There’s a long road ahead for the infrastructure bill to reach success

The Infrastructure Investment and Jobs Act is moving rapidly into implementation. Not surprisingly at this early stage, states, municipalities and cities are working hard to present their infrastructure funding priorities. Federal agencies are rapidly devising systems to determine how to allocate funds, where to direct them, how to access them and which projects to pursue.

In other words, infrastructure “czar” Mitch Landrieu has his work cut out for him. He is certainly eminently qualified — his experience as mayor of New Orleans during the recovery from Hurricane Katrina (and as Louisiana’s lieutenant governor during Katrina itself) was effectively a graduate course in the essentials of resilient infrastructure, the challenges of modernization and the consequences of infrastructure failure. And he does not lack support. He leads an oversight committee that includes Transportation Secretary Pete Buttigieg and Commerce Secretary Gina Raimondo, whose departments are responsible for a large proportion of the funding. A presidential advisory board will likely also help.

But the scale of the funding available through the infrastructure bill and the rapid pace of deployment present challenges. My conversations with mayors, governors and state and local agencies suggest that few of them have a full grasp on where to request funds or the processes and procedures for assigning funds to projects.

This initial confusion will certainly subside as Landrieu puts his team in place. But other pitfalls remain.

The first is the risk of excessive politicization of the funding process. My voice has been among those warning of a rush to allocate funds to shovel-ready projects and those that already have funding assigned to show fast results and score political points.

The second pitfall is the lack of a system. After we have funded those first projects, how do we determine which other projects merit funding, and at what level? Buttigieg has spoken of the need to favor “shovel-worthy” rather than shovel-ready initiatives — that is, the projects that will best contribute to competitiveness and long-term growth. He calls for a mix of investments — some supporting projects already underway and others favoring those that are entirely new. 

That is the right approach, a combination of the political and the strategic, the immediate and the long-term. But what determines those elements? Objective tests would greatly help evaluate potential infrastructure projects and gauge their impact.

But the concern here is there are no clear criteria, and those mentioned in the infrastructure bill are understandably but excessively broad. To ensure that the infrastructure program does not succumb to political influence from one administration to another, we need to quickly establish key parameters.

How to do that? I have called for the creation of an infrastructure bank that could also serve as a project clearinghouse and consulting resource to state and local governments. While such a bank was initially part of the infrastructure bill — it was removed at the last minute — it is not too late to create it and capitalize it with the right funding and resources. 

But in the immediate present, it will be necessary for Landrieu and the oversight committee — along with staffers from other federal agencies and from state and local government — to marshal data and look objectively at the potential return on investment for each infrastructure program they favor. This is what the project financing world does every day in analyzing infrastructure projects for equity and debt investors, including the tax-exempt municipal market, the largest funding source for municipal infrastructure projects outside of the federal government. 

There is a third pitfall: long-term maintenance. It is legitimate to say that funding should be directed not to maintenance but to new projects. But keep in mind that new projects have their own maintenance requirements. There is no such thing as self-sustaining infrastructure. Electric vehicle charging stations will not repair themselves. Landrieu and Buttigieg, as former mayors, know this — Buttigieg has spoken about maintenance as an infrastructure priority. 

Most of the maintenance expenditure will show up after these projects are built and after the infrastructure bill is fully exhausted. Thus, it will become an additional burden on the states and municipalities responsible for these assets. Funding these long-term requirements must be an important element of infrastructure strategy. Accounting for future budgetary needs — and in some cases introducing user fees to provide the projects a degree of financial self-discipline — must be among the criteria used to determine which projects to undertake. 

Finally, involving the private sector as a partner in the development of new projects, or upgrading existing ones such as airports or highways, could be a critical means of ensuring the long-term success of the infrastructure bill. “Private sector” refers not just to private capital but also to state pension funds that can play a critical role in funding and helping to manage state and local infrastructure projects. 

With these priorities in place — a focus on infrastructure investments that drive growth, a willingness to approach the challenge analytically and objectively, drawing on available expertise, and providing for maintenance in every new project — the implementation of the infrastructure bill will be well on its way to success. The next months are critical for this measure that we have fought so hard to enact. But if leaders like Landrieu and Buttigieg draw on their own extensive infrastructure experience, the bill will live up to its historic potential.  

Sadek Wahba is a member of the advisory council of the Wilson Center and a senior fellow at the Development Research Institute at NYU. He is also chairman of I Squared Capital. The views expressed do not necessarily reflect those of these organizations.