A short-term gain could jeopardize infrastructure funding in the long term
Oklahoma Dept. of Transportation Sec. Gary Ridley told the House Transportation and Infrastructure Committee that the American Recovery and Reinvestment Act (ARRA) has been a huge success. In fact, Ridley said, more than 90% of the highway funds allocated to Oklahoma under the program have been assigned to projects, and 83% of those projects are under construction.
“We have moved much faster than the law required,” he said, while testifying on behalf of the American Association of State Highway and Transportation Officials. “More than 5,400 highway and bridge projects valued at $14 billion are under construction in every part of the country,” he added.
Now, that investment of $21 billion might seem like small potatoes if President Barack Obama gets his wish. The President proposed a major investment in the country's infrastructure, perhaps $50 billion or more. According to a report in The New York Times, the President said the cost could be offset by some of the $200 billion in lower-than-expected spending on the earlier federal bailout of financial institutions.
Many believe the boost to infrastructure spending is a way to quickly create jobs and bolster an economy that is struggling to emerge from the recession. That short-term outlook, though, has some concerned. Rob Puentes, senior fellow in the Brookings Institution's Metropolitan Policy Program, is worried that the short-term solutions could be harming the long-term stability of infrastructure improvements. “For two years literally, there's been a steady drumbeat for transportation reform,” he told Fleet Owner. “The one thing we've all agreed on is [the system] is broken and we need reform. But with the economy, we all kind of forgot about that.”
Puentes said that the Administration needs to balance long-term infrastructure needs, primarily through the six-year highway reauthorization bill, with the short-term needs to pump up the job market. “We don't have to have the two things separate,” he said. “I think the frustration a lot of people here in Washington feel is we keep forgetting about reform.”
Obama's latest plan is short on specifics at the moment, although he's touting the impact it will have on hiring. “These are needed public works that engage private-sector companies, spurring hiring across the country,” the President said. “Already, more than 10,000 of these projects have been funded through the Recovery Act. And by design, Recovery Act work on roads, bridges, water systems, Superfund sites, broadband networks, and clean energy projects will all be ramping up in the months ahead.”
Both Obama and Sec. of Transportation Ray LaHood spoke at Brookings recently and both told their audiences the U.S. needs to be creative when it comes to transportation funding. “The President did talk about transportation, but there is a big [long-term] funding problem,” Puentes said.
Without many specifics, though, the actual impact on transportation is still a bit murky. “I wish we knew,” Ken Simonson, chief economist for Associated General Contractors of America, told Fleet Owner. “He was pretty vague in the speech itself and we're still trying to run down specifics. We're not sure how the $50 billion number we keep hearing will be spent.”
The overall impact is also unclear at this time, Simonson said. “Contractors are waiting for assurances that there will be a long-term investment [in projects],” he added. “States have been cutting back on projects for the last two years, so without this additional money, it is” a certainty that they would have continued.
Beyond the impact on infrastructure is a more important question facing the Administration that also has not been addressed. With the six-year highway reauthorization bill still not signed as of press time, could this proposal simply siphon money away from the long-term bill?
“Chairman [James] Oberstar [D-MN] is all for any proposal that will spend money on restoring our national transportation infrastructure,” Jim Berard, communications director for the Committee on Transportation and Infrastructure told Fleet Owner. But, Oberstar, committee chairman, “is concerned that any supplemental jobs bill not be seen as a substitute for a long-term authorization.”
There seems to be little doubt about the immediate benefits of this plan to create jobs through infrastructure improvements. What no one seems to know at this point is what impact this short-term solution will have on the long-term outlook of transportation in the U.S.