As state legislators gather for the 2023 legislative session, they will find themselves flush with trillions of dollars allocated by the 117th Congress from the American Rescue Plan Act (ARPA), the Infrastructure Investment and Jobs Act (IIJA), and the Inflation Reduction Act (IRA).  They can either spend this money wastefully or use the opportunity to take the lead in restoring fiscal sanity, regaining their independence from federal mandates and restrictions, establishing greater accountability, and increasing innovation.

With so much money at their disposal, state leaders should use discretion and oversight, which will help them to avoid pouring federal grant money into duplicative, wasteful, and unsustainable projects, while also becoming unwilling pawns in the costly and often unrelated policy priorities of the Biden administration.  

But some of the federal money being thrown across the country is already being spent wastefully.  For instance, state and local leaders dispensed money from ARPA into projects that had no relationship to the COVID-19 pandemic or economic recovery, like the construction of high school auditoriums and sports facilities, golf courses, and sea urchin habitats.

In addition to spending money more responsibly, state and local leaders must take steps to ensure that the provisions of loans and grants do not force them to impose harmful policies like net neutrality and the Green New Deal onto taxpayers.  This includes early spending guidance for broadband funding, which sought to push states to favor applications from providers who adopted net neutrality requirements and government-owned networks.  Similarly, the IIJA and IRA were full of grant programs designed to force the states to prioritize union membership and “environmental justice” rather than provide for the needs of all taxpayers.

Before the $65 billion in broadband funding was provided in the IIJA, an estimated $800 billion was already available across the federal government for broadband deployment, which is far more than needed to connect every person and household in the nation that wishes to have broadband access.  Lawmakers must ensure that broadband spending is not prioritized for government-owned networks and engage in strict oversight of that spending.  Further, state leaders must not allocate broadband funds to overbuild existing connectivity at the expense of unserved and underserved communities.  

There are some rather unfortunate examples of what not to do with broadband spending.  According to a September 2022 report from the Wisconsin Legislative Audit Bureau, $105.6 million in broadband money from the Coronavirus Aid, Relief, and Economic Security (CARES) Act and ARPA was distributed without sufficient guidance and oversight.  Unqualified applicants were given access to funding without providing all the required information.  There is unspent money from COVID-19 spending bills and funding that has not yet been allocated from the IIJA, so state lawmakers must establish proper oversight and accountability measures to avoid a repeat of Wisconsin’s failure in their own states.  

Beyond oversight of federal funding initiatives, state lawmakers will also have several opportunities to reduce red tape and increase innovation.  On December 16, 2022, Ohio Governor Mike DeWine (R) signed a bill establishing a regulatory sandbox, joining Arizona, Florida, Kentucky, North Carolina, South Dakota, Utah, Vermont, West Virginia, and Wyoming.  First implemented in the United Kingdom, regulatory sandboxes create an innovation-friendly environment by reducing burdensome red tape that creates barriers to entry for new businesses.  These innovation-producing environments invite new business and economic growth to states while reducing the costs to consumers.

State and local leaders can also ease the burden on taxpayers by adopting sound energy policies.  For much of 2022, Americans experienced the highest gas prices on record and the highest inflation in decades.  Governors Gavin Newsom of California (D) and Kathy Hochul of New York (D) are promoting policies that will force residents toward “green” energy alternatives.  Instead of mandating that citizens purchase expensive new electric vehicles or endorsing Green New Deal policies, state leaders should reduce restrictions on energy innovation.  With gas prices again projected to rise above $4 per gallon in 2023, lawmakers should resist the temptation to impose more burdens on American energy independence. 

With the nation facing continued concerns over a recession and gridlock likely for much of the 118th Congress, state lawmakers should seize the opportunity to take the lead on critical policies impacting the lives of their residents.  They should restore fiscal sanity, provide needed oversight and accountability, and offer wins to taxpayers and consumers by reducing innovation-stifling red tape.