The States And the Stimulus: How California and Other States Spent Surface Transportation Funds in the First 120 Days

2009-06-29

Executive Summary

120 days of the stimulus: time to ask “how is the money being spent?”

June 29th marks the 120-day deadline for states to commit at least 50% of American Recovery and Reinvestment Act’s (ARRA) $26.6 billion in transportation funds. It is a good time to examine how states are using the money. This report reviews project choices to answer critical questions about states’ accountability to the taxpayers who are providing tens of billions of dollars for new transportation projects. These questions include:

• Are states and urban areas investing stimulus funds in projects that will generate the most jobs and create transportation for the 21st century?

• Are states and urban areas making progress on the objectives for the ARRA funds?

• Are choices in spending ARRA funds transparent and accountable? Was the public well informed about how those spending decisions were being made and given an early opportunity to have a say in how the money would be spent?

To set the stage for answers to these questions, the report:

• describes the purposes of the law;

• describes the wide range of investments available to the states and urban areas;

• documents the expected outcomes of the legislation as articulated by the President and Secretary of Transportation; and

• compares the economic benefits of building roads, building public transportation, and repairing roads and bridges.

The report also reviews states’ transportation infrastructure needs: what needs did the states have that stimulus money could help solve? The report then compares the spending choices to the stimulus goals and state needs.

Our conclusions are based on the commitments for Surface Transportation Program (STP) funds posted to the US Department of Transportation’s ARRA Section 1511 Web page.

Transportation funding in the ARRA must be evaluated in terms of its multiple goals

The ARRA and federal officials identify nine goals for ARRA transportation funding:

1. create and save jobs

2. fix our crumbling infrastructure

3. modernize the transportation system

4. promote long-term economic growth

5. improve public transportation

6. reduce energy dependence

7. cut greenhouse gas emissions

8. not contribute to additional sprawl

9. reduce commute times and congestion

States could use the stimulus to make progress on urgent needs

The ARRA gave states and urban areas $26.6 billion in flexible transportation funds that could be spent on a variety of non-roadway and roadway-related needs, including: road and bridge repairs; public transportation expansion; bicycle lanes; traffic signals; pedestrian routes; and new highway capacity. Those needs include:

• 18,722 U.S. bridges on state and Interstate systems are rated “structurally deficient” by U.S. DOT, and are “unsafe” according to the American Society of Civil Engineers, including 793 bridges in California.

• One-third of the nation’s major roads are in poor or mediocre condition; more than one-quarter of major urban roads are in poor condition; every year, rough roads cost drivers up to $740; and every $1 spent maintaining a road saves spending $6-$14 to rebuild one that has deteriorated. 82 percent of California's roads are not in “good” condition.

• The backlog of bridge repairs is deep across all regions of the country.

States’ choices will have major impacts on the recovery and our transportation future

The choices that states and urban areas make matter. Different projects have different impacts.

• In general, public transportation and road and bridge repairs produce 31% and 16% more jobs respectively than construction of new roads and bridges;

• On average, repair and maintenance projects spend money and create jobs faster than projects that add new capacity.

• Smaller projects, such as bridge painting, are generally quicker to start than large new projects and are also generally more labor intensive.

• Economic rates of return for new-capacity road projects have been dropping for several years.

Major findings

1. States failed to make as much progress as possible on pressing transportation needs.

Given the opportunity to use ARRA funds to make progress and invest in projects that would produce the highest returns, states and regions made a wide range of choices—some good and some poor.

Good:

In 11 states, 100% of the money going to roads is going to road repair. A total of 17 states are spending 90% or more on repair.

Seven states are spending more than 10% of funds to make progress on expanding choices: on public transportation, walking, and biking.

Of those, outstanding states that are doing both:

Poor:

38.3% of Kentucky’s lane miles are in “Poor” condition, and 573 of its bridges are “structurally deficient.” Yet given $421 million in flexible funds, Kentucky will spend 88% on new roads, rather than fixing the deteriorating system it has. And if the state can't afford to maintain what it has, how does it plan to maintain the new roads?

Other states spending less than half of road money on repair:

How California Compares:

By mid-June, California had spent $2.17 billion out of the $2.6 billion it will receive in surface transportation funds. California did not take advantage of the flexibility of the funds to direct a notable portion to public transportation, despite its benefits. 96 percent has been spent on roads instead of public transportation or other non-motorized needs.

Despite having a backlog of more than $1.5 billion in ready-to-go road and bridge repair jobs, 43 percent of that road funding immediately went to new capacity. California ranked 42nd out of the fifty states for the percentage of road funding that went to repair instead of new capacity.

Nationally:

• Despite a multi-trillion dollar backlog of road and bridge repairs, states committed almost a third of the ARRA STP money – $6.6 billion – to new capacity road and bridge projects rather than to repair and other preservation projects. As the nation grows some places will need additional road capacity. However, given the enormous repair backlog, its costs and threats to human safety, and lower job-creation rates, much of the new road construction does not fulfill ARRA goals.

• Most states did not use ARRA funding to fill the giant backlog in public transportation investment. Given the growing demand for, the need for upgrading, and the many benefits of public transportation, the $185 million allocated so far is grossly inadequate. Even when ARRA’s dedicated funding for public transportation is taken into consideration (a separate $8.4 billion), the total commitment to public transportation falls far short of the need.

2. By focusing STP funds on roads rather than a balanced set of investments, most states met only 2 of 9 ARRA objectives

• Although many states helped close the repair gap and created jobs by emphasizing road preservation, they could have created more jobs, faster, and made more progress on the repair backlog by spending more on repairing the public’s previous investments in the transportation system.

• By allocating few funds (3.7%) to public and non-motorized transportation, states made less progress on modernization, rapid job creation, enhancing public transportation, long-term economic growth, reducing greenhouse gases, oil dependency, and providing low cost transportation choices.

3. Transparency of decisions is lacking, and accountability for results is weak

• Reporting project choices after decisions have been made provides only minimal transparency. Most states failed to educate, engage, and seek input from the public before making decisions. In most cases, it would be almost impossible for the average citizen to find out and then to understand what his or her tax dollars are buying.

• There is not a clear articulation of what project portfolios should accomplish, no methods identified for evaluating projects against these goals or against one another, and few repercussions for achieving or failing to achieve these goals.