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Witnesses tell subcommittee discretionary grants are slow; states rely on formula dollars to deliver projects
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Summary
AASHTO and state DOT advocates said formula funding from IIJA spends out far faster than discretionary competitive grants, a gap that affects project delivery and local planning.
State DOTs and their national association told the House Subcommittee on Highways and Transit that formula apportionments under IIJA deliver results faster and more predictably than discretionary competitive grants.
AASHTO Executive Director Jim Timon told members that Congressional Budget Office estimates show an estimated 67% spendout of formula dollars provided to states in the first two years after allocation, compared with a 1%–7.4% spendout rate for discretionary grants in the same period. Timon and several members said that the formula pipeline allows states, metropolitan planning organizations and localities to program multiyear projects and obligate funds quickly.
Members from both parties noted examples of discretionary grants taking years to reach recipients. Timon described a Georgia applicant that had to wait two years from selection to signing a grant agreement with the Department of Transportation; members and witnesses said those delays can leave local projects unable to start or facing higher costs by the time agreement is reached.
The committee also discussed the August redistribution of unused obligation limitation, which this past year totaled roughly $8.7 billion (about 14.5% of the FHWA program) and created extreme short‑term pressure on states to obligate funds. Timon said states have mostly exhausted their “ready to go” project pipelines and that the redistribution mechanism may need legislative attention to avoid recurrent fiscal cliffs at the end of the fiscal year.
Witnesses and members proposed several approaches to improve delivery and equity: streamlining federal grant agreement processes, reexamining eligibility and reporting burdens on discretionary grants, increasing formula apportionments as the “foundation of the program,” and improving technical assistance to smaller localities that lack grant-writing staff. Several witnesses urged that the next reauthorization preserve core formula programs as the baseline while tailoring some competitive programs for projects that genuinely require federal prioritization.
