduct a study on affordability and household connectivity, and streamline the application process for federal assistance programs.

Spending $80 billion for the competitively bid expansion of broadband access; 75% is proposed to be distributed through nationwide competitive bidding, and 25% to be distributed among states to conduct statewide competitive bidding. A minimum of $500 million would be earmarked for the recently established Tribal Broadband Connectivity Program at the NTIA.

Lifting barriers to local governments, public-private partnerships, and cooperatives from delivering broadband service, by prohibiting state governments from enforcing laws or regulations against such service delivery.

Spending $6 billion for the Emergency Broadband Benefit, recently established with $3.2 billion in funding from the December 2020 COVID Relief Bill, which provides a $50 monthly discount on the internet plans for low-income Americans anywhere in the country or $75 for consumers on tribal lands.

Spending $2 billion for the Emergency Connectivity Fund, which received $7.17 billion in the March 2021 American Rescue Plan, to expand the E-Rate program for emergency connectivity and devices for schools and libraries.

Providing $5 billion over five years for low-interest financing of broadband deployment, through a new program that would allow eligible entities to apply for secured loans, lines of credit, or loan guarantees to finance broadband infrastructure build out projects.

Distributing $625 million for Local Digital Equity Competitive Grant Programs to local governments, Tribal governments, non-profits, anchor institutions, educational institutions, and workforce development programs for digital inclusion activities, i.e. those that enable reliable broadband service, internet-enabled devices, digital literacy training, technical support, and promotion of online privacy and cybersecurity.

Spending $685 million for a State Digital Equity Capacity Grant Program, including $60 million to help states develop a “Digital Equity Plan,” and $625 million to implement those plans. No less than 5% of the funds must be used to award grants to Indian tribes, Alaska Native entities, and Native Hawaiian organizations.

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The Proposal to Transition to Clean Energy
 
The current version of the Plan includes $100 billion for power infrastructure and economic development investments in distressed and disadvantaged coal, oil & gas and power plant communities. The Plan proposes the first batch of funding to advance the goals announced in the President’s January 27th Executive Order on Tackling the Climate Crisis at Home and Abroad, including commitments on a just transition to a clean energy economy, environmental justice, and federal procurement, including:
 

$27 billion for a Clean Energy and Sustainability Accelerator to mobilize private investment into distributed energy resources; retrofits of residential, commercial and municipal buildings; and clean transportation with a focus on disadvantaged communities that have not yet benefited from clean energy investments.

$10 billion for the development of the next generation of conservation and resilience workforce, through a new Civilian Climate Corps.

$5 billion for the remediation and redevelopment of Brownfield and Superfund sites and related economic and workforce development – to be achieved by investing in the Economic Development Agency’s Public Works program (while lifting the cap of $3 million on projects), in “Main Street” revitalization efforts through the HUD and USDA, and in the Appalachian Regional Commission’s POWER grant program for idled factories, as well as by providing dedicated funding to support community-driven environmental justice efforts.

Creating new jobs modernizing power generation and delivering clean electricity through a 10-year extension and phase-down of an expanded direct-pay investment tax credit and production tax credit for clean energy generation and storage; and supporting state, local, and tribal governments that choose to accelerate this modernization through complementary policies, such as clean energy block grants.

Building next generation industries in distressed communities by providing tax credits for capital-project retrofits and installations and carbon capture deployment and permanent storage; investing in 10 pioneer facilities to demonstrate carbon capture retrofits for steel, cement, and chemical production facilities, while protecting the communities from pollution; and supporting large-scale sequestration efforts.

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The Innovation Proposal
 
The Plan includes $480 billion to spur innovation through investment in R&D, a more equitable innovation economy, and domestic manufacturing, including:
 

$45 billion for Historically Black College and Universities (HBCUs) and other Minority Serving Institutions (MSIs) to upgrade research infrastructure in laboratories, invest in R&D, and create up to 200 centers of excellence that serve as research incubators at HBCUs and other MSIs.

$20 billion for regional innovation hubs and a Community Revitalization Fund that aims to support community-led redevelopment projects that help close the current gaps in access to the innovation economy for communities of color and rural communities.

$31 billion for programs that give small businesses access to credit, venture capital, and R&D dollars, as well as funding for community-based small business incubators and innovation hubs to support the growth of entrepreneurship in communities of color and underserved communities.

$30 billion in additional funding for R&D that spurs innovation and job creation.

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The Resilience Proposal
 
The Plan proposes $161 billion to create more resilient communities and rebuild water infrastructure, including through:
 

$50 billion for the Federal Emergency Management Agency’s (FEMA) Building Resilient Infrastructure and Communities program, the Department of Housing and Urban Development’s (HUD) Community Development Block Grant (CDBG) program, new initiatives at the Department of Transportation, tax credits, and transition and relocation assistance to community-led transitions for the most vulnerable tribal communities.

$111 billion for clean water investments, including $45 billion to replace 100% of the nation’s lead pipes and service lines through the Environmental Protection Agency’s Drinking Water State Revolving Fund and Water Infrastructure Improvements for the Nation Act (WIIN) grants; $56 billion to modernize drinking water, wastewater, and stormwater systems, through grants and low-cost flexible loans to states, Tribes, territories, and disadvantaged communities, and $10 billion to monitor and remediate pollution in drinking water, and to invest in rural small water systems.

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The Talent Development Proposal
 
The Plan contains $237 billion for talent development. This includes:
 

$100 billion for workforce development programs targeted at underserved groups, including $40 billion for a new Dislocated Workers Program and training focused on high-demand sectors such as clean energy, manufacturing, and care-giving; $12 billion for investing in evidence-based community violence prevention programs, job training for formerly incarcerated individuals, a new subsidized jobs program, elimination of sub-minimum wage provisions in Fair Labor Standards Act, and expanding access to employment for workers with disabilities.

$137 billion for education infrastructure, including $100 billion to upgrade and build new public schools, through $50 billion in direct grants and an additional $50 billion leveraged through bonds; $12 billion for community colleges to be used by states in order to address existing physical and technological infrastructure needs and access to community college in education deserts; and $25 billion to upgrade child care facilities and increase the supply of child care, to be used by states through a Child Care Growth and Innovation Fund.

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The Transportation Proposal
 
The Plan includes $571 billion for transportation infrastructure, to repair roads, bridges, rail, and transit systems in poor condition. This includes:
 

$115 billion to modernize the bridges, highways, roads, and main streets that are in most critical need of repair.

$85 billion to modernize existing public transit, doubling the current levels of federal funding, and helping agencies expand their systems to meet rider demand.

$80 billion to address Amtrak’s repair backlog, modernize the Northeast Corridor, improve other existing corridors, and connect new city pairs (see here for Amtrak’s proposed service map with 30+ new routes by 2035, which would be funded by this plan).

$174 billion to invest in electric vehicles (EVs), a part of which is proposed to be used to establish grant and incentive programs for state and local governments and the private sector to build a national network of 500,000 EV chargers by 2030.

$25 billion for airports and $17 billion for inland waterways, coastal ports, land ports of entry and ferries.

$20 billion for a new program to reconnect neighborhoods cut off by historic investments and ensure new projects increase opportunity, advance racial equity and environmental justice, and promote affordable access.

$25 billion for a dedicated fund to support ambitious projects that have tangible benefits to the regional or national economy but are too large or complex for existing funding programs; and

Technical assistance and procurement support to state, local, and tribal governments.

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HR&A will continue to track the progress of the American Jobs Plan and other federal funding for a just and resilient recovery. To learn more about our efforts, drop us a line at stimulus@hraadvisors.com.