Not Much Stimulus for Infrastructure Projects

After attending a recent national conference and speaking with several local engineering consultants and heavy highway construction contractors, I am of the opinion that the American Recovery and Reinvestment Act of 2009 (a.k.a Stimulus) is something short of stimulating--at least for transportation officials.

The $787 billion Stimulus Plan was sold to taxpayers as an infrastructure program that would rival the New Deal's Works Progress Administration (WPA) and Eisenhower's Interstate Highway System.  In reality, less than 4 percent, or $29 billion of the total plan is being directed at highway and bridge spending.  While this is still a tremendous amount of money, it does little to repair the gaps in the nation's infrastructure.  If you factor in other modes of transportation such as airports and railroads, the total stimulus investment is $48.1 billion, or approximately 6% of the total plan.  Much of the remaining amount is planned for social service initiatives, state tax and Medicaid relief and energy efficiency. 

While I applaud the drive towards green energy, I am a bit concerned that after this money is spent we will have little to show for it.  Under the WPA and Interstate Highway System our nation created lasting infrastructure.  We had assets that were worth the debt we created.  Under ARRA, we will have injected little into our growing infrastructure problem and thrown the rest at a one-time attempt at saving state governments from making difficult choices regarding overgrown and outdated programs.

Aside from the obvious lack of highway and bridge funding under stimulus, the program itself created constraints that made funding large infrastructure projects impossible.  ARRA required funds to be obligated within 120 days.  This limitation essentially ruled out most bridge projects, as the design requirements under federal regulations dictate a 9 to 18 month process to evaluate bridges, the adjacent environment and any right-of-way acquisition.  Unless a jurisdiction locally funded and designed a bridge following federal guidelines and had it sitting on a shelf waiting for aid, it was not going to receive ARRA funds for bridge replacements. 

A bulk of the stimulus money will be going towards "painting the roads black", that is simple pavement maintenance projects that overlay existing roads with new asphalt.  This is a maintenance treatment in most cases and will last anywhere from 7 to 15 years.  This type of work will not be creating any new jobs.  Quarries will not be adding staff or equipment.  They may work some additional overtime, but new hires and equipment are not required. 

Contractors are not hiring either.  This goes against logic, but in reality, the much touted stimulus plan in many states only provides a one-time reprieve from state or local funding of the same projects.  In many places, government has instituted the "lift, clean and replace" rule.  This means that projects that were going to be funded with state aid and local funding are now being funded with federal stimulus and the money that was obligated is being held in reserve or being used somewhere else in the budget.  To make matters worse, due to delays in approvals on ARRA projects, many of these projects will now be completed in 2010 as opposed to the current year.  So not only are contractors only working the same work load as a normal year, many of the projects are now scheduled to be awarded too late in the current construction year to be implemented before winter arrives. 

Long term, I am afraid that ARRA will have given taxpayers a false sense of security when it comes to overall transportation funding.  The need for infrastructure improvements is constantly growing and current estimates place the financial need at $2.2 trillion over 5 years to bring the nation's infrastructure up to speed, with $937 billion needed just for highways and bridges.  Taxpayers will not stomach another large spending program targeted at transportation because they are under the impression that this was fixed by stimulus.  The existing Dedicated Highway and Bridge Trust Funds at both the Federal and State level are nearing bankruptcy and will require additional funding from the General Fund to stay afloat.  These funds derive their income primarily from motor fuels taxes.  As cars acheive higher mileage ratings and people drive less, the collection of gas taxes drops.  This has been the case for some time and it is estimated that the gas tax would need to be increased $0.40 per gallon to makeup the shortfall.  This would obviously not be a popular plan.  Other plans include a vehicle miles traveled tax that conjurs up images of big brother rather quickly.

The bottom line is that the American Recovery and Reinvestment Act of 2009 has done little to stimulate the investment in our transportation networks and without a permanent solution to the current funding shortfall our infrastructure will get worse and worse, hurting our already weak economy.