Is the stimulus plan working? What about transportation funding?

The stimulus plan and transportation funding are two of the most hotly debated subjects in the news. There are many unanswered questions. Will the stimulus plan work? Will the funds get out quickly enough to make a difference? Where will necessary additional transportation funds come from? How will we ever pay off the debt?

According to a press release from the Associated General Contractors of America (AGCA), the stimulus plan, the American Recovery & Reinvestment Act, is working by providing much-needed relief for the construction industry. The construction sector has suffered significantly higher unemployment levels than the rest of the economy. Construction unemployment is near 19 percent, while the overall national unemployment rates remain around 9 percent.

In the AGCA press release, Ken Simonson, chief economist for the AGCA, said the intent of the infrastructure portion of the stimulus plan was clear: put unemployed construction workers back to work. “Early reports indicate that the infrastructure piece of stimulus is beginning to do exactly what was intended,” he said, “put construction workers back on the job.”

Simonson said that as more stimulus-funded projects are awarded, a growing number of companies are reporting new jobs and are rehiring laid-off workers. Some companies have cancelled layoffs and plan to hire new employees. He said that stimulus the funds were keeping a bad business environment from getting substantially worse for many companies.

As for transportation funding in general, that issue is still being debated on Capitol Hill as Congress tries to reach a budget agreement. At press time, a tentative agreement was reached on the Fiscal Year 2010 budget. According to the National Stone, Sand & Gravel Association’s (NSSGA) eDigest & Washington Watch newsletter, the final budget agreement accepts the higher House transportation and transit funding figure and the House reserve fund language. Both the House- and Senate-passed budget resolutions rejected Obama’s proposal that would have eliminated the budget firewalls that sequester gas-user fees into the Highway Trust Fund for use on transportation projects.

According to the newsletter, the bill is tentatively supposed to be transformative in nature and compress the 108 highway programs into four broad sections including critical asset preservation, highway safety, surface transportation, and congestion mitigation/air quality improvement. The critical asset preservation section would include bridge repair, highway maintenance, and the national highway system. The safety section would include rail crossings, motorcycle safety, and rural road safety. The surface transportation section would contain the primary allocation to the states and transportation enhancements. The final section would contain the congestion mitigation program. This breakdown list is tentative and may change as the bill is finalized.

If the $450-billion figure is the total number for the highway bill, additional funding is deemed necessary – possibly $100 billion, according to the newsletter. Without a road user fee or an increase in the gas tax, it is unclear, at this time, where the additional funds will come from.

The bottom line

The Bottom Line Report released by the American Association of State Highway and Transportation Officials and the American Public Transportation Association states that by 2015, governments at all levels will need to more than double their spending on highways and bridges to keep up with traffic demands and our aging highways and bridges. In 2006, federal, state, and local governments spent $79 billion on highways and bridges, but an investment of $166 billion a year is required if the number of miles driven increases as expected. Another $13 billion would be needed annually for environmental mitigation, highway operations, safety programs, and security.