- Post-IIJA federal transportation spending growth has been driven mainly by highways/streets, while transit capital has stagnated in real terms and rail has declined.
- The law’s transportation funding mix heavily favors highways (about 55–60%) over transit and rail (about 28–30% combined).
- Construction-cost inflation has cut IIJA purchasing power, potentially reducing highway build-out by roughly 30–40% versus 2021 prices.
- Delivery and outlook risks include shrinking state/local transit matches, slow permitting and planning, and possible funding cuts heading into FY 2025–2026 reauthorization/appropriations.
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The Infrastructure Investment and Jobs Act (IIJA), enacted November 15, 2021, was intended as a transformational investment across infrastructure sectors—transportation, energy, broadband, etc.—with substantial expectations placed on roads, bridges, public transit, and rail. Federal programs under the Act authorized up to $108 billion over FY 2022-2026 for public transportation via the Federal Transit Administration (FTA), alongside massive highway and multimodal allocations.
Yet, four years on, the Urban Institute’s detailed review reveals that while there has been an overall increase in ground transportation capital investment, this rise is almost entirely driven by highway and street projects. Public transit capital spending has flatlined when adjusted for inflation, and rail projects—outside of direct federal spending—have experienced net declines. The picture is further complicated by state and local funding dynamics; while federal highway funds appear to have bolstered state/local road investments, transit agencies often saw decreases in their non-federal contributions during the same period.
Cost inflation has played a decisive role in weakening the real impact of IIJA funding. The Bureau of Transportation Statistics (BTS) shows that rising prices for materials (notably asphalt tied to volatile crude oil) and labor mean that highway construction funds under IIJA will buy significantly less—potentially only 60–70 % of what could have been achieved under 2021 prices. This erosion matters more for transit and rail where capital costs are higher per unit of output, and where non-federal funding is less elastic.
Looking ahead, several strategic implications and open questions emerge. First, the reauthorization of IIJA in FY 2026 is looming; appropriations already show that public transit and passenger/freight rail may face cuts relative to what IIJA authorized, raising uncertainty. Second, structural barriers—long project-approval timelines including environmental permitting, workforce shortages, supply-chain delays—have delayed capital deployment, especially for transit and rail projects. Third, the climate objectives embedded in IIJA risk being undermined if highway-oriented spending continues to dominate, given potential increases in carbon emissions tied to expanded roads.
In summary, while IIJA has delivered unprecedented investment levels on paper, its actual impact—what gets built—has been constrained by inflation, funding shifts at state/local levels, and mode imbalance favoring highways over transit and rail. The forthcoming reauthorization is a critical inflection point: whether it refines prioritization, rebalances modal investment, and strengthens implementation will determine whether IIJA’s ambitious goals are realized.
Supporting Notes
- Federal public transportation authorization under IIJA: up to $108 billion over FY 2022-2026, including $91 billion guaranteed funding for transit programs.
- IIJA allocates ~$566-$673.8 billion for transportation projects; $338 billion (≈ 60 %) goes to highway-related work, versus ~$91 billion (≈ 16 %) to public transit and ~$66 billion (≈ 12 %) to rail/freight.
- State and local highway spending rose about 22 % from $117.35 billion to $142.86 billion in four years post-IIJA; whereas transit spending by the same levels dropped ~36 %, from $12.45 billion to $7.88 billion.
- Inflation in construction costs: highway construction saw ~26 % rise in 2022; under high inflation scenario, only ~60 % of the infrastructure volume can be bought with IIJA highway funds compared to 2021 prices (up to a 40 % reduction).
- Despite IIJA’s intent, bridge spending fell until 2023 before beginning to recover; and public transit capital investment didn’t increase in real terms post-IIJA when adjusted for construction input inflation.
- FY 2025 appropriations proposals show cuts: public transit funding $1.3 billion lower (–6.2 %) relative to FY 2024; passenger/freight rail funding $4.6 billion below authorized levels in IIJA (–22.4 %).
- Firewalls of project delivery include lengthy permitting under NEPA, workforce shortages, and stalled local funding matching requirements.