Infrastructure Funding in the New Budget Environment.


Looking at grant expenditure by function and recipient, we see that the allocation of grant funds has shifted, while budgets for state and local governments have tightened. Overall grant outlays have more than doubled in nominal terms over the past 30 years, largely due to the growth in mandatory spending over that period --but that doesn't tell the full story Federal grants have received relatively consistent funding, but the proportion of grants that are directly received by state and local governments has shifted. State and local governments are receiving fewer transfers from the federal government as more funds are transferred to support citizens directly

Public net infrastructure investment has decreased noticeably since 2000. If they are to continue providing the essential development that supports a vibrant economy, state and local governments need consistent investment from their federal partner. Infrastructure directly affects the economic viability of individuals, businesses, and state and local governments, so falling too far behind on infrastructure investment could hinder overall economic growth on local, regional, and even national levels. According to the American Society of Civil Engineers, continuing the current trend of infrastructure investment would cost the U.S. GDP $3.9 trillion, along with $7 billion in business sales and 2.5 million American jobs.

All federal funds come with a mandate, but some have more narrowly defined purposes than others. For example, a portion of the Community Development Block Grant (CDBG) is transferred directly to states or local governments based on a formula that relies on population statistics. Once the funds have been distributed, the receiving entity has the authority to implement the funds at their discretion.

In contrast, the Federal Transit Authority's Better Utilizing Investments to Leverage Development (BUILD) grant, a program intended to fund infrastructure for transportation projects, has requirements for the size of the project, the amount of funds the local government contributes to the project, and whether or not the project has "a...

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