4. Federal Money
Between April 2020 and March 2021, Congress adopted assistance and economic stimulus packages that delivered more than $500 billion to state and local governments. From those packages, most states’ share of the $1.9 trillion American Rescue Plan Act (ARPA) money remains unspent. While lawmakers in some states are meeting in special sessions this fall to approve spending requests, most will do so in 2022 sessions.
Because of the federal assistance packages, however, most lawmakers across the country will go into 2022 sessions with budget surpluses. Lobbyists across state capitols cite three emphases gaining traction in how to invest ARPA money: Workforce development, behavioral/mental health, and affordable housing.
5. Infrastructure
More federal money is coming to state capitols in 2022 via the five-year, $1.2 trillion Build Back Better (BBB) infrastructure bill approved by the U.S. Senate in August but hung up in the House. Regardless of which version is adopted, states can expect a significant infusion of federal money for projects that meet a broadened definition of what constitutes infrastructure.
While the federal bill earmarks $621 billion for traditional concrete-and-rebar projects — such as road building, and upgrades in mass transit, utility, and water quality systems — even the more conservative Senate-adopted BBB sets aside hundreds of billions for “resiliency,” broadband accessibility, cybersecurity, and energy policy.
Once the federal infrastructure package is adopted, state transportation agencies will coordinate with congressional offices, governor’s offices, and regional, county, and municipal transportation planning boards to overlay “new” federal dollars into existing plans and projects to get the best bang for their one-time BBB buck.
Ultimately, at the end of 2022 sessions, those synthesized plans synchronized to funnel federal funding into projects and plans will migrate through chamber committees and evolve until adopted by legislatures across the country. These are among the infrastructure issues those plans will address:
Public Transit
The bill earmarks at least $85 billion in mass transit. New York, New Jersey, and Connecticut are expected to receive $15.2 billion based on a funding formula established under the 2015 FAST Act that enhances grants for areas with the best access to public transit.
Ferries
The bill earmarks $1 billion for the Alaska Marine Highway System to develop ferry systems that can reach rural communities and $15 million for Rhode Island’s ferry system to expand connections to port towns.
Bridge/road deferred maintenance/upgrades
The plan earmarks $115 billion to upgrade 20,000 miles of highways, roads, and streets, and fully repair the “10 most economically significant bridges in the country” and the worst 10,000 smaller bridges.
Economic displacement recovery
The bill includes $20 billion for “connecting neighborhoods historically cut off by investments” in public works, such as the placement of interstate highways through communities usually predominantly populated by minorities.
Passenger rail
The infrastructure bill includes $80 billion for Amtrak’s Northeast Corridor and improvement grants for a backlog of Amtrak repairs and route expansions. Lawmakers in several states have large-rail projects that could tap into this fund, including California, New Jersey, Minnesota, Louisiana, Oregon, and Virginia
Cybersecurity
The pending federal infrastructure package does not directly address cybersecurity but enables upgrades by providing funds for modernizing electrical grids, plugging supply chain vulnerabilities, and supporting research on artificial intelligence and quantum computing.
However, lawmakers in many states will still have federal funding at their disposal for cybersecurity initiatives from ARPA, which earmarked $650 million for "cybersecurity risk mitigation" as well as $1 billion for the General Services Administration to spend on federal IT modernization projects.
Resiliency
The proposed federal infrastructure bill includes $50 billion for "infrastructure resilience," which includes projects designed to strengthen electrical grids, food systems, urban infrastructure, and community health and hospitals from natural disasters, power disruption, cyberthreats, and ransomware attacks.
Electric vehicles
As much as $174 billion could be made available for building infrastructure to accommodate electric vehicles through the proposed federal infrastructure package.
The aim is to build a network of 500,000 electric vehicle stations, using electric vehicles in bus fleets, and replacing the federal government's fleet of diesel transit vehicles with electric vehicles. It would also offer tax incentives and rebates for electric cars. State lawmakers will be looking to tap into the fund to augment their own EV plans. Among them: California, Connecticut, New Jersey, and Florida.
Broadband
Lawmakers in at least 43 states and 98 counties and cities are planning or considering projects to expand broadband internet access by tapping into a $10 billion fund for states to use on broadband, digital connectivity devices, and multi-purpose community facilities that directly enable work, education and health monitoring.
Under the bill, states will be eligible to tap into the fund to secure $100 million allocations to improve broadband infrastructure, especially in rural areas.
Energy policy
President Joe Biden’s energy policy is for the nation to be carbon-free by 2050. Among the ways the proposed infrastructure bill seeks to make that happen is by restoring up to $300 billion in production tax credits (PTC) and investment tax credits (ITC) for clean electricity, including solar; a $100 billion, eight-year plan to modernize the nation’s electricity sector with the goal of achieving a 100 percent carbon-free grid by 2035; and with $100 million in funding earmarked for “transformative clean energy technology research and development.”
The goals and funding outlined in the proposed federal infrastructure package could be dovetailed into legislation to mitigate greenhouse gas (GHG) emissions adopted by at least 16 states and Puerto Rico and through executive orders by the governors of New Mexico, North Carolina, and Pennsylvania.
Thirteen Northeast and mid-Atlantic states and the District of Columbia have entered into a regional initiative called the Transportation Climate Initiative (TCI) to improve transportation, develop a clean energy economy and reduce carbon emissions from the transportation sector. In addition to D.C., member states include Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, and Virginia.
Some energy transition initiatives will be fiercely fought at the state level, especially in oil-generating states such as Louisiana, Texas, and Wyoming.
Wind farms
The proposed infrastructure package will open new tracts for leasing in 2025 to wind farm developers in seven areas off the Atlantic and Pacific coasts and in the Gulf of Mexico to generate 30 gigawatts of electricity by 2030, enough to power more than 10 million homes and create 77,000 jobs.
The plan includes $3 billion in federal loan guarantees and upgrades to ports in Maine, New York, the mid-Atlantic, the Carolinas, California, Oregon, and the Gulf of Mexico. The leases can be administered through executive action without Congressional approval.