As 2024 wraps up and planning for 2025 begins to take shape, state legislatures are tackling challenges that directly impact the built environment. From evolving transportation funding mechanisms to disaster mitigation, workforce development, and tax policies, these legislative trends offer both opportunities and risks for architecture, engineering, and construction professionals. At Victor, we closely monitor these developments to try and help our insureds navigate the shifting landscape, mitigate professional liability risks, and optimize business opportunities.
Funding infrastructure amid declining gas tax revenues
The rise of electric vehicles (EVs) and more fuel-efficient cars is reducing gas tax revenues, leaving states scrambling to fund critical infrastructure projects. We should expect to see legislatures exploring alternative funding sources, such as EV registration fees, public charging station levies, and road usage charges. Given funding uncertainty, it would be wise for design firms to get ahead by proposing design solutions that will address these bigger funding challenges.
Addressing disaster risks and environmental health
The increasing frequency of natural disasters and the environmental risks posed by per- and polyfluoroalkyl substances (PFAS) are driving new legislation. For example, the Environmental Protection Agency (EPA) set a maximum contaminant level for PFAS at 4 parts per trillion. Public water systems will have to comply with these new standards by 2029, which is prompting states to invest in testing, remediation, and infrastructure hardening. Design professionals should expect that government clients will need to meet these stricter federal environmental compliance standards.
With extreme weather events increasing in severity and frequency, states are also looking for ways to build resiliency into their power grids with more back-up energy storage. In the first half of 2024, 300 pieces of legislation were introduced on resiliency and energy security.
State are also looking more closely at ways to incentivize natural disaster mitigation measures for wildfires and flood risks—whether through the creation of specific state funds or through financing tools for local governments to implement mitigation measures. This accelerating legislative trend will undoubtedly continue as projections for worsening conditions and impacts on state budgets are expected.
Design and construction firms would do well to anticipate these trends with design solutions that help energy providers, government clients, and communities integrate resiliency measures into the built environment.
Skills over degrees: Workforce development trends
In response to workforce shortages, states are prioritizing skills-based hiring, particularly for public sector roles. This shift includes investments in certificates, industry certifications, apprenticeships, and other non-degree credentials.
The labor market for construction and design professionals may see a broader pool of talent with diverse credentials. However, firms must ensure adequate training and oversight for staff with non-traditional pathways to avoid errors that could lead to liability claims.
Tax cuts and incentives: Balancing relief and growth
Despite slowing revenues, state legislatures are pursuing property tax relief and business tax incentives to address housing affordability and stimulate economic growth. The potential implications for the built environment are that while tax relief can make housing projects more viable, firms must be mindful of how these policies may influence project funding, timelines, and stakeholder expectations. Engaging early with tax consultants and legal advisors can help firms mitigate risks.
How Victor supports insureds
These legislative foci highlight the interconnectedness of policy, design, and construction. To help insureds stay ahead of these trends, our Risk Advisory program offers:
- Risk management resources/publications
- Continuing education platform
- AI-backed contract review services to help insureds mitigate contractual risks
- Tailored coverage to protect against evolving risks
By understanding the legislative landscape, firms can position themselves not just to survive but to thrive amid these changes.
Conclusion
The 2025 state legislative landscape underscores the need for proactive planning in the built environment. As gas tax revenues decline, environmental standards tighten, workforce priorities shift, and tax policies evolve, design and construction professionals should plan to adapt. With the right strategies and support, these changes can become opportunities to lead in resilience, sustainability, and innovation.