Local Governments with More Staff and Bigger Budgets Are More Likely to Win Federal Infrastructure Grants

Urban Wire Local Governments with More Staff and Bigger Budgets Are More Likely to Win Federal Infrastructure Grants
Amanda Hermans, Tomi Rajninger
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Each year, federal agencies decide how to distribute billions of infrastructure dollars across the US through competitive funding programs. To receive funding, however, local governments must first apply. This process is often time-consuming and difficult to navigate because application criteria vary for each grant program.

At the same time, many federal agencies have begun to better align their funding streams with the administration’s equity goals by developing equity plans, distributing grants to historically disinvested communities, and providing application assistance to communities in need. Still, Urban Institute research has shown that counties with more resources per capita tend to win more grant dollars. A small survey of municipalities across the US also has suggested that a city’s ability to apply for infrastructure funds and implement the projects depends on its administrative capacity and budget.

In a new analysis of the relationship between local capacity and the likelihood a community wins competitive grants, we find that grants are more often distributed to counties with higher staffing levels and higher budgets per capita. Well-resourced municipalities are also more likely to win larger awards from federal infrastructure programs. To avoid reinforcing inequities when distributing federal awards—such as the hundreds of billions of dollars for road improvements, public transit, and energy efficiency being distributed under the Infrastructure Investment and Jobs Act (IIJA)—federal agencies could provide more support to communities with fewer resources.

Counties with greater administrative capacity are more likely to receive competitive awards from federal infrastructure programs

To examine local governments’ administrative capacity, we compiled data on counties with more than 50,000 residents using the US Census Bureau’s Census of Governments. We calculated full-time staff and full- and part-time payroll per capita by county, including all local governments within the county. We also assessed the share of staff and payroll devoted to transportation and environmental activities.

Using these capacity indicators, we then assessed how much competitive infrastructure funding counties received in fiscal year 2022 (FY22) from 29 IIJA programs and the US Department of Housing and Urban Development’s (HUD’s) Continuum of Care Program through a regression analysis. We find that counties with increased per capita staffing capacity and payroll expenditures were more likely to receive a competitive award from the federal government in FY22.

We also looked at how a county’s chance of receiving federal grants would change if the county had greater capacity in one of five areas.

Percentage-point increase in the likelihood of receiving competitive funding for counties with greater capacity in a given area
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Our analysis showed that, on average, having a higher level of per capita transportation payroll was associated with the highest increase in likelihood a county would receive funding. Counties with an additional $10 per capita for transportation payroll had an 18.1 percentage point higher likelihood of winning funding from competitive transportation programs than counties without that additional capacity, on average. And counties with an additional $10 per capita for environmental payroll had an 8.8 percentage point higher likelihood of receiving funding from an environmental program, on average.

Total payroll expenditures across all local governmental categories were also associated with a higher likelihood of counties receiving funding, but counties needed a larger per capita dollar amount ($100 per capita) to see a comparable increase in likelihood (10.7 percentage points, on average).

Full-time staffing levels also mattered. On average, an additional five sector-specific employees per 10,000 residents was associated with 3.6 and 1.1 percentage point increases in the likelihood of winning a transportation or environmental grant.

Among counties that received competitive funding in FY22, larger transportation payrolls per capita corresponded to larger amounts of transportation funding per capita than counties with smaller transportation payrolls. Accounting for county-level racial and income characteristics among counties, we found that an additional $1 per capita for transportation payroll was associated with an average of $5.78 more in competitive transportation funding per capita in FY22.

Municipalities with greater administrative capacity receive higher amounts of federal infrastructure funding

Because municipalities often directly apply for and receive grants, we also explored the relationship between administrative capacity and competitive grant awards at the city level.

We sampled 130 cities that received at least one competitive federal award in FY22 and had capacity-related data listed in the Lincoln Institute of Land Policy’s Fiscally Standardized Cities database. To calculate administrative capacity, we totaled per capita general revenue, own-source revenue, general expenditures, governmental administrative expenditures, and transportation expenditures. Of the 329 grants these cities received from 17 competitive IIJA programs, almost half were awarded directly to the municipal government. 

We found that, on average, cities with higher per capita capacity tended to receive larger award amounts. Cities with the lowest capacity—or, in the bottom quarter of capacity—received less award funding on average than the cities in the top quarter. In FY22, cities with the lowest per capita general revenues received an average of $92.60 per capita in federal competitive infrastructure grants, compared with $138.44 for cities with the highest general revenues.

Average award amounts per capita, by capacity indicator
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However, on average, cities with the lowest transportation expenditures per capita received more in transportation-related awards than those in the top quarter of transportation expenditures ($104.33 and $96.12 per capita). Still, cities in the third quarter of per capita transportation expenditures received the most of any quarter on average ($140.23 per capita), suggesting awards generally increase with capacity.

How federal agencies can help local governments with less administrative capacity access infrastructure funding

Our findings demonstrate that local administrative capacity can shape the distribution of federal infrastructure resources. Local governments with lower administrative capacity and budget may not have the resources, awareness, or experience to apply for and win federal infrastructure awards that could help improve their local infrastructure and residents’ quality of life.

To help localities access federal funding opportunities, regardless of their capacity, federal agencies should consider the following: 

  1. reexamine application processes to ensure they’re accessible and not overly burdensome for local governments, such as by simplifying application steps or combining applications for related programs
  2. conduct targeted outreach so local governments know which funding sources are available to them in advance of application deadlines
  3. explore ways to provide technical assistance to localities that have been historically marginalized, have fewer resources, or have less experience with the application process

In addition to federal agencies, states and nonprofit organizations could provide assistance and ensure localities can apply for and receive the competitive infrastructure funding their communities need. 

Recent federal efforts have begun to address capacity-related inequities. In April 2022, the Office of Management and Budget released guidance directing federal agencies administering infrastructure grant programs to provide increased technical assistance to applicants. The US Department of Transportation and HUD’s joint Thriving Communities Program supports “disadvantaged and under-resourced communities” by providing technical assistance and help with planning and capacity building. Further research is needed to understand if and to what extent these efforts have mitigated capacity-related inequities.

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Research Areas State and local finance
Tags Equitable development Federal budget and economy Infrastructure Federal housing programs and policies Race and equity in grantmaking Environmental quality and pollution Transportation Housing and the economy State programs, budgets
Policy Centers Metropolitan Housing and Communities Policy Center
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