Infrastructure: Here's how states are benefiting from Biden's $1.2 trillion legislation

Jul 09, 2023

President Biden signed the US Infrastructure Investment and Jobs Act (IIJA) into law in November 2021.

Since then, the bipartisan legislation has provided state and federal agencies with up to $1.2 trillion in funding to refurbish roads and bridges, improve access to clean water and internet connectivity, and increase the number of clean energy projects.

However, the capacity of each state and local government to channel this funding has varied widely. Funding was divided between the number of infrastructure projects present in each state.

States with higher populations and larger areas such as California ($20 billion), Texas ($15 billion), and New York ($10.9 billion) received the highest amounts of total funding compared to New Hampshire, which received the least ($855 million).

"To some degree, the relative size of expenditure is influenced by readiness of state governments to move quickly," Joseph Schofer, professor emeritus of civil and environmental engineering at Northwestern University, told Yahoo Finance. "Those that were better organized — had their priorities lined up and projects ready to go — will show larger expenditures early."

On top of that, he said, "this large tranche of infrastructure money is playing a catch-up role, making up for insufficient past investment in all states but especially in big and getting-bigger states."

A total of seven federal agencies received funding through the infrastructure bill, with the Department of Transportation (DoT) getting the highest amount at $284 billion for modernizing roads, bridges, railways, and transit. Out of the $284 billion, $110 billion went toward roads and bridges.

On a state level, funding ranged from $619.3 million for the state of New Hampshire to as much as $15.1 billion for California.

The states of Oklahoma and Arkansas each received $2.3 billion, the overall median amount across the US. Both states also have a joint agreement on advanced transportation and mobility. For highways in particular, the bipartisan investment will result in a 27.7% jump in the Oklahoma state funding for transportation in the next five years, according to the Department of Transportation.

On average, the poor conditions of roads cost an Oklahoma driver $394 per year and an Arkansas driver $671. States with poor road conditions have a higher cost of driving per driver.

Meanwhile, one in three bridges in the US is in need of repair or replacement, according to the American Road & Transportation Builders Association. Similarly, 43% of all roads in the country are in poor condition.

"This funding will be used to improve and enhance our transportation system, which will increase the quality of life for everyone in Arkansas," the Arkansas Department of Transportation said in a statement provided to Yahoo Finance. "[It] will provide much-needed funding for improvement and support of our State Highway System. This funding will help us to take care of the existing system we have and it will allow us to plan for future projects that will provide additional economic benefits to the state."

As part of the funding for Arkansas and the "Safe Streets for All" program, investments will be directed toward entities that work towards mitigating rash driving, repairing roads and highways, and helping reduce traffic fatalities.

Although traffic fatalities declined in 2022 by 0.3%, a record 42,939 deaths were recorded in the US in 2021. An overdue update to the inspection standards of bridges is currently in development at The Department of Transportation. The new regulations will implement technological changes such as using unmanned aerial systems or drones, according to the Federal Highway Administration.

Aside from funding for transportation, the infrastructure bill also includes money to improve access to both clean water and internet access across the US.

A total of $73 billion is allocated for energy and power, $65 billion for broadband, and $55 billion for clean water. For energy and power, the bill will fund the national shift toward renewable energy, more electric vehicle charging stations, and improving natural gas infrastructure.

The $65 billion for better internet access, an initiative known as the "Internet for All" bill, will be used to boost fiber optic cable manufacturing and provide high-speed internet, according to the Department of Commerce. The high cost of internet has created a digital divide in the country as 24 million households live without reliable internet facilities.

There is also a clean water access gap in the country, with roughly 2.2 million households in America living without running water in their homes.

The highest amount of funding for clean water went to Montana at $3 billion. Montana has suffered a history of poor water quality in its waterways. In 2014, a report by the Montana Department of Environmental Quality highlighted that 125 bodies of water were polluted. More recently, dangerous lead levels were also found in the drinking water supply of state schools.

"In many Montana communities, aging infrastructure requires investment now to protect access to safe, clean drinking water," Chris Dorrington, director of the Montana Department of Environmental Quality, told Yahoo Finance. "This funding will help with those upgrades and reduce the risk of lead and emerging contaminants while reducing the out-of-pocket costs to Montanans."

Prior to Biden's large funding legislation, an infrastructure deficit or "infrastructure investment gap" was projected until 2039.

An infrastructure deficit occurs when there is long-term underinvestment and a lack of necessary levels of taxation by states to keep the infrastructure in good shape, according to Joseph Schofer.

"Public infrastructure needs to be maintained just like your car," Schofer said. "Deferral of maintenance leads to ever more costly problems, to the point where a rescue, like the [infrastructure act], is needed to get back to 'even.' Will we learn from this and do better at keeping up with the needs? If not, we’ll face another deficit down the line."

Yet, every aspect of America's infrastructure is crumbling, according to the American Society of Civil Engineers, which gave the US an overall "C-" grade to reflect the country's infrastructure.

Transit scored the lowest with a "D-", a grade unchanged since 2017 with a $176 billion unfunded maintenance backlog as of 2021, according to Michael Schipper, an engineer, author of the transit chapter in the 2021 Report Card for America's Infrastructure, and deputy general manager of the Greater Cleveland Regional Transit Authority. It's hoped that the bipartisan infrastructure bill will relieve some of that underfunded gap.

"Transit infrastructure has been underfunded at the federal, state, and local levels for decades, and suffers from years of deferred maintenance," Schipper told Yahoo Finance. "Much of the infrastructure was aging beyond its useful design life. Perhaps most importantly, 45% of Americans lack access to transit systems."

Schipper added that raising America's overall infrastructure grade will require further investment and leadership, combined with stricter safety standards, efficiency in spending the new funding, and implementing innovative technologies.

"The infrastructure law was a great step in the right direction, but we’ll need continued action on that scale to bring the grades to a point we’re happy with," he said.

—

Tanya is a data reporter for Yahoo Finance. Follow her on Twitter. @tanyakaushal00.

Click here for the latest economic news and economic indicators to help you in your investing decisions

Read the latest financial and business news from Yahoo Finance