On October 3rd, 2022, the Federal Highway Administration (FHWA) announced a $59.9 billion investment into the nation’s infrastructure for Fiscal Year 2023 under the Infrastructure Investment and Jobs Act (IIJA). This infrastructure formula funding is an increase of $15.4 billion from 2021, which was the last year before funding allotments became available from the IIJA. America’s roads and bridges are “vital arteries” of our transportation system. Distributing the IIJA funding to all 50 states, as well as Puerto Rico and the District of Columbia, will ensure our transportation system can continue to connect people and goods across the U.S.
Improving transportation infrastructure with the IIJA
Acting Federal Highway Administrator Stephanie Pollack remarked, “These historic investments in American infrastructure give States the flexibility they need to determine how to allocate funds in order to replace deficient bridges, improve safety for all road users, and reduce carbon emissions by improving transportation infrastructure for communities throughout each state.”
The nearly $60 billion funding is applied toward rebuilding roads, bridges, and tunnels, reducing carbon emissions, and safety improvements. This apportionment funds 12 programs - including 3 new programs, and significantly increasing funding on 6 legacy programs.
These new programs are included in the new funding:
- Carbon Reduction Program, providing project funding with a goal to reduce transportation emissions such as transportation electrification infrastructure projects, vehicle-to-infrastructure communications equipment, and deployment of alternative fuel vehicle infrastructure. Funding can also be used to support the development of state carbon reduction strategies.
- Promoting Resilient Operations for Transformative, Efficient, and Cost Saving Transportation Formula Program (PROTECT), which will support projects that help “make surface transportation more resilient to natural hazards” through planning and resilience improvement projects.
- National Electric Vehicle (EV) Infrastructure Formula Program provides funding for EV charging infrastructure, including data collection, access, and reliability, helping to set a foundation for a future zero-carbon emission world.
These legacy programs are also included in the funding:
- Bridge Formula Program, with a 391% funding increase over FY21
- Appalachian Development Highway System, with a 146% funding increase over FY21
- Highway Safety Improvement Program, with a 26% funding increase over FY21
- Metropolitan Planning Program, with a 25% funding increase over FY21
- National Highway Performance Program, with a 20% funding increase over FY21
- Surface Transportation Block Grant Program, with a 16% funding increase over FY21
Each state receives funding from the Infrastructure Investment and Jobs Act (IIJA)
Funding from this infrastructure bill will be sent directly to all 50 states, as well as the District of Columbia and Puerto Rico using formula grants.
With formula, or formulaic grants, USDOT distributes funds directly to states, transit agencies, and tribal recipients. Each state receives a portion of the almost $60 billion funds, calculated by Congress. Specifically, it is determined by multiplying the total amount available by the ratio of that State’s FY 2021 combined amount of apportionments to the total FY 2021 combined amount of apportionments for all States.
IIJA funding gets sent to each state annually using the Congressionally mandated formulas.
To view the funding by state and program, FHWA’s Bipartisan Infrastructure Law Funding page has the details.
Other federal government support in 2023 for the construction industry
In addition to owners being able to use IIJA funding for digital transformation and funding for a wide range of infrastructure projects, the IIJA isn’t the only bill the Federal government has in store for helping the construction industry in 2023.
The CHIPS and Science Act is an investment intended to increase the production of semiconductors and build computer chip plants in the U.S., while working through supply chain vulnerabilities. The Act also provides a 25% tax credit for building and equipping computer chip plants in America.
The Inflation Reduction Act (IRA) also contributes to supporting the construction industry into 2023, by extending energy-related tax breaks for energy efficient commercial buildings.
Richard Branch, chief economist at Dodge, speculates, “The funds provided to the construction industry through the Infrastructure Investment and Jobs Act, the CHIPS and Science Act and the Inflation Reduction Act will counter the downturn allowing the construction [industry] to tread water,” said Branch. “During the Great Recession, there was no place to find solace in construction activity — 2023 will be quite different.”