Infrastructure took center stage during President Joe Biden’s State of the Union address Tuesday night.
“We used to be number one in the world in infrastructure, then we fell to thirteenth,” Biden said in his second State of the Union address, his first with a Republican majority in the House.
“Now we’re coming back because we came together to pass the Bipartisan Infrastructure Law, the largest investment in infrastructure since President Eisenhower’s Interstate Highway System,” he said.
The BIL has already funded more than 20,000 projects, Biden said. “And we’re just getting started.”
For the municipal bond market, the administration’s emphasis on the infrastructure law, which features $1.2 trillion from 2022 through 2026, is a chance to highlight the importance of long-term financing, said Emily Brock, federal liaison for the Government Finance Officers Association.
“He mentioned infrastructure quite a lot and that had support from the audience, which is a great thing for us,” Brock said. “This helps us talk about the ‘funding vs financing’ conversation. The funding is fleeting, so having a fully supportive muni bond market to provide the financing as a long standing anchor in the future will absolutely be our focus because there’s a lot of support for it.”
Long-term solutions like tolling will be needed to continue to build and maintain infrastructure after the BIL funding runs out, according to the International Bridge, Tunnel and Turnpike Association.
“We encourage Congress and the administration to seek and find long-term, sustainable sources of funding to support our nation’s vital infrastructure,” said IBTTA CEO Patrick Jones in a statement.
“Tolling and pricing are powerful and effective tools in the funding toolbox that will help America maintain its critical infrastructure long after the IIJA.”
The president singled out the Brent Spence Bridge spanning Ohio and Kentucky, which is in line for $1.6 billion of federal funds, as the type of major project underway that will benefit the nation. He touted coming efforts to replace lead drinking lines and connect all Americans to high-speed internet, both major initiatives that will start to roll out this year and next.
“President Biden’s speech made clear he understands the importance of [the local-federal] partnership and the need for continued work to strengthen local economies, rebuild our infrastructure, combat the climate crisis, build up our workforce, address growing mental health and substance abuse challenges and more,” said National League of Cities CEO Clarence Anthony in a statement.
Biden also touted the Inflation Reduction Act’s investments in clean energy infrastructure, an area that the muni market will watch closely.
In other muni-related news, Biden highlighted the coming 15% corporate minimum tax that some think will hurt demand for muni bonds and the bulked-up IRS, which some say will boost demand for munis. He also renewed calls for lifting the $31.4 trillion debt limit to avoid a market-roiling default.
On the debt ceiling debate, which is likely to become a top legislative battle over the next few months, the National Governors Association issued a plea for an agreement to come to a deal as soon as possible.
“And we call on both the Administration and Congress to consider serious long-term reforms that will reduce the national debt and put the country on more sustainable fiscal footing,” said NGA Chair Gov. Phil Murphy of New Jersey and Vice Chair Gov. Spencer Cox of Utah in a statement. “States and territories succeed when there is certainty and stability in federal resources.”
In a bit of news, Biden announced that he would soon unveil standards that would require all construction materials in federal infrastructure projects to be made in the U.S.
Associations representing contractors and road industries have warned that the provisions could drive up costs and delays, as not all materials are domestically produced and those that are can often cost more.