Talking Michigan Transportation

What’s in the infrastructure bill for Michigan?

October 28, 2021 Season 3 Episode 78
Talking Michigan Transportation
What’s in the infrastructure bill for Michigan?
Show Notes Transcript

On this week’s Talking Michigan Transportation podcast, timely conversations about the long-awaited infrastructure bill President Biden has been seeking. 

Recorded Thursday, Oct. 28, as negotiations continue in Congress, Susan Howard, program director for transportation finance at the American Association of State Highway and Transportation Officials, talks about the Infrastructure Investment and Jobs Act (IIJA) and what it would fund.  

Later, Zachary Rable, a policy analyst in the Michigan Department of Transportation's (MDOT) Bureau of Transportation Planning, joins the podcast to break down what the IIJA would mean for Michigan. 

Howard talks about the transportation highlights in the IIJA and why she’s optimistic Congressional members can find agreement on the broader social safety net bill that would clear the way for a separate vote in the House on the infrastructure legislation, adopted with some bipartisan support in the Senate in August. 

Among the transportation highlights, the IIJA: 

  • Makes the largest federal investment in public transit ever,
  • Makes the largest federal investment in passenger rail since the creation of Amtrak,
  • Makes the single largest dedicated bridge investment since the building of the interstate highway system, and
  • Makes the largest investment in clean energy transmission and electric vehicle (EV) infrastructure in history; electrifying thousands of school and transit buses across the country; and creating a new Grid Deployment Authority to build a resilient, clean, 21st century electric grid. 

Howard says the investment in EV infrastructure would be significant and presents it as a new frontier, with EV charging dollars going to every state, allowing states to choose how EV infrastructure best fits into their own demographics. She calls it a long-term endeavor. 

Later, Rable talks about some specifics in the IIJA for Michigan: 

  • It would reauthorize surface transportation programs for five years, providing Michigan and MDOT necessary predictable and sustainable funding for advancing the department's multimodal transportation goals,
  • It would provide $2.4 billion in "new" highway funding for Michigan for Fiscal Years 2022-2026, a $340 million average annual increase, and
  • It would provide $563 million for the Bridge Replacement, Rehabilitation, and Preservation Program, as well as $110 million for the EV Charging Program and $8.7 million for the Ferry Boat Construction Program.

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Jeff Cranson: Welcome to the Talking Michigan Transportation podcast. I'm Jeff Cranson.

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Cranson: This week, are we finally going to see the long-awaited infrastructure bill the President has been seeking? As we record today, Thursday, October 28, negotiations continue in Congress. Some House Democratic members say they need to see texts from the broader social safety net bill before they are willing to vote on the infrastructure bill, which passed the Senate with some bipartisan support several months ago. First, I’m speaking with Susan Howard, the program director for transportation finance at the American Association of State Highway and Transportation Officials. And later, I’ll speak with Zach Rable, a policy analyst at MDOT, who will talk about what the infrastructure bill could mean to Michigan specifically.

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Cranson: So, again, Susan, thank you for taking the time to be here.

Susan Howard: Absolutely, thanks for having me.

Cranson: So, without getting into, you know, the social safety net bill, the bigger bill that some in the House say has to be agreed to and they want to see language before they're willing to vote on the infrastructure bill, could you just remind us of what the process is here and, you know, really just what's going on? I mean, you're watching it very closely from your vantage point, both your professional position and your contacts on the Hill, so how would you sum up where things are right now?

Howard: Sure, well, it has been lots of fits and starts and a very, I guess, messy process, but we do have an infrastructure bill known as the Infrastructure Investment and Jobs Act, the IIJA, which was passed by the Senate back in in August and has kind of just been waiting in the wings for House consideration. It is a very large spending bill. It includes five-year reauthorization of surface transportation programs, which of course is of paramount importance to state DOTs, but also a lot of other spending on transportation and other sectors as well. And we have had a situation where there has not been, yet sort of the key number of folks willing to vote on the IIJA without some further assurance that this other bill is ready to be teed up, ready for a vote. So, we've had this sort of dance over the last couple of months of kind of creeping up to the line and then realizing the votes weren't there. As a result, about a month ago we had a temporary shutdown of the program because we didn't have the IIJA pass or an extension for the FAST Act in place. So, we're kind of in a similar situation right now where the extension that we're operating under expires on October 31. So, to prevent elapse in the program, we either need the bill to pass before October 31 or we need another extension, so, it's a feeling of déjà vu. It sounds as though negotiations on the, you know, sort of social spending package are evolving and getting closer, but whether it's enough for folks to go ahead and take a vote on the infrastructure bill I think remains to be seen.

Cranson: Yeah, it sounds like this morning the President told some members of Congress that he met with that he was within inches of an agreement with Senators Manchin and Sinema. And if that's true, that's a good sign. I guess, having watched this over the years and seeing so many of these deadlines come and go and understanding why things are even more complicated now, you know, what's your gut tell you about whether we're going to get a deal or not?

Howard: I still think the bill will pass. I still think that there's enough in the IIJA that people have worked really hard to secure and really, you know, in these times, a rather unprecedented bipartisan effort in the Senate to get a package pulled together. I think there's probably too many people with kind of skin in the game, so to speak, to abandon it all together. So, I do think it will pass. It's just a matter of when in today's sort of high-pressure campaign, and there's, like, going to be a bunch of, you know, press conferences and public events by President Biden to really, I think, give it a push to get done. I just don't know what's in the minds of house progressives and whether that will be enough for them. I mean, they've kind of moved the goal post a little bit in saying, you know, “Okay, we definitely need an outline,” meaning, we need to know what's going to be in the package and how much spending will be, to, “No, we need legislative text itself,” which is nowhere near being ready. Or would they be comfortable with, just kind of like you said, the agreement, the structure, you know, or are they going to, you know, go so far as to say we won't vote on infrastructure unless we have already voted on the sort of social spending package? So, all of that is kind of in flux still, and there'll just have to be a lot of very diligent vote counting, I think, by the House leadership to see if the infrastructure bill can pass. And they won't bring it to the floor if it can't pass. They don't want the embarrassment of it failing. So, whether what's being kind of sketched out today will be enough and whether honestly the, you know, pressure from House leadership and the President will be enough to kind of satisfy where some of these House Democrats are, give them enough assurance that they're willing to vote on the package that's sitting there ready to go.

Cranson: So, without text, really everything the president is saying to them today comes down to two words, “trust me.”

Howard: Yeah, I mean, the broad outline is the spending range is there, but it's really—the outline from what I understand is very kind of, like, categorical meaning, like, visionary things like we want to, you know, make great strides on climate, and what falls under that category we can guess because of some of what we've seen come out of the various House committees that were involved in the budget reconciliation process, which is the vehicle through which this is moving. But yeah, you're right, we don’t really know. It is kind of a, “Trust me, I’ve got you. I’ve heard the message. I know what your priorities are, and this package will have them.” But, you know, the reason that Senators Manchin and Sinema have been so important to this is that you have to have the votes in the Senate to pass the package, and those two are the key votes. So, they've had to be on board early on.

Cranson: So, if they don't have an agreement, you know, on the broader agenda, the big reconciliation package, they could still find a way to extend highway funding beyond the 31, right?

Howard: Oh, yes, absolutely, and that would be what we would be looking to pivot to very quickly, and I think work behind the scenes is underway on another extension, the duration of which I think is a little bit up in the air. The last time they just did a month and I thought, you know, that within that month time frame enough progress will be made on the social spending bill and the reconciliation process that we'll be able to get there. So, yes, you know, worst case scenario is that we have another temporary shutdown, which is not good policy and is not good for state DOTs and not good for federal highway and the employees there that are paid through the Highway Trust Fund either to get furloughed. So, we’re hoping to avoid that, but we have until Sunday. That's when the short-term extension expires. So, yes, there's a possibility that if this all doesn't seem to be coming together in a way to get passage of the infrastructure bill in time then we could quickly pivot to another extension, which, again, it's not ideal. I mean, state DOTs don't like these short-term extensions. They're very disruptive. They don't allow us to plan but, you know, it's better than having the program lapse. So, I think we'll see something before Sunday, either enough products will be made that this bill can get passed or we'll turn to it another extension.

Cranson: So, it gives a whole new meaning to trick-or-treat on Sunday, doesn't it?

Howard: [Laughing] Right, exactly.

Cranson: So, I don't know if you hear from many states that if there is a lapse it really means they're already going to have to cancel projects or pull back. At MDOT at least, they manage the cash flow that they could withstand a short-term lapse. Hopefully it doesn't come to that, but I guess I just I want people to know that because that's a question that always comes up. So, let's go back to the IIJA then, and you've talked about it before. Could you just remind us what it means, you know, across the modes to state DOTs and, you know, things beyond roads and bridges?

Howard: Yeah, absolutely. The keyway to think about the bill is that it is both a long-term extension of surface transportation programs and a lot of additional spending above and beyond that. So, there are, you know, the kind of core programs that are reauthorized. There's some new formula programs. I think all told it's about a 30% increase in formula funding states, which, again, is kind of the bread and butter that state DOTs depend on with the federal aid program and being able to apply federal dollars to projects in their state. And of course, the significance of a long-term bill is that it does allow for that planning over multiple years for State Transportation Improvement Programs to be implemented and for us to know where the federal resources are so that we can, you know, match them with state with state money and deliver a program. So, there's a couple of new formula programs. There's some focus on bridge spending from a lot of different categories. So, some of this has been a little bit unusual, I guess I would say, in its structure in that it goes beyond just a five-year reauthorization to include additional budget authority beyond. But there's a lot of funding for passenger rail. There's significant funding for transit although there's also funding in the reconciliation package for transit of kind of some things that didn't get done through this package, through the IIJA. And then beyond transportation, there's significant broadband investment, water, wastewater, you know, the kind of core physical infrastructure that we that we think about. If it's on the ACEC, the civil engineer’s scorecard, you know, if it's a category on there, it probably got significant funding in this bill. It is, you know, kind of the traditional hard infrastructure that we talk about. The other thing that's noteworthy, I guess, to say about the bill is it also includes a lot of discretionary spending, meaning competitive grants in new categories that states, or localities, or MPOs would, depending on the eligibilities, have to compete for. So, that I think is significant, and will be a bit of a sea change both for the U.S. Department of Transportation, which will have to administer a large number of discretionary programs, and for states who will be applying for those and localities who may be applying to those and become recipients, for the first time, of federal dollars. So, there's a lot of capacity that will have to be built up.

Cranson: Capacity in what sense?

Howard: Well, just sort of the ability to be able to write grant applications and follow through with that process and meet the criteria.

Cranson: I see, and some of those are electric vehicle charging grants. I’m sorry to cut you off.

Howard: No.

Cranson: But I just wanted to talk about some of those grants and the EV component especially because that's a big deal in Michigan.

Howard: Yeah, absolutely.

Cranson: What do you think about that from a policy standpoint?

Howard: Yeah, there's significant investment in electric vehicle infrastructure, and I think it's exciting. I think it’s going to be kind of a new frontier for a lot of state DOTs who—some state DOTs have been involved in in charging infrastructure, but it really is relying upon the state DOTs to kind of take on a new, stepped-up role to deploy charging infrastructure. And, you know, there's a broad—there's a big vision here from the administration to have a national network, so they want every state involved. They don't want this to just kind of be only a piecemeal, only in those states who have had an interest already. So, there's going to be, you know, formula dollars for EV charging going to every state. And how states choose to use it or how it best fits into their own demographics and the, you know, EV users in their state I think is going to be a long-term endeavor.

Cranson: Yes, we need to know that we have the same reliable charging network when we drive across the country as we might in our own state, right?

Howard: Yeah.

Cranson: That's the thinking. From a policy standpoint, what do you think about doing this with competitive grants? Do you like that approach?

Howard: Well, AASHTO is always, you know, our states kind of live and die by the formula apportioned programs. I mean, that is the way to get money out the quickest I would say. And it's well established, and we always tend to defer to a preference for formula-based distribution. Certainly, there’s a place for discretionary grants. We've had them, you know, over the years, like what used to be known as the TIGER program and the BUILD program, now it's RAISE. So, you know, large discretionary pots of funding that states and localities could apply to for funding, and many states have taken great advantage of those. Those programs have always been oversubscribed, but, you know, you may not get the entire cost of the project through one grant cycle. You're going to have to have some kind of state or local match for it. The process for competing for grants is time consuming, and it can be expensive. So, it's just a thing that I think states are going to have to kind of balance and figure out how to approach, and, again, sort of how much certainty will there be that a certain state will be—what's the return on it on the effort, so to speak. There's not going to be a guarantee that you're going to get a grant from this program, but do you feel confident enough, you know, that the outcome will be positive that the effort is, you know, kind of worth putting this in there? So, I think that's going to be kind of a shift in the thinking. And as states begin to do, you know, their forecasting and programming and working in some kind of way to guestimate what the return might be on some of these discretionary grant programs, so I do think that that's going to be significant. I think there's going to be, you know, a lot of work that the USDOT does with states and other grant recipients to try to come up with a streamlined process that will be a little bit quicker, keep the money flowing, and really making the best use of it. Of course, it'll be incumbent upon the recipients—us—the state DOTs and others, to make good use of the funds that were given, whether they be formula dollars or discretionary dollars. I mean, this is going to be a high level of investment. We as the, you know, state partners, people will be looking to us to see that we spent the dollars wisely and that we, you know, made investments that really advance transportation in our country.

Cranson: Sure. Well, so, you know, in Michigan’s case in that IIJA, there's about $7.9 billion dollars for highway funding, which is about $2.4 billion that's actually new, breaking down to about $340 million average annual increase from fiscal year 22 through 26. That's sounds like a lot of money, but that doesn't really fill the gap that we know we have that, you know, the various engineering societies that you're talking about that do the report cards that say what we actually really need to invest and increase our investment, but, you know, it's still a lot. What are you hearing from other states? I mean, how are people kind of balancing the message of, “Hey, this is a really big deal and thank you, but don't, you know, oversell it and set expectations too high for what this will be able to do?”

Howard: Yeah, that's a great point, and that has come up quite a bit because I think there is a perception that this is going to just be, like, you know, this influx of dollars unparalleled, and that, you know, the partners that we work with are going to be looking just like, “Okay, where, you know, are all those big lettings immediately?” It's not quite like that. Again, it is funding over five years. It is an increase for sure, but you're right, we do have to set realistic expectations and also that these projects take time. I mean, many of the projects that, you know, are going to benefit from this level investment are ones that have been in the STIP or been in development for a long time, so those are ones that can advance. Maybe the extra IIJA money helps move something a little bit further down the line than it was originally planned, but you're right, we do have to temper expectations because they're going to be challenges with this. There are going to be matched challenges in some cases. We've all seen what's going on with in inflation and materials and workforce issues. So, you know, there could be some challenges ahead for sure. I think we do need to be mindful of those and working together to address some of them and being honest with our, you know, partners within the construction industry and in the engineering industry about what this really means for individual states.

Cranson: Yeah, I think that's really important too. Well, thanks, Susan. We covered a lot of ground, and as always, I really appreciate your insights since you're on the Hill and watching these things closely. Is there anything else you want to add as we watch hopefully?

Howard: Right, cross your fingers. It has been an absolutely, unbelievably busy time for folks on the Hill, especially. It's been a herculean effort to get where we are, and there really is a lot of support for this bill. So, I remain confident that it will get across the finish line, if not today then down the road. But, you know, the hard work I think will pay off. And, again, having this level of interest and attention to infrastructure has been really exciting and I think helped us explain, you know, what state DOTs do, why we're important, how we serve the public. So, all that I think has been, you know, kind of an extra benefit to having this type of pitched and busy federal season as we've had. So, thanks again for the chance to talk with you today.

Cranson: Yeah, so this is kind of an extended trip to Disneyland for transportation finance geeks like us, I guess.

Howard: [Laughing] Yeah.

Cranson: Susan, thanks for taking time to be here.

Howard: Absolutely, thanks for having me.

Cranson: Please stay tuned. We'll be back with more Talking Michigan Transportation right after this.

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Narrator: Did you know that most work zone crashes are caused by inattentive motorists? It only takes a split second of distraction to dramatically change lives forever. The Michigan Department of Transportation reminds you to slow down, follow all signs, and pay attention when driving through work zones because all employees deserve a safe place to work. Work zone safety: We're all in this together.

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Cranson: So, part two today involves what the IIJA would mean to Michigan, and I’m speaking with Zach Rable, first time visitor to the Podcast. He's a policy analyst in the Bureau of Transportation Planning at MDOT, and he's been watching this very closely, just like Susan who talked about it earlier from a national perspective. Zach has been analyzing and studying what this would mean to various programs, and what kind of effect it could really have on transportation in Michigan. So, Zach, thanks for taking time to be here.

Zach Rable: Yeah, absolutely, Jeff. Thanks for having me. It's really important for Michigan because first things first, it would reauthorize Surface Transportation Programs for five years, you know. This provides Michigan and MDOT that funding that's predictable and sustainable that we really need and is necessary for advancing our multimodal transportation goals. As our listeners know, these projects that we're working on don't just happen overnight. They take a while to conceive of and plan out, and without that predictable, sustainable funding, it's really hard to know that we can plan for these projects, you know. Something we've seen with other iterations of surface transportation reauthorizations are a slew of continuing resolutions. And those short-term funding extensions, while they're important to keep the programs open and running, they really make it hard on MDOT and, you know, states like Michigan to plan for the future and to make those significant investments in their transportation network.

Cranson: And five years actually sounds like a long time compared to what we've seen the past several reauthorizations, right?

Rable: Yeah, I believe MAP-21 was just a couple years, and the FAST Act was four years. We've now sort of encroached into five years with the extension last year, but yeah, five years would be a good amount of time. And we would certainly appreciate having that span of time with known, predictable funding.

Cranson: More than $300 million dollars a year for five years on top of new money, on top of what we're doing with the governor's Rebuilding Michigan bonding program is not insignificant, but is it enough?

Rable: Yeah, that's a really great question, Jeff. Because we need so much help with our transportation network in Michigan, you know, roughly $300 million average annually is a good amount of money. It helps, certainly, you know, the governor's bonding program helps as well, you know. Truthfully, we would still need a good amount of other additional funds to close the gap and, you know, achieve that state of good repair that we're constantly working towards, but certainly, you know, $300 and some million annually is really important. It does a number of other things. It creates a new bridge program that would help Michigan replace, rehabilitate, and preserve some of its critical bridge infrastructure. We estimate that Michigan might receive something like $560 million dollars there. It’s super important for critical infrastructure. It also creates a new EV charging infrastructure formula program. Michigan’s already engaged in this a lot, but this would help our state expand on its EV charging network, and that's especially important as our state’s automakers are hoping to make that transition to 100% electric in the upcoming decades. Again, for this program we're, you know, as we've looked ahead, we're thinking that Michigan might receive something like $110 million dollars, which is a good amount of money. It also creates new discretionary grant programs. Michigan has had some good success applying for these for some of its big-ticket projects. Bluewater Bridge recently got I believe it was a grant for that, and it keeps those and expands them, gives new money, so, those types of things are there. New highway formula funds for climate change and resiliency will help our state adapt to and mitigate, you know, some of those lingering impacts of climate change. We've seen a number of flooding events in our state recently and having more money to help combat those adverse effects of climate change would really be important for us. So, lots of good things in this bill even if it's not going to completely close our gap that we need to get our transportation network into a state of good repair.

Cranson: Yeah, I don't think you can probably over emphasize the impact of the climate and the high water and the damage that's done. I mean, we're already fighting to make up for years of under investment in roads, and then to endure that in various places across the state with no extra funding has been quite a burden, so that's definitely welcome. What do you think about the doing the EV charging as kind of a competitive grant program? I mean, what's your policy view on that?

Rable: So, the bill does two things, right? It creates a formula program that will give Michigan a chunk of change, and then it also creates this new competitive EV formula program that Michigan can obviously compete with other states and localities. I think it's important to have that formula piece so that the states are able to really dig in and start building out their charging infrastructure more fruitfully. But at the same time, having a competitive grant program is always good because I think it allows some of the more innovative plans for states or different pieces of technology to sort of come through and bubble up. I know it's challenging sometimes on states to apply for these, but I mentioned this previously, we've had some success. I think Michigan in particular is a leader in the EV technology program moving forward. So, I’m hoping that even though a good portion of EV funds in the bill do come through formula or through competitive grants, that Michigan will have an opportunity to really put its name out there as a leader in this field.

Cranson: What else do you think we should, you know, focus on for people in terms of, you know, other modes perhaps?

Rable: Yeah, I’m glad you brought that up. Of course, there are more modes than just highways, right? Those funds are important for Michigan. This bill does a good job of advancing transit funds. We're seeing after we review this bill, we're thinking that Michigan would get maybe $47 million dollars more annually when compared to the FAST Act. It does a number of things to add funding to passenger rail for the Amtrak network. Again, some of these come through competitive grant opportunities. And it also slightly different than a typical surface transportation bill because there's other funding mechanisms in the IIJA. It has some aviation funds. It's hard to know how much of this will come to Michigan, but, you know, it gives funds for Capital Improvement Grants for runways and taxiways as an additional discretionary grant program, things like that. So, whether it's the new transit funding or additional potential funds in passenger rail or aviation, it does a lot of new things. There's also a lot of new money in here for freight, for ports. It touches on trying to electrify our busing fleets across the nation. It’s hard to underemphasize the amount of new programs in the bill. There are so many.

Cranson: So, you're part of a new generation of, you know, transportation planners taking this on. You’re still kind of in the, you know, early stages of your career. From what you've seen and what you know about your friends, you know, other people in your demographic, what do you think about the discussions that Secretary Pete Buttigieg of USDOT have about the need for more investment in transit and rail and what, you know, future generations are going to really want for their own transportation?

Rable: Yeah, I think that this is a trend that's continued for a few years now of wanting to diversify your transportation network and give modal choice. This is something that I think younger generations are really keen on, but I think older generations also benefit from greatly. When you are aging in place, having the ability to not always have to drive yourself but to take transit or other different modes of transportation to get to things that are important to you, whether that's, you know, wanting to go to the grocery store or get to healthcare or just go for, you know, a safe walk around the block. Those are all really important things. I think our generation is really emphasizing this. I think, you know, Secretary Buttigieg and a lot of, you know, members of the progressive Democratic party are emphasizing this, and it's showing in the IIJA and pieces of what the, you know, Democrats in Congress are hoping to pass with an additional budget reconciliation bill. There are, you know, it's hard to know exactly, but there have been conversations about adding in transit choice funding, you know, additional funding for pedestrian and bike paths in that bill. Without knowing exactly what's in it, you know, that's still encouraging, having those conversations is encouraging. I’m a planner by trade, and we frequently talk about the need to make a place, you know, viable and having more modal choice in transportation helps make a place more viable, more vibrant. I find it exciting.

Cranson: Good. Yeah, that's well said, Zach. I think just the emphasis on pedestrians and having, you know, good, safe sidewalks in neighborhoods, and you're right, that is important to, you know, people of any age, but people that are walking because their doctor tells them they need to get out there and walk more, you know, that's—

Rable: Yeah.

Cranson: That's a really good point, and the freedom that public transportation can provide just like we talk about with automated vehicles and what that could mean in terms of people being able to get some place more safely. And if they get to that point where they have to give up their keys, you know, they'll have a means to get around because they won't actually be the ones driving. So, I think all of that's going to be good. Is there anything else you want to add about the IIJA as we sit here, probably both of us, with one eye on our news feeds to see where negotiations are?

Rable: You know, I think that we've emphasized the key points for Michigan and why it's so important. Your guess is as good as mine on if these latest rounds of negotiations will finally get it over the hump and allow the House to pass the bill. I’m certainly keeping my eyes tuned to that.

Cranson: Thanks, Zach, for taking time to offer your insight as we watch this unfold, and, you know, I’m going to be optimistic too and think that we're going to get to a place where both chambers agree and the President signs this. And I’ll have to have you back on to talk about where the money's going once it actually starts flowing.

Rable: Yeah, that sounds great, Jeff. Thank you so much for having me on. I appreciate the opportunity and look forward to future chat.

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Cranson: Thank you again for listening to this week's edition of the Talking Michigan Transportation podcast. I would like to thank Randy Debler and Corey Petee for engineering this week's podcast. To subscribe to show notes and more, go to Apple podcasts and search for Talking Michigan Transportation.