Stimulus spending on highways isn't delivering on job promises

McClatchy NewspapersSeptember 26, 2010 

WASHINGTON — Federal stimulus money to fix America's highways is stuck in the slow lane in some states, including a few that are suffering from some of the nation's highest unemployment rates.

In California, for example, where the 12.4 percent unemployment rate is the third worst in the country, officials are rolling their highway money out far more gradually. As a result, the Golden State is far behind other states in the percentage of projects it's started.

More than a year and a half after Congress passed a massive plan to stimulate the economy and get Americans working, California has yet to start 41 percent of its highway projects, according to a McClatchy analysis of the most recent federal data.

While some states have put their money to work quickly, others chose projects that have been slower to produce jobs, and so the nation is far from fulfilling President Barack Obama's prediction that the highway stimulus dollars would create or save 150,000 jobs by the end of this year.

So far, according to an analysis of White House data, the highway stimulus spending has produced about 92,000 jobs. While administration officials said last week that the highway program is "on track" to meet its goals, a Department of Transportation stimulus update report found that the program had spent less than it was expected to.

"The highway building was oversold as a short-term jobs creator," said Dan Seiver, a professor of finance at San Diego State University. "I think it is a good way to spend money. But given how capital-intensive road building is, it doesn't generate an enormous number of jobs quickly."

"If you really wanted to have a highway project that is intended to maximize employment, then build the highway with picks and shovels," he added.

Liz Oxhorn, a White House spokeswoman for the stimulus program, said the highway funding is doing what it's supposed to do.

"The more than 14,000 Recovery Act transportation projects nationwide are putting Americans to work across the country just as we said they would," she said. "We stand by our estimates."

Obama is now pitching a $50 billion transportation spending program, saying in a speech in Milwaukee earlier this month that he'd like to create an infrastructure bank that will "create jobs immediately," as well as "make our economy hum over the long haul."

That also was the intent of the 2009 American Recovery and Reinvestment Act, the so-called stimulus bill that's pumping more than $800 billion into the U.S. economy through a mixture of tax cuts and spending programs.

The bill included about $27 billion to help the Federal Highway Administration fix the nation's roads. The money passed from the federal government to the states, which then decided what projects they wanted to fund.

According to the House Committee on Transportation and Infrastructure, which helped design the bill's transportation components, the stimulus package called for money "to be invested in ready-to-go projects." States should give preference to projects that can be "started and completed expeditiously," the committee said.

When the Government Accountability Office recently examined the spending rates in several states, it found that those that emphasized quick-to-start projects already had spent a far larger share of their money than those that didn't. Illinois, Iowa and Mississippi, the GAO said, all had rates above 65 percent.

California, by contrast, had spent 26 percent of its highway money, one of the lowest rates studied by the GAO. Beyond that, Federal Highway Administration data show that 404 of California's 981 projects, or 41 percent, have yet to be started. California will be getting $2.5 billion in highway stimulus funds, more than any other state.

Only Virginia has a higher percentage of projects it hasn't started — 52 percent — federal data show. A spokesman for Virginia transportation officials said the state looked for projects that would have a long-term impact on the state, and that the collaborative process meant it was "several months before we began choosing projects."

Among the reasons for the delays in California: More levels of government were involved in the process.

According to the GAO, California law calls for a high percentage of projects to be administered by local governments, which meant more local reviews and public comment periods. The state also undertook a number of large projects that, whatever their long-term benefits, couldn't be started quickly, the GAO said in a more recent report released on Sept. 20.

"No other state comes close to having this number of locally-controlled projects," said Mark DeSio, a spokesman for the California Department of Transportation. He said local agencies need six months to begin construction on a project, due to the approval processes of local governing boards or commissions as well as federal requirements for obtaining qualified contractors.

Some other states were delayed by their decisions to tackle certain kinds of projects. Among the easiest highway projects to roll out involve resurfacing pavement. It doesn't require extensive environment clearances, it's simple to design and can be bid quickly.

Yet Florida, which has the fifth-highest unemployment rate in the nation at 11.7 percent, chose to use only 12 percent of its highway money for such projects. That's about half the national average, and far lower than Iowa and Illinois, which used about 60 percent of their funds for such jobs, according to a 2009 GAO report.

One of the largest projects funded by the stimulus package is in California — a major upgrade of Interstate 405. In July, the project was singled out by the president's Council of Economic Advisers in its status report on the stimulus package: The project will add 10 miles of car pool lanes to the San Diego Freeway, "increasing capacity along one of the most clogged transportation arteries in America as well as supporting 18,000 jobs."

According to a California transportation officials, the project has produced about 1,000 direct jobs. Asked where the 18,000 figure came from, the state of California said it's based on the full cost of the project — $1 billion — not just the $190 million that's coming from the stimulus package. The state estimates that each $1 billion in transportation funding creates 18,000 jobs among construction contractors as well as "suppliers and other industries that benefit from the project."

Nevertheless, the Obama administration consistently has trumpeted the highway program with optimistic jobs estimates.

In April 2009, Obama spoke at a Department of Transportation event celebrating the stimulus program's 2,000th highway project. He talked about the "remarkable" effort, and detailed how "quickly, efficiently, and responsibly those investments have been made."

"By the end of next year, our investments in highway projects alone will create or save 150,000 jobs," Obama said. "I want to repeat that: 150,000 jobs, most of them in the private sector."

What did he mean? The White House explained last week that he meant all direct and indirect jobs — in other words, jobs that are created both by hiring road workers and the impact the money has supporting other businesses.

Even by that measure, however, a review of the most recent White House job estimates, based on spending through June 30, shows that highway projects have created about 92,000 jobs.

The number of jobs directly created by stimulus money is lower still. A Department of Transportation tally, for example, shows that all stimulus highway projects have supported an average of about 26,000 jobs per month through the year ending June 30, according to a department spokeswoman.

Consider a big project that the president announced in April 2009. The 2,000th stimulus road project set aside about $45 million to widen Interstate 94 and rebuild an overpass near Kalamazoo, Mich. The president said the project "will start this summer, creating an estimated 900 jobs right away — and it will go into 2011, creating nearly twice that many jobs altogether before it's finished."

According to the Michigan Department of Transportation, that I-94 highway job has so far racked up more than 82,000 hours of work since spring 2009 — the equivalent of about 40 full-time jobs, although the number of workers on site varies from month to month. The state said $2.4 million in wages have been paid.

MORE FROM MCCLATCHY

Party like it's 1994: GOP to offer plan to reverse Obama

Another White House economic adviser departs — Summers

Great Recession ended in June 2009, but who knew?

Check out McClatchy's politics blog: Planet Washington

McClatchy Newspapers 2010

McClatchy Washington Bureau is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service