Two Years In, How Quickly Is IIJA Funding Being Put to Work?

Two weeks ago, we passed the two-year anniversary of the signing of the bipartisan infrastructure law, the Infrastructure Investment and Jobs Act (IIJA). That law provided a total of $567 billion in funding for the U.S. Department of Transportation – a five-year extension of ongoing surface transportation programs at substantially increased funding levels, plus a one-time slug of $184 billion in appropriations for those modes but also airports, ports, and pipelines.

Coincidentally, two weeks ago also saw the public release of detailed information on federal budget execution for fiscal year 2023, which closed on September 30. In some instances, this information allows us to see how quickly the first two years of IIJA funding is being put to work.

Just because Congress provides $1 billion in contract authority, or makes a $1 billion appropriation, does not mean that the money instantly flows into the economy and starts creating jobs. There are intermediate steps that culminate in that funding being obligated, legally, when a representative of the federal government signs a grant agreement, or direct contract, or purchase order that promises a specific amount of federal money in exchange for something. Once the obligation is incurred, contractors start buying materials and hiring people, goods are shipped, people go to work, and the money goes to work in the economy. Once the work is finished, the federal government writes a check or makes a wire transfer to “liquidate” the obligation, a.k.a. making an outlay.

Outlays are reported monthly by the Treasury, but we used to have to wait for the annual President’s Budget to get details on obligations. However, nowadays we have which gives us obligation and outlay data on a quarterly basis, straight from the big computers at Treasury and OMB. We can now see how quickly IIJA money is being put to work by looking at obligations in fiscal 2022 and 2023 versus the pre-IIJA year of 2021, with some limits.

Highways. It should not surprise anyone that the federal-aid highway program has put its IIJA funding increase to work more quickly than other modes. The program is a well-oiled machine, with FHWA district offices in all 50 state capitals (usually across the street from the state highway bureau) and a history of pushing states to sign as many contracts as possible in order to obligate all of its annual use-it-or-lose-it funding authority.

The main program account, from the Highway Trust Fund, went from $45.4 billion in pre-IIJA obligations in 2021 to $56.2 billion in 2022 and $56.7 billion in 2023, a rate 25 percent higher than 2021.

However, we can’t make any determinations about IIJA general fund appropriations for highways because of a data coding problem. The fundamental unit of budgeting is the account, but the Appropriations Committees put the IIJA general fund money for highways in the same budget account as the regular annual Congressional “plus-up” program and earmark funding started in 2018, and also appropriated $10 billion in COVID aid into the same account in 2021. FHWA did not code the sources separately, so there is no way to distinguish the obligation and outlay of the $10 billion in COVID aid from the $9.45 billion per year starting in FY 2022 from the IIJA or from the regular (smaller) underlying programs in the account.

Mode Account Name Fund Acct. # FY 2021 FY 2022 FY 2023
FHWA Federal-Aid Highways HTF 8083 45,365 56,164 56,690
FHWA Highway Infrastructure Programs GF 0548 7,012 6,535 9,041

Mass transit. While the IIJA provided a 31.5 percent increase in new contract authority out of the Highway Trust Fund for the mass transit Formula and Bus Grants account, that increase has not fully been felt yet. New obligations in that account for 2023 were only 6 percent higher than the pre-IIJA 2021 year.

Mode Account Name Fund Acct. # FY 2021 FY 2022 FY 2023
FTA Formula and Bus Grants HTF 8350 10,739 11,744 11,412

The reason is that mass transit got so much COVID aid that transit providers often delay obligation of their regular formula funding (which usually has no expiration date) in order to spend their use-it-or-lose-it COVID funding first.

Transit has the same problem as highways in that the COVID money was put in the same budget account as ongoing programs and IIJA advances, but unlike FHWA, FTA has coded the IIJA money and most of the COVID money separately. Of the $2.05 billion in general fund IIJA money received each year by this account in 2022 and 2023, FTA managed to obligate $782 million in 2022 and $1.522 billion in 2023. But this was all dwarfed by COVID aid. (For FY 2021, FTA did not code the CARES Act separately from the regular program.)

Transit Infrastructure Grants (069-2812)
FY21 FY22 FY23
Regular Appropriations ??? 697 527
COVID – CARES Act ??? 3 2
COVID – CRRS Act 7,262 5,985 915
COVID – ARP Act 7,779 20,025 2,509
IIJA Advance Approp. 0 782 1,522
Account Total 17,272 27,491 5,473

The IIJA also provided funding for four other FTA accounts. $1.6 billion per year goes to the Capital Investment Grants account (matching around $2 billion per year in regular appropriations), and rather than go through the time-consuming process of selecting new projects and signing new agreements, FTA decided to use the first installments of its IIJA money to pay off existing commitments ahead of schedule, allowing the money to be obligated quickly. Obligations totaled $4.5 billion for that account.

As for the other three new programs, they have been slow getting off the ground.

Mode Account Name Fund Acct. # FY 2021 FY 2022 FY 2023
FTA Capital Investment Grants GF 1134 3,313 1,544 4,515
FTA All Stations Accessibility Program GF 1145 0 0 321
FTA Ferry Service for Rural Communities GF 1146 0 0 0
FTA Electric or Low-Emission Ferries GF 1144 0 0 0

Rail. Federal grants to Amtrak have always been quick to obligate and outlay, but this can be misleading. Amtrak is, technically, a private company, and its books are not part of the federal budget. Once DOT writes Amtrak a check for its annual grant, that shows up as 100 percent obligation and outlay rate from a federal budget point of view, even if Amtrak just sits on the money and does not spend it for years.

For example, Amtrak has already obligated most of its increased IIJA funding for the National Network, but this does not mean that billions of dollars in projects for the network are already underway, as it would mean if FHWA or FTA had obligated that money. (Amtrak’s COVID aid has been filtered out of these numbers.)

Mode Account Name Fund Acct. # FY 2021 FY 2022 FY 2023
FRA Amtrak Northeast Corridor GF 1774 1,359 2,058 2,444
FRA Amtrak National Network GF 1775 1,643 4,576 4,329

For other Federal Railroad Administration programs, things seem to be progressing slowly. FRA does not code its IIJA spending separately from regular appropriations, so there is no obvious pattern.

Mode Account Name Fund Acct. # FY 2021 FY 2022 FY 2023
FRA Federal-State Partnership for IPR GF 2810 84 49 254
FRA Consolidated Rail Infra. & Safety GF 2811 208 268 329
FRA Restoration & Enhancement GF 0750 69 1 46
FRA Railroad Crossing Elimination GF 0760 0 0 0

However, one of these things is not like the others. The Federal-State Partnership for Intercity Passenger Rail has been slow to leave the station, resulting in a huge buildup of unobligated balances. In this presentation, obligations are shown as negative because obligating funds subtracts those funds from the unobligated balance in an account:

Federal-State Partnership for IPR
FY 2020 FY 2021 FY 2022 FY 2023
Carryover Unobligated Balance from Prior Year 674 807 918 8,022
New Appropriations +200 +200 +7,154 +7,298
New Obligations -68 -84 -49 -254
Unobligated Carryover to Next Year 806 923 8,023 15,065

Another $7.2 billion was made available for this program on October 1, so the unobligated amount as of today is around $22 billion. Having large unobligated balances laying around is a bad thing, not only for government efficiency reasons, but because until an appropriation is obligated, it can be rescinded (taken back) by Congress, and the larger the pile of unobligated money is, the more attractive it is to rescind.

Multimodal grants. Two different major grant programs – RAISE grants, and MEGA project grants – are funded out of the same budget account, which is discussed in another article in this issue. The other three multimodal grant programs established by IIJA at DOT are understandably slow to get going.

Mode Account Name Fund Acct. # FY 2021 FY 2022 FY 2023
OST National Infrastructure Investments GF 0143 557 1,247 252
OST Safe Streets and Roads for All GF 1735 0 0 190
OST National Culvert Removal GF 1733 0 0 0
OST SMART Grants GF 1734 0 0 93

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