Much like the 4000-year-old Indian parable of the blind men and the elephant, what you see in the much ballyhooed federal infrastructure law passed last year, will depend on what part of it touches your business.
If you are in the underground construction game, nationally you will see an additional $50+ billion funneling into the state revolving funds (SRF) for water, sewer, plus lead pipe replacement and, as we have been reporting lately, broadband fiber optic cable expansion.
If you are in the highway construction market, across the country you’ll see $284 billion in “transportation spending,” including projects including airports, buses and commuter trains, electric vehicle charging stations, ports, waterways, and road/street safety projects. Around $110 billion of that total is for road, bridge and local street projects which includes a billion to start knitting back together local communities separated by freeways in the 50s, 60s and 70s.
As strange as it may seem to Californians, you might even see new opportunities for repairing, replacing, and even building new dams if you are into heavy civil projects.
If you are part of the Biden Administration and the progressive wing of Congress, you see this money flowing swiftly into all the above plus environmental justice and regular old environmental Improvements to put a stop to climate change worries.
This isn’t the “stimulus” bill banged together in 2009, complete with non-existent “shovel-ready” projects. President Biden couldn’t help waxing nostalgic at the press conference following the bill signing on November 15th, when he said the public would see action soon, “within the next two to three months as we get shovels into the ground.”
Five Will Get You Ten
Like the blind men in the parable, a person with sight will note that while the blind men correctly describe each part of the beast, the sum of the parts is less than the whole. It is also important to note that the elephant isn’t as big as you might think.
This time around the money spreads over multi-year increments—five years for most work and as much as ten years for mega projects. For each of the funding buckets headlined in the Infrastructure Investment and Jobs Act, (IIJA), there are state agencies with buckets at the other end.
What It Means for Water and Sewer Work
According to the numbers released by the federal Environmental Protection Agency in December, the State Water Resources Control Board (SWRCB) will receive $609,441,000 this year. California’s cut is 12 percent of the new funding, with 50 states, plus tribes and territories getting a total of $7,420,806,000 for the fiscal year 2021-22.
The state will take that money and spread it through the Clean Water SRF (sewers) and the Drinking Water SRF programs. For the last year with complete financial information, the SWRCB provided approximately $599 million in new CWSRF financing to 23 projects in the fiscal year 2019-20 and approximately $147.4 million in new DWSRF financing for 34 planning and construction projects. There is a bit of a backlog at the agency as the number of projects funded rounded out to about ten percent of the project applications received for that year.
Assuming SWRCB employees were working at top efficiency in 2019-2020, it is unlikely that they can increase their productivity by 80 percent to process all the paper (or electrons) needed to add another 60 or so funded projects. Hiring new workers is hard in the Age of Covid so don’t expect high-speed funding on water work.
Similar Worries for Highway, Bridge & Streets
California’s share of the traditional infrastructure package of roads and bridges filters through the time-consuming Caltrans and California Transportation Commission processes. Under the IIJA that funding should increase by about four plus billion per budget cycle, which is what Governor Newsom is recommending this fiscal year.
Even with the state running budget surpluses of up to $45 billion this year, transportation gets a diminishing percentage of the budget funding unless you count, like the Governor does, $6.1 billion in General Fund money for electric trucks, school buses, heavy-duty vehicles, and 100,000 new charging stations as transportation projects.
Even worse, the Governor is proposing to halt the inflation adjusted increase to the SB 1 tax scheduled for July 1. This breaks faith with the construction industry which worked for years to reach the deal that SB 1 represents. It certainly doesn’t do anything to cut into the existing $61.5 billion in deferred maintenance of our Golden roads and bridges.