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Published in Economic Development
Gov. Gretchen Whitmer (center) surveying a bridge in Jackson earlier this year. Gov. Gretchen Whitmer (center) surveying a bridge in Jackson earlier this year. COURTESY PHOTO

Historic federal funding influx forces decision making by state, local policymakers

BY Sunday, December 19, 2021 07:00pm

If there’s any certainty about 2022, it’s that Michigan policymakers will have billions of federal dollars to distribute for infrastructure and economic development. 

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What’s far less certain, however, is exactly how and where the funds will be distributed.

Michigan approached the end of the year with around $16 billion in federal funding either waiting to be spent or scheduled to come in from two federal laws. The state had been sitting on nearly $6 billion left from the American Rescue Plan Act (ARPA) — signed by President Biden in February — before lawmakers appropriated $1 billion for an economic development incentive fund.

That still leaves billions of dollars in unused ARPA funding on top of roughly $10 billion Michigan will receive under the $1.2 trillion Bipartisan Infrastructure Law that Biden signed on Nov. 12.

In recent weeks, local officials and trade groups have been lobbying to help create a coordinated plan for sending out the money. Sources say the earliest political consensus has been building around hard infrastructure projects like roads and bridges, while local officials — who could ultimately vie for the money — hope to use it for major transformational projects that wouldn’t require ongoing funding.

Last month, dozens of municipalities, nonprofits, trade groups and private businesses formed the Coalition of a Strong and Prosperous Michigan to issue a plan for spending American Rescue Plan Act dollars in Michigan. The “MI Prosperity Roadmap” calls for $3 billion for infrastructure, $800 million to stabilize local governments, $805 million for housing and community development, $910 million for economic development, and $500 million for public health and safety.

“It’s not just about us, it’s about the group and things we think will make Michigan more competitive and put us in a position to grow,” said John LaMacchia II, assistant director of state and federal affairs for the Michigan Municipal League, one of the coalition’s member organizations. “This is our thoughtful expression of what we think is a comprehensive investment strategy.”

Similar to how it played out this month at the end of the Legislature’s session, the ARPA funding will be allocated through budget supplementals. The ARPA money must be obligated by 2024 and spent by 2026.

Perhaps more importantly, though, if legislators take action to swiftly allocate the funding, it will help keep the state competitive “in the overall grand scheme of what’s going on in the country,” LaMacchia said. “We should really be at the forefront and leading by example.”

Distributing funds

Still, how the ARPA and infrastructure money will be distributed locally remains an open-ended question. In the case of the infrastructure law, municipalities will likely have to make their case for money that’s being passed through state agencies. 

John Weiss, executive director of the Grand Valley Metropolitan Council and chairperson of the Michigan Infrastructure Council, recommends that local governments and state agencies use “asset management principles” to pick infrastructure projects where funding would be directed.

“This is once-in-a-generation funding. We want to make sure it’s spent right on long-term fixes and projects that can be maintained,” Weiss said. 

Earlier this year, the Michigan Infrastructure Council launched an online portal that tracks where and when projects including utilities, roads and water and sewers will take place with a goal to avoid duplicated projects.

Meanwhile, some consensus has emerged that both ARPA and infrastructure pots of money should be used for transformational projects in communities that don’t require ongoing funding.

“Roads, bridges, parks, trails — things like that can make a lot of sense and it doesn’t tie us to something we don’t have the funds to pay for,” said Joshua Lunger, senior director of government affairs for the Grand Rapids Area Chamber of Commerce.

Lunger also said that state officials have indicated there will be themes in how money is spent in the coming years — broadband internet expansion or drinking water infrastructure, for example — as opposed to specific projects.

As well, the Whitmer administration has already taken action in instances where federal funding is specifically earmarked for sectors, such as issuing executive directives on spending priorities for broadband internet and electric vehicle charging stations. 

Economic development potential

Outside of critical projects like roads, bridges and water systems, officials see major potential to use the stimulus and infrastructure funding on economic development initiatives. The “MI Prosperity Roadmap” for ARPA funding notes that “it is critical to learn from the experiences of the last year and a half and capitalize on the changing environment to make the state a model for recovery, innovation, and growth.”

The coalition calls for specific investments in office space conversion, brownfield redevelopment, site development, job training and electric vehicle infrastructure.

Randy Thelen, president and CEO of The Right Place Inc., said the economic development organization has held sessions with partners about how the funding will be rolled out and helping to prepare applications for grant-based projects.

“From a policy perspective, we’ve been very active in Lansing encouraging investments in brick and mortar-type projects,” Thelen said. “How do we get these one-time dollars to build these assets that have multi-generational impacts on the region?”

He compared the opportunity to the New Deal in the 1930s, and noted potential investments particularly along the Grand River in Grand Rapids.

Despite a yearslong timeframe to ship out the money, LaMacchia says there’s a certain level of urgency to keep Michigan competitive with other states.

“The work the coalition is doing is important, but the work we need to do as a state is equally important for our long-term success,” LaMacchia said. “We need to understand that we’re competing against other states and we need to move decisively.”

Read 1416 times Last modified on Friday, 17 December 2021 11:34
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