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TIGER Changes Its Stripes

By Jake Varn, Andy Winkler

Wednesday, April 11, 2018

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Beneath the noise of the never-ending Infrastructure Week, three important developments have affected a critical source of infrastructure funding, the Transportation Investment Generating Economic Recovery (TIGER) discretionary grant program:

  1. The White House again proposed eliminating it in its annual budget.
  2. DOT announced the latest TIGER recipients, with rural projects and road/bridge projects claiming a significantly larger share than past rounds of funding.
  3. Congress tripled TIGER’s appropriation for the next fiscal year in the omnibus spending bill.

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 wide authority in TIGER project selection to advance its priorities. This has implications not only for fulfilling the administration’s infrastructure plans, but also for the next round of TIGER funding and the program’s overall political sustainability moving forward.

TIGER’s Structure and Execution

Established in 2009 as a part of the economic stimulus package, TIGER grants are awarded to road, rail, transit, port, or multimodal projects that aim to:

  • 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, the Department of Transportation expects 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.

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 a “Cost Sharing or Matching” category, applicants can 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.

Recent Developments

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.

Summary of TIGER Grant Funding Rounds

RoundTotal FundingRecipientsAverage AwardRural Funding
TIGER I (2009)$1,498 million51$29.4 million$163 million (11%)
TIGER II (2010)*$557 million42$13.3 million$106 million (19%)
TIGER III (2011)$511 million46$11.1 million$128 million (25%)
TIGER IV (2012)$485 million47$10.3 million$116 million (24%)
TIGER V (2013)$458 million52$8.8 million$108 million (24%)
TIGER VI (2014)*$547 million41$13.3 million$131 million (24%)
TIGER VII (2015)$485 million39$12.4 million$181 million (37%)
TIGER VIII (2016)$485 million40$12.1 million$103 million (21%)
TIGER IX (2017)$487 million41$11.9 million$311 million (64%)
Source: Source: U.S. Department of Transportation and BPC analysis
* Includes capital construction grants but excludes planning grants

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.   

Source: U.S. Department of Transportation

Policy Implications and Outlook

As a matter of policy, these shifts in funding priorities are important for three reasons:

The next round of TIGER grants is set to have the largest pool of funding since the program’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. One may reasonably infer—particularly given recent comments by Chao—that the administration will again seek to direct funds toward rural communities and road projects. If so, rural communities should take notice.

The Trump administration may use existing programs to advance its infrastructure priorities. The public notice for TIGER IX and distribution of grants funds 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 have already been applied to the TIGER 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 TIGER program will be dependent on the program being perceived as 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 program is attempting to achieve both equity and the best outcomes, but without adequately providing the transparency to claim either. If the administration again distributes nearly two-thirds of TIGER funding to rural communities, it may have to defend how that allocation represents the best use of limited taxpayer dollars. The current lack of transparency around project selection makes that a difficult prospect and could undermine the program’s bipartisan support.

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, Congress should also expect a higher level of transparency and rigor in the project selection process.