State and Local Governments Face Persistent Infrastructure Investment Challenges
Costs grow to address critical repair backlogs and limit impact on public safety after decades of underinvestment
State and local governments across the United States spend roughly half a trillion dollars annually on transportation and water infrastructure, with about one-quarter paid for through grants from the federal government. This spending includes investments in new projects as well as general upkeep and operating costs for roads, bridges, and public transit systems, as well as the development and maintenance of state and locally managed water resources.
Still, experts warn that these commitments will not be enough to keep pace with the growing backlog of needed repairs, or the significant upfront investments required to modernize core public infrastructure systems. In a 2019 report, researchers from the Volcker Alliance, a nonprofit organization focused on public finance issues, estimated that the costs for delayed repairs and maintenance that has accumulated nationally over the past 50 years could reach nearly $1 trillion. That represents about 5% of the nation’s gross domestic product (GDP), but the estimate is likely low. Last year, The American Society of Civil Engineers projected these costs could be double that amount.
Making matters worse are the imminent effects—climbing temperatures, rising sea levels, and increasing precipitation, for example—that a changing climate will have on already vulnerable infrastructure systems. Estimates of the additional investments needed to make core public services, such as access to clean water, more resilient to these changes range in the hundreds of billions of dollars.
Part of the historic gap between sufficient funding for critical maintenance and capital investment needs and the available resources to pay for them can be attributed to the decline in federal spending on infrastructure since the 1980s. That drop followed a peak in spending during the mid-1970s when initiatives such as the expansion of the national highway system and establishment of the federally supported clean water programs were under way.
Rates of Government Infrastructure Spending Since the 1950s
Capital investments as a percentage of gross domestic product, 1956-2021
Note: Dotted lines for each category of spending from 2018 to 2021 indicate Pew estimates using federal data.
Sources: Pew analysis of economic data from The Federal Reserve; Federal Highway Administration data; and data and analysis from the Congressional Budget Office report “Public Spending on Transportation and Water Infrastructure, 1956 to 2017”
© 2023 The Pew Charitable Trusts
Now, the federal government has reversed this slide with enactment of the American Rescue Plan Act (ARPA) and the Infrastructure Investment and Jobs Act (IIJA) in the past year. In addition, state and local governments have taken on an increasing share of the costs. Still, overall government spending on these systems has lingered around 2.4% of GDP, more than half a percent less than when spending peaked nearly 60 years ago at 3%, according to the Congressional Budget Office.
Of course, behind these figures are the real-life effects that these challenges have on individuals, communities, and businesses. The impact varies from longer commuting times on public transportation to public safety and health concerns over unsafe bridges and hazardous drinking water. Substandard infrastructure can impede economic growth, put public safety at risk, and disproportionally affect marginalized communities.
The dangerous and often inequitable impact of this legacy of underinvestment is more evident than ever. For example, the recent safety failures of Boston’s public transit system led to the death of a passenger, and the collapse of the Forbes Avenue Bridge in Pittsburgh earlier this year left 10 people injured. And the systemic failures of aging and undermaintained water treatment facilities in Jackson, Mississippi, and Flint, Michigan, left nearly 260,000 residents in these predominantly Black cities without access to clean water for weeks at a time.
With pressures over public health, safety, and economic concerns mounting during the COVID-19 pandemic, the federal government in 2021 made a major investment in public infrastructure by passing the IIJA. The $1.2 trillion total package includes up to $550 billion in new infrastructure spending—a substantial down payment toward addressing longstanding problems—but the actual impact that these dollars will have in addressing critical maintenance and repair delays already on the books is unclear.
That’s because of a confluence of factors such as inflation-related cost increases for basic construction materials, pandemic-driven supply chain disruptions, and lingering worker shortages. Still, one of the most persistent challenges that states and localities face in paying down their accumulated deferred maintenance backlog is estimating and budgeting for how much spending is actually needed to prevent roads, bridges, water utilities, and similar assets from degrading.
The lack of consistent data or standard measures of accumulated deferred maintenance across the 50 states has left policymakers without a clear picture of the true size or magnitude of the problems or the costs and impact of further inaction. That reality then limits policymakers’ ability to make informed spending choices and plan for the long term. Gaining a clearer baseline picture of current and future investment needs is an essential starting point for understanding the true costs of the nation’s infrastructure maintenance and investment gap.
Even in the midst of these challenges, Americans seem to agree on the need for more substantial investments in infrastructure, as well as the need for better data and management tools to evaluate progress. And thanks to new federal stimulus dollars and recent budget surpluses, state and local policymakers are well-positioned to take the lead on making these infrastructure investments and innovations in ways that allow them to factor local considerations for climate resiliency needs and equitable growth into their decisions.
Fatima Yousofi is an officer and Susan Banta is a project director with The Pew Charitable Trusts’ state fiscal policy project.
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