Economic Impact Of The Infrastructure Investment & Jobs Act: Virginia

After more than three months, the Infrastructure Investment & Jobs Act (IIJA) was finally approved by the House, a bipartisan bill previously passed in the Senate.  Now it will head straight to President Biden’s desk where he is expected to sign the bill next week.  VTCA members worked diligently with Virginia’s Congressional Delegation including holding group conference calls with staff of Virginia Congressmen to provide the details of the positive outcomes of investing in hard infrastructure.

The IIJA will provide $8.89 billion in state formula funds for highway, bridge, and transit investment in Virginia over the next five years, including a 32 percent funding increase in FY 2022. 

As projects are completed over time, the overall transportation system will become more reliable for the traveling public. Businesses will also be more productive as their costs are lowered. 

The positive impacts from IIJA-related construction activity will be felt quickly as work gets underway. A September 2021 report by global forecasting leader, IHS Markit, quantifies the initial outcomes: 

• IIJA investment to fix Virginia's roads and transit system will add an additional $1.89 billion (about $6 per person in the US) in state gross domestic product each year. 
• The increased economic activity will benefit Virginia residents – disposable income will increase by $715 million each year, an average of $207 per household. 
• State and local tax receipts will increase by an average of $332 million per year. This is additional income that can be reinvested in the state, without any increase in tax rates. 

Federal investment has supported 70 percent of state highway and bridge capital improvements in state over the last decade and 26 percent of transit capital outlays. Federal transit investment supported 69  agencies urban and rural in Virginia. 

The historic investment levels of the IIJA provide a unique opportunity to improve and transform the major Virginia highway and transit systems that citizens rely on every day.

VDOT has been planning for passage and is ready to utilize the funds, of which 40 percent will go toward highway and bridge investments. There is a new Bridge funding formula, and this new program may take a bit more time to get underway. 

There was no expectation that the Senate will now pass the “soft” infrastructure bill that many Progressives want. That bill will have to be voted on its own merit and will be discussed by Congress over the next several months.