Unless they appoint infrastructure coordinators — or czars — state and local governments risk squandering their shares of the trillions in public works money coming their way under the landmark Bipartisan Infrastructure Law, a new report from McKinsey & Co. warns.
Why it matters: Because of the historic opportunity to make huge and lasting improvements, the Biden administration has urged each state to name a point person and task force to administer the law, passed in November, which targets everything from clean water and high-speed internet access to bridge and road repair and public transportation.
- But so far only a handful of states, like Delaware, Arkansas and New Mexico, have done anything of the sort.
Driving the news: McKinsey says each state needs a centralized and highly coordinated effort to manage the massive amount of money headed its way — and to grab as much of the unassigned pie as possible.
- While 60% of the funds will be allotted to states through set formulas, the rest will come through competitive grants, loans and federal programs, McKinsey says.
- Unlike the American Rescue Plan — which sought to push out aid quickly through formula-based allocations — the infrastructure law "creates a large and more complex funding environment with multiple potential applicants and detailed eligibility requirements."
By the numbers: The $1.2 trillion infrastructure law includes $550 billion in new-program spending for state and local governments.
Where it stands: President Biden's own infrastructure czar, Mitch Landrieu — a former mayor of New Orleans — sent letters in January to all 50 governors imploring them to name dedicated task forces that would include a chief point person.
- "We know that needs, capacity, and challenges can vary widely by locality," the letter said, per CNN.
- "We need to make sure our programs reflect these realities across your state and our country, and having a senior, single point of contact in your office will help ensure that issues get elevated appropriately and rapidly."
McKinsey's report amplifies these points and emphasizes the challenges that states and large cities will face:
- Unprecedented levels of funding: "Some programs, such as the Drinking Water State Revolving Fund will receive more funding in the next five years ($30 billion) than in the previous 25 years combined ($25 billion)," McKinsey says.
- New energy technology requirements: "For example, in addition to determining the locations for electric-vehicle charging infrastructure, the law requires states to establish interconnected networks — an undertaking that requires building architecture, a technology stack, an operations plan, and a clear set of goals."
- Many stakeholders to coordinate, often with competing priorities.
- For many programs, states are required to match 10%-40% of the total award.
- High labor and supply chain costs.
There are also domestic production requirements to comply with: The law "expands Buy America requirements for federally funded infrastructure projects to cover most construction materials," per McKinsey.
What they're saying: "This is not a stimulus package the way that some previous things have been — both for COVID and if you go back to the 2009 economic stimulus package," Delaware's infrastructure coordinator, Greg Patterson, told Delaware Public Media.
- “This is an infrastructure investment. These are projects that are going to take years to plan and to implement but that will make a difference for generations."
Cautionary tale: The New York Times reported this week that $1.9 trillion being spent in communities through the American Rescue Plan "has barely registered with voters."
