AUSTIN — Texas will only benefit from the federal Infrastructure Investment and Jobs Act, state economists said, but when and by how much will not be known for years.
The bill, initially introduced at $6 trillion, was reduced to a final $1.2 trillion when passed in Congress on Nov. 5. Of the total, Texas is slated to receive approximately $35.44 billion with money earmarked for highways and bridges, broadband access and clean drinking water, among others, according to White House estimates.
Pia Orrenius, vice president and senior economist for the Federal Reserve Bank of Dallas, said the funding will only help the Texas economy continue to flourish, stating that the investments will raise the growth rate which in turn increases output in the economy.
She added that the extent that it increases productivity could also lead to wage increases for workers.
“Generally, in economics, we view infrastructure spending as a very positive form of federal spending,” Orrenius said. “When infrastructure is improved, that increases the efficiency of the economy and the productivity of the economy.”
The bill also promises new jobs with the White House projecting to add, on average, about 2 million jobs per year over the coming decade.
Orrenius said that if there was one snag that could come from the infrastructure bill, it is its reliance on labor availability and smooth supply chains, both of which are currently seeing difficulties. She added that this is only an issue if it is still occurring when the money is distributed and projects begin—which she predicts is still a year out, at the earliest.
The increasing costs of supplies could also mean dollars will not go as far, she said.
“There's really no negative that I could think of in terms of investing in infrastructure,” Orrenius said. “It’s a long run investment in the capital stock of the country—that increases productivity.”
Mike Davis, a clinical professor of economics at Southern Methodist University, is more hesitant of guaranteed benefits saying as far as he could tell, the decisions on funding allotments were not done with any cost-benefit analysis or planned with specific projects in mind. Instead, Congress identified a dollar amount and then decided how to divide it.
Nonetheless, Davis agrees that compared to other stimulus package options, infrastructure is an investment that can be seen and that’s a benefit—but who, where and what remains to be answered.
“There was not careful and considered project analysis, certainly not on a project by project basis,” Davis said. “That's why it's so hard to even speak to the economic consequences of this because we don't know yet.”
President Joe Biden is expected to sign the bill into law on Monday.
The bill allotted funding for specific sectors including improvements to transportation infrastructure.
Texas is slated to receive approximately $26.9 billion for highways and bridges, as well as additional funding for public transit, aviation and passenger rails. And the state’s roads are ready for updates.
In an infrastructure condition report by the American Society of Civil Engineers, Texas received a D-plus on its highways and roads, and a B-minus for its bridges. Overall, the state received a C.
From 2010-2016, daily vehicle travel rose nearly 16% with many motorists seeing an increase in delay, limited roadway capacities and deteriorating conditions, the report said. Much of the congestion can be attributed to the high population growth with the state adding approximately 4 million residents over the last decade. This led to the average Texan spending 54 hours in traffic at a cost of $1,080 annually, it said.
“Texas’ highway network is the nation’s largest and critical to our economy,” the report said. “The state’s economic growth depends on the efficiency, reliability, and safety of our highway system, supporting individual mobility, commerce, and industry needs,” the report said.
Texas Department of Transportation Director of Communications Bob Kaufman said the department did not yet know exactly which projects will get additional funding, but it is likely TxDOT could use it to move forward projects already in various phases of development.
“With our state’s population booming, funding for transportation is as vital as ever,” Kaufman said. "The infrastructure bill passed by Congress will help address transportation needs in Texas as the state could receive nearly $1 billion per year of additional funding for project development, construction and improvements to our roads and bridges over the next 5 years.”
THE DIGITAL DIVIDE
The bill also dedicated $65 billion for improved broadband access. Each state is slated to receive a minimum of $100 million with more given to states with greater needs.
State Program Director for Connected Nation Texas Jennifer Harris said she anticipates Texas will receive “much, much more” than the initial allotment, based on the formula laid out in the bill.
“This level of funding for broadband is unprecedented; it's going to impact Texas in ways that federal initiatives on broadband never have previously,” Harris said. “We are in a once-in-a-generation, once-in-a-lifetime type opportunity as far as broadband.”
The bill secures funding for unserved communities ensuring there is connectivity directly available in homes and businesses, as well as connectivity from city to city and town to town, Harris said.
Inadequate broadband access is an issue seen across the county but Texas is in a unique situation because of its size, Harris added.
“We have more road miles than any other state meaning we will need more miles of infrastructure to reach homes and businesses than any other state,” she said.
The state also struggles with adoption, where 96% of Texans have the physical capability to have broadband internet with a 25 megabit per second download and three megabit per second upload speed, yet pre-COVID just under 68% of Texans were subscribing to fixed broadband at home, according to American Community Survey data.
“[Texas] ranks 35th among states and territories when it comes to subscribing to broadband meaning that along with infrastructure, we have many other barriers including affordability, access to devices, and a lack of digital skills that are barriers to having broadband in every home and business,” Harris said.
To help address these issues, the 87th legislative session passed House Bill 5—which created the Texas Broadband Office.
The office is dedicated to creating a broadband map indicating areas eligible for financial assistance; setting an effective threshold speed for broadband service in underserved areas; and creating a state broadband plan, among other duties, according to its website. It was officially established Sept. 1.
Harris said she believes the formation of the TBO as well as the federal funding is moving Texas in the right direction to complete connectivity.
“There's so much work to do to be prepared to receive the infrastructure bill dollars, … but all the planning that we can do now means that we're going to spend all of those dollars much more wisely,” she said.
A third major portion of the bill earmarks $55 billion for water infrastructure. Of that, Texas is expected to receive about $3 billion over five years which will go toward lead pipe replacement, chemical cleanup and more.
David Foster, Texas director for Clean Water Action, said the combination of the state’s multiplying population, degrading pipes and increasing effects of climate change, make the funding all the more impactful.
He added that a high priority for him would be to identify and replace all lead pipes, in line with initiatives seen in Ft. Worth and other urban areas.
“Our population is growing dramatically and so we need to meet the water needs of millions of not just current but also future Texans, and at the same time, our water infrastructure is in dire need of repair,” Foster said. “We need to not only invest in these aging systems, but we also need to rethink how we go about meeting our water needs.”
As parts of the state become more flood and drought prone, Foster said it is imperative the state start planning now to ensure water access.
“We definitely need this money and we need more,” Foster said. “We need to be smart about how we spend it and match it with state dollars … and in some cases local dollars.”