This post has been updated.
Beneath the noise of the never-ending Infrastructure Week, four important developments have affected a critical source of infrastructure funding, the Transportation Investment Generating Economic Recovery (TIGER) discretionary grant program:
- The White House again proposed eliminating it in its annual budget.
- DOT announced the latest TIGER recipients, with rural projects and road/bridge projects claiming a significantly larger share than past rounds of funding.
- Congress tripled TIGER’s appropriation for the fiscal year 2018 in the omnibus spending bill.
- DOT rebranded TIGER as the Better Utilizing Investments to Leverage Development (BUILD) program, releasing updated criteria for 2018 funding applicants.
Evident in these developments is a clear shift in the type of projects selected and a stark difference of opinion among policymakers regarding TIGER’s value and its objectives. With its infrastructure proposal twisting in the wind, the Trump administration has used its broad authority in TIGER project selection to advance its priorities and has now changed the program’s name and, potentially, its objectives. Congress’s reaction to these changes will determine TIGER/BUILD’s future.
TIGER’s Structure and Execution
Since its inception in 2009 as a part of the economic stimulus package, TIGER grants have been evaluated and awarded to road, rail, transit, port, or multimodal projects according to how they further these key aims:
- Improve public health and safety;
- Maintain a state of good repair;
- Facilitate economic growth or competitiveness;
- Improve energy efficiency and environmental sustainability; and
- Increase quality of life and access to essential services.
Along with considering how applicants further those objectives, DOT has expected applicants to demonstrate that their projects are innovative, have strong partnerships and collaboration with stakeholders, are ready to start soon and complete the project within a few years, and have a positive benefit-cost ratio.
Along with other changes, the rebranding of TIGER as BUILD has adjusted these principles to prioritize the applicants’ share of non-federal revenue in covering project costs.
Source: U.S. Department of Transportation
|Primary Criteria<br /> • Saftey<br /> • State of Good Repair<br /> • Economic Competitiveness<br /> • Environmental Sustainability <br /> • Quality of Life<br /> <br /> Secondary Criteria <br /> • Innovation<br /> • Partnership<br /> <br /> Other Criteria<br /> • Demonstrated Project Readiness<br /> • Project Costs and Benefits<br /> • Cost Sharing or Matching<br /> <br /> Additional Considerations<br /> • Geographic Diversity Among Recipients<br />||Selection Criteria<br /> • Safety<br /> • State of Good Repair<br /> • Economic Competitiveness<br /> • Environmental Protection <br /> • Quality of Life<br /> • Innovation<br /> • Partnership<br /> • Non-Federal Revenue for Transportation Infrastructure Investment<br /> <br /> <br /> Other Criteria<br /> • Demonstrated Project Readiness<br /> • Project Costs and Benefits<br /> <br /> <br /> Additional Considerations<br /> • Geographic Diversity Among Recipients<br />|
TIGER grants may be used for up to 80 percent of the costs of projects located in urban areas and up to 100 percent of the costs of projects in rural areas. But under the previous “Cost Sharing or Matching” category, applicants could increase their competitiveness by securing self-sustaining revenues and “demonstrating significant non-federal financial contributions.”
Though this lengthy mix of requirements might suggest otherwise, Congress has given DOT a great deal of latitude in the project selection process. The majority of these requirements have been adopted administratively. For example, DOT requires project benefit-cost analyses, but does not use them to objectively or transparently rate applications. In fact, a DOT Inspector General audit questioned how such analyses are evaluated, noting that, after fiscal year 2016, a lack of economic benefit did not automatically disqualify projects from advancing in the selection process. A host of criteria are considered in the initial evaluation process by a technical review team. Yet ultimately, applications are simply categorized along a scale that ranges from “Not Recommended” to “Highly Recommended,” and then all final funding decisions lie with the secretary’s office. A 2014 Government Accountability Office report highlighted the ambiguity inherent in this process, calling on DOT to demonstrate precisely how applications are evaluated and better document final selection.
DOT’s flexibility in dispensing grant awards is further apparent when looking at recipients. DOT has been statutorily required to disperse TIGER funds geographically across the country and balance the needs of rural and urban areas. In the past, this has included a minimum allocation of 20 percent of overall funding to rural communities, perhaps reflecting the roughly 20 percent of Americans that live in rural communities. For the next round of funding, the minimum allocation to rural communities was bumped up to 30 percent. Otherwise, Congress has not been prescriptive about how the program most appropriately balances rural and urban interests?or to what degree benefit-cost considerations should dictate the allocation of funds. Given the program’s discretionary nature, a somewhat even or representative geographic or urban/rural distribution makes political sense to sustain public and congressional support for the program.
In March, DOT released the list of grants for their 2017 round of funding (TIGER IX). Importantly, this latest round of funded projects shows a striking shift in project selection toward rural projects and road/bridge projects.
This shift wasn’t wholly unexpected; the government had already announced that “special consideration” would be given to qualifying projects in rural communities. Still, as with nearly all previous rounds of TIGER funding, rural and urban projects were about evenly represented in the pool of applicants. However, 12 percent of all rural applicants were ultimately awarded a TIGER grant this round while only 6 percent of urban applicants received awards. In the previous eight rounds of funding, 4 percent of rural applicants and 7 percent of urban applicants received funding on average.
Of the selected projects in TIGER IX, 64 percent were from rural areas, accounting for $311 million of the $487 million awarded. Meanwhile, around 77 percent were for a road project and only 4 percent were for transit projects. When questioned about these shifts, Transportation Secretary Elaine Chao said, “It’s clear that rural America has been neglected.” She remarked that DOT will be seeking “equity” and “parity” in the future distribution of funds. The distribution of projects DOT selected in TIGER IX were a sneak peek of the policy shifts announced in BUILD.
Policy Implications and Outlook
As a matter of policy, these shifts in funding priorities are important for three reasons:
The application process is now open for BUILD grants, with awards being allocated from the largest pool of funding since TIGER’s inception. As mentioned, Congress has tripled its appropriation to the TIGER program in the recent omnibus spending package and will soon be holding hearings to decide how to appropriate funds for the next fiscal year. With the changes in the BUILD rebrand, the administration formally announced that it will direct “a greater share” of funds toward projects in rural communities over equally qualified urban projects.
The Trump administration is using existing programs to advance its infrastructure priorities. The distribution of TIGER IX funds and the BUILD changes reflect many of the priorities in the administration’s infrastructure legislative outline?specifically more funding for rural communities, with fewer strings attached, and the creation of a new “Incentive Fund.” For the latter, the administration planned to award projects that bring self-sustaining revenues to the table?perhaps through new local taxes, user fees, or a public-private partnership?and therefore require less federal funding as a share of projects costs. As mentioned above, both the rural focus and the emphasis on a lower federal cost-share for infrastructure funding were applied to the last round of TIGER funding and the new BUILD program.
Aiming for more rural funding and a lower federal cost-share can be a slight contradiction; rural projects typically require a higher level of federal funding than urban projects. This contradiction was apparent in the TIGER IX funding round. With more rural projects, TIGER IX funding represented 52 percent of all projects’ costs. Only projects in the TIGER V round (2013) had a higher ratio of TIGER funding to total project costs.
Political support for the program has been mixed. President Trump’s past two budgets requested that Congress defund the TIGER grant program, stating that awarded projects are “generally eligible for funding under other programs.” Given the tripling of the TIGER grant program in the recent omnibus appropriations agreement, most members of Congress clearly disagree. However, continued bipartisan support for the program will be dependent on the program being perceived fair, equitable, and a good investment. Federal transportation funding has typically taken one of two approaches: a painstakingly negotiated formula model, which distributes money among the states; or a performance and outcomes based model, which seeks to support high-value projects. Currently, the TIGER/BUILD program is attempting to achieve both equity and the best outcomes, but without adequately providing the transparency to claim either.
With $1.5 billion to distribute, DOT will have to defend how its allocation of BUILD grants represents the best use of limited taxpayer dollars. The lack of transparency around project selection will make that a difficult prospect and could undermine the program’s bipartisan support.
In fact, two of TIGER’s key Senate appropriators (and architects of the original legislation) have already voiced their displeasure. In a bipartisan letter to DOT, Sen. Susan Collins (R-ME) and Sen. Jack Reed (D-RI) expressed concern that the BUILD program’s new criteria?such as the emphasis on non-federal revenues?will diminish the program’s effectiveness and “have not been agreed to or voted on by Congress.”
With additional funding, DOT will now have an even larger role in shaping the country’s infrastructure investments. With more funding should come greater responsibility. Given the country’s fiscal outlook, whether the program is called TIGER or BUILD, Congress should expect a higher level of transparency and rigor in the project selection process.