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Committee hears federal funding uncertainty could disrupt IIJA, IRA and CHIPS awards
Summary
NCSL and committee staff warned that overlapping federal actions — reconciliation, executive funding freezes and tax changes — create uncertainty for state implementation of IIJA, IRA and CHIPS-funded projects that could affect Minnesota projects including grants to Bemidji and bridge work in Minneapolis and Duluth.
State and national officials told the Minnesota House Capital Investment Committee on March 18 that overlapping federal budget processes, executive funding freezes and pending tax changes are creating uncertainty that could affect infrastructure projects funded by the Infrastructure Investment and Jobs Act, the Inflation Reduction Act and the CHIPS and Science Act.
Brian Wankel, senior legislative director for budgets and revenue with the National Conference of State Legislatures, told the committee “All this is creating uncertainty for states.” He outlined a convergence of federal reconciliation, executive orders and litigation that he said could alter funding flows for fiscal year 2026, which begins Oct. 1, 2025.
Wankel told members that an early Office of Management and Budget memo and related executive actions prompted confusion about implementation and temporary portal shutdowns at federal agencies. He said many of the programs targeted for review in the memo involve discretionary grants and funds that remain unobligated — and therefore are more vulnerable to rescission or delays. “Those are the easiest funds to rescind because they still remain with the various agencies,” he said.
Committee members raised specific concerns about projects in Minnesota. Chair Franzen cited recent media reports saying the city of Bemidji lost a Department of Transportation grant, and he and members mentioned potential impacts on Duluth and the Nicollet Street bridge in Minneapolis. Wankel and state officials said they had asked federal partners for timelines but had not received comprehensive schedules for reinstituting all paused programs.
Minnesota Management and Budget staff later urged committee members to collect a list of local projects that rely on federal funding so the state can press federal officials for status updates and help coordinate with relevant state agencies. Representative Perez Vega and other members asked MMB and MnDOT to pursue alternate funding if federal awards remain paused.
Wankel also said reconciliation proposals in Congress and potential tax changes tied to extensions of the Tax Cuts and Jobs Act could reduce federal revenues or alter offsets, increasing the risk that unobligated discretionary grants would be cut. He noted ongoing litigation challenging some executive actions and said legal uncertainty could prolong the disruption.
Committee members directed staff to collect project lists from legislators and to coordinate with Minnesota Management and Budget and MnDOT to track awards and obligations.
The state-level discussion followed Wankel’s national overview and set the agenda for MMB’s later presentation on how Minnesota is tracking and obligating federal infrastructure funds.
