Congress likely to scrutinize competitive grant process in next transportation bill

The Infrastructure Investment and Jobs Act’s emphasis on competitive grant programs to fund transportation projects, which marked a major policy shift, will likely come under scrutiny next year as Congress begins to craft the next surface transportation bill.

Lawmakers will “want to look at what was working well with the Bipartisan Infrastructure Law and how to make it better,” said Jordan Baugh, senior policy advisor for Sen. Tom Carper, D-Del., chair of the Senate Energy and Public Works Committee, one of four Senate committees that share jurisdiction over surface transportation. Baugh made the comments Tuesday at the National Conference of State Legislatures’ Legislative Summit.

For the first time with the IIJA, also known as the Bipartisan Infrastructure Law, Congress “did something different – we opened up grant opportunities to local governments and metropolitan planning organizations that had not always had the ability to directly apply” for federal funds, Baugh said. “Many have been very popular; some have had difficulties with rollout and implementation,” he said. “The discretionary grant programs will get a lot of scrutiny.”

IIJA funding will expire at the end of 2026, and Congress is expected to take up reauthorization next year. The law for the first time handed out billions of dollars through competitive grant programs for local governments to fund transportation projects, as opposed to the traditional use of formula funds that flow through the states.

The $1.2 trillion IIJA allocated $196 billion for up to 75 new and existing competitive grant programs, making up 30% of the law.

The programs have been the target of criticism from Republican lawmakers as well as some state and local officials who have a litany of complaints, including an overly competitive process; confusing criteria; delays between grant announcement and actual funding; lack of feedback; and the disadvantage facing smaller governments who lack grant expertise.

For Congress and the Biden administration, grant programs allow for a degree of control over what projects get funded, similar to the use of earmarks, which are no longer used in the transportation bill, Baugh said.

“When Congress stopped providing earmarks in transportation bills, that is when we started to see more of a proliferation of discretionary grant programs,” Baugh said. The grants allow the funds to be “directed to certain policy ends and goals … and preserve some of that ability of the administration and Congress to direct where some of the priorities are.”

As a representative of state transportation departments, the American Association of State Highway and Transportation Officials generally favors formula funding through states over heavy use of discretionary grant programs, said Susan Howard, AASHTO’s director of policy and government relations, who spoke on the panel.

“We strongly believe that formula dollars are the best way to get the program implemented,” Howard said. “We have seen a lot of challenges with the discretionary grant process.”

States often work with local governments to help them with the grant process, but even some states are questioning “is it worth going for this grant or do we just rely on formula [funds] to get it done over time,” she said.  

One solution in the next bill could be to combine smaller grant programs to streamline the process, much like the DOT has done with its popular Mega, Infra, and Rural grants, Baugh said.

“That might make it easier because you’re not applying for 15 different grants and also it could give some flexibility, so that you’re making the process as easy as possible for local governments,” he said.