Regional Block Grants: A New Approach to Funding Transformative Infrastructure Projects
For the better part of a decade, America’s two largest political parties have put forward platforms to rebuild and renew America. One of the investment areas with the broadest agreement is infrastructure. The economic case for maintaining and modernizing physical assets, such as fixing the country’s bridges or extending its broadband networks, continues to be clear. Yet the emerging political consensus also reflects an underlying philosophical alignment: Reinvesting in our cities and towns can uplift households, businesses, and entire communities.
Yet delivering transformative infrastructure with regional or national impacts is complex. Unlike the kinds of routine projects managed within a single jurisdiction, transformative projects address structural needs across an entire region, often carrying a price tag beyond a single jurisdiction’s purchasing power. These projects demand coordination among multiple jurisdictions—pooling diverse funding sources and employing an array of skilled tradespeople to deliver multiple smaller projects at once. Every region’s definition of “transformative needs” is a bit different too, such as rebuilding freight junctions across Chicagoland or protecting metropolitan Houston from future flooding.
Federal Washington has a long tradition of requiring regions to plan out their infrastructure assets and systems. Federal transportation, water, housing, and economic development policies each compel regions to make long-term plans, in many cases even providing funds to facilitate the process. What Congress has mostly failed to do, though, is provide enough steady capital to accelerate and underwrite those plans’ specific projects. Instead, the current federal approach—most recently through the Infrastructure Investment and Jobs Act (IIJA)—primarily sends infrastructure funds to states using formulas or through competitive processes that unduly burden regions. Even worse, states often fail to meaningfully collaborate with local and regional leaders when deciding how they’ll use their federal dollars.
The result is a string of missed opportunities. Too many transformative efforts never shift from planning documents to shovels in the ground. Projects that do advance move more slowly due to funding shortfalls, complex compliance rules, or limited labor supply. Even when recent federal laws tested new approaches, competitive grantmaking has proven to be an unpredictable source of funding for localities and an inefficient way to strengthen relationships among regional partners.
America needs a new federal approach to fund transformative infrastructure projects. The federal government needs more efficient ways to translate their dollars into region-serving projects, allowing federal agency staff to focus primarily on knowledge sharing, testing new ideas, or delivering true mega-projects. Meanwhile, receiving more direct funding would give regions greater autonomy to construct projects that no single municipality can deliver alone—and more dependable funding would help regions build the internal knowledge and capacity that their state peers have. Regions would be able to tap a new source of revenue and leverage it to create more value from existing investment channels. With this approach, regions would be free of a “one-size-fits-all” approach from the state down, able to respond and execute with flexibility.
Regional block grant programs are ideally suited to help rebuild America from its economic engines outward. New programs would send federal funds to every region in the country, allowing regional governments and their municipal peers to accelerate projects of regional significance that they’ve prioritized within their federally supported long-term planning efforts. Flexible planning funds would help nurture regional relationships among local officials, civic leaders, and industry partners. Federal staff in Washington, D.C. and field offices could focus more on addressing complex questions received through technical assistance requests from regional partners and look for common lessons to share across the country.
Federal officials have had great success running block grant programs, but they have not used those program designs to their fullest extent within the infrastructure sector. This report makes the case that regional infrastructure matters, and consolidates lessons from the most recent federal investment period. Federal lawmakers, regional leaders, and other stakeholders should apply these lessons as they consider how to launch new regional block grant programs in future legislation.