Most people love infrastructure projects, and sometimes the bigger the better. But big capital projects — whether it’s building a new subway, a hospital, or an aircraft carrier — take time, and sometimes it’s a lot of time. Monthly financial reports indicate that the current fiscal year (2024) is the tipping point when the massive funding increases the 2021 infrastructure bill provides for highway and public transit spending really start flowing out of the U.S. Treasury.
That law (the Infrastructure Investment and Jobs Act, or IIJA) went into effect in mid-November 2021, six months after the start of fiscal year 2022, and provided a massive increase in budget authority for all types of federal infrastructure programs starting that year. Highway Trust Fund programs received immediate increases of 24 percent for Highway Account programs and 32 percent for Mass Transit Accounts, with subsequent increases in the range of 2 to 3 percent per year.
| Contracting Authority for the Total New Highway Trust Fund | |||||
| Financial year 2021 | FY22 | Financial year 23 | Fiscal year 24 | ||
| Motorway account | |||||
| Total new authorization | 48,558 | 60,036 | 61,369 | 62,740 | |
| Increase compared to the previous year | +11,478 | +1,333 | +1,371 | ||
| +23.6% | +2.2% | +2.2% | |||
| Mass transport account | |||||
| Total new authorization | 10,150 | 13,355 | 13,634 | 13,990 | |
| Increase compared to the previous year | +3,205 | +279 | +356 | ||
| +31.6% | +2.1% | +2.6% | |||
Contract authority (a form of budget authority) is simply permission for the federal government to make a legally binding commitment to pay money to someone, somewhere, at some point. These commitments are then delayed because, unlike almost all other government programs, the trust fund is subject to an annual cap on total commitments in the annual funding authorization act (in fact, Permit No. 2 is required to draw on Permit No. 1). Eventually, contracts are signed, funds are committed, and projects are implemented, and at the end, the U.S. Treasury writes a check or makes a wire transfer to a state or local grant partner to compensate them for the work done.
All of this takes time. Several years, to be exact. For example, according to usaspending.gov, two of the three largest checks written to the Transit Formula Grants account so far in fiscal year 2024 are to New Jersey Transit, for contract authority issued in fiscal year 2021 ($319 million) and fiscal year 2022 ($292 million). Overall, trust fund spending (the cash repayments to states and localities) actually decreased in 2022 compared to 2021, due to this time lag (and the aftereffects of short-term COVID aid temporarily crowding out long-term capital aid).
For the first ten months of the current fiscal year 2024 (October 1, 2023 to July 31, 2024), spending from the Trust Fund’s Highway Account is 20 percent higher than it was for the tenth month of fiscal year 2021, the year before the IIJA. And spending from the Mass Transit Account is up 49 percent compared to fiscal year 2021 (though in this case, the 2021 level has suffered much more from the shift in COVID relief than the Highway Account).
| Total financial expenditures from the Highway Trust Fund in the first ten months of the fiscal year | |||||
| Financial year 2021 | FY22 | Financial year 23 | Fiscal year 24 | ||
| Motorway account | |||||
| Total new authorization | 35,119 | 33,560 | 37,564 | 42,146 | |
| Increase compared to the previous year | -1,559 | +4,004 | +4.582 | ||
| -4.4% | +11.9% | +12.2% | |||
| Mass transport account | |||||
| Total new authorization | 6,208 | 5,517 | 7,491 | 9,256 | |
| Increase compared to the previous year | -691 | +1,974 | +1,765 | ||
| -11.1% | +35.8% | +23.6% | |||
In absolute terms, these figures will be significantly higher, particularly in the motorway account, where construction is carried out exclusively outdoors and where, accordingly, most construction work is carried out and expenditure is highest in the months of August, September and October.
Monthly spending is graphed below (public transit spending is not as subject to seasonal fluctuations because a far greater share of that money is spent on purchasing things like buses and railroad cars, which are made in covered factories that don’t close even in cold weather).
(Why are we focusing on the trust fund, you ask? Because most general fund accounts don’t report monthly spending. Usaspending.gov reports all federal spending accounts quarterly, and USDOT reports biweekly cumulatively (for FY 2022-2024 total) for IIJA stuff, but neither is suitable for this purpose. The monthly financial statement is almost useless for most of the DOT’s transportation modes—they still report monthly spending on Amtrak accounts, which Congress stopped funding in 2016, but lump everything else into one big total at the Federal Railroad Administration. Meanwhile, the Federal Highway Administration conveniently updates Table FE-1 every month, which contains monthly trust fund spending since 2008.)
