Shovel Ready or Ready to Shovel?

Remember the transportation stimulus package? Whatever happened to that money? I’m pretty sure it got allocated, but weightier transportation stories like hot-air-balloon fraud seem to have bumped highway spending off the front page. To catch you up, here are some recent numbers that are worth mulling over.

“One man’s bureaucratic red tape is another’s essential framework to prevent the public from being ripped off.”

Figures from the California Department of Transportation show that, as of late October, over $2 billion in federal highway funds had been allocated to the state when the American Recovery and Reinvestment Act passed in February. Of that sum, only $837 million had been awarded in construction contracts. Even more surprising, only $51 million, or about 2.5 percent of the total, had actually been disbursed. Given all the talk when the ARRA was passed about the many projects that were “shovel ready” and primed for construction, this is perhaps a bit disheartening. After all, this spending was pitched as a way to pump immediate life into a collapsing economy.

Before you lay siege to the Sacramento statehouse with your torches and pitchforks, there are many qualifying caveats.

First, don’t single out California. Overall, the U.S. Department of Transportation has managed to disburse only $5.5 billion to the states out of the $30.5 billion in available transportation funds. Unless the bulk of the money has accidentally disappeared between the couch cushions in the DOT employee lounge, other states are having trouble spending quickly as well.

Second, there are good reasons for the slow pace of the process. Many procedures have to be followed before government money can be spent, especially on big capital investments. And one man’s bureaucratic red tape is another’s essential framework to prevent the public from being ripped off. Would you like the contracts awarded without a competitive bidding process, or would you like to have the construction cause irreversible environmental damage? If not, proposals have to be prepared, projects evaluated and prioritized, studies completed, presentations given, bids weighed, plans finalized, and so on.

Also, these figures may mask a degree of spending that has already taken place. Undoubtedly, there has been some stimulus as private contractors spend money (e.g. take on new staff) in anticipation of the arrival of stimulus funds. Also, there was some acceleration of state projects that were already in the pipeline.

In addition, there is general consensus that, although the economy has been showing signs of life lately, the recovery will be slow. So the transportation stimulus, even if a bit late in arrival, will still be welcome.

Finally, I have no doubt that many very important transportation benefits will flow from the facilities that are constructed or repaired using this money. The administration was not looking only at the stimulus effects of ARRA transportation package. It was also considering the eventual payoffs in terms of time saved, increased productivity, fatalities prevented, and so on. As Brian Taylor of UCLA and Jianling Li of the University of Texas at Arlington have demonstrated, larger projects, and projects that are more capital-intensive, have slower outlay rates. Thus, while simple tasks like road resurfacing can plow ahead quickly, more “game-changing” and ambitious investments — like building highways or rail transit lines, adding HOV lanes, or improving interchanges — are bound to take a while to gear up.

But I would like to make one plea as a result of these numbers. That is that the phrase “shovel ready” be defined as “ready to shovel.” If we’re looking at two months of shovel design, then a month of steel tensile strength testing, then two more months evaluating the bid from the Matsuhito Shovel and Spade Conglomerate, then a three-month wait while the president’s Council on Shovel Safety comes out with its report, we should probably call it “bureaucracy ready,” or perhaps “advanced-planning ready” if “bureaucracy” is too pejorative a term. If we’re promised immediate stimulus we have a right to immediate stimulus; if the system will take a while to gear up, no matter how worthy the reasons, we have a right to know that going in.


Andy

What's most disheartening is that the people who sold this as an immediate boost to the economy knew exactly how long it would take for the cash to land in struggling citizens' pockets. This delay may be a surpirse to the general public but these politicians knew better. (As usual.)

JimBob

Ah yes, the all important outlays like the airport project that has only 35 passengers a day going to that airport? Or how about a bridge that is only linked to 10 families on the other side? I'm sure these are wonderful stimulative projects that will generate significant ROI to taxpayers for years to come.

jim

The caveats are bogus. Again, this money was supposed to be for SHOVEL READY projects, not proposals or interesting ideas.

Ezra

Eric: Perhaps in a later column you could discuss the pros and cons of, simply, giving the money away to "ordinary" Americans? Obviously, there are some serious inflation concerns, on the one hand, but, on the other, there would be no need for bidding processes, environmental studies and the like. Or maybe a combination of (less) funding for capital projects and (more) tax cuts or grants to ordinary taxpayers would be in order. Your thoughts?

JorgeN

"shovel ready" evokes Depression era photos of hundreds of men, picks, shovels and wheelbarrows, putting food on the table of the unemployed.

While it is desirable to maintain, upgrade and extend our (crumbling) infrastructure, current construction methods require small specialized crews, think bulldozer, backhoe, truck, roller and paver, and the impact on the unemployed would be modest.

For the unskilled there's only the bright orange best and small flag to wave.

cirby

From other reports, it's fairly obvious that all of that California money went to the 55th Congressional District...

Doc

If all that is true, then why is much of the Baltimore beltway and one of the major routes to DC (Route 29) already repaved, along with multiple long-overdue street repairs in the city of Baltimore?

Brian in PA

this "stimulus was bogus to start with. such a small portion to be used for actual investment, and that is not working. If they wanted to quicly stimulate the economy they should have picked 1600000 randome TAXPAYERS and awarded them 500000 tax free dollars. That would stimulate the economy!

John

Although I was been skeptical of the stimulus from the get go- I for one, am estatic that these 'shovel' ready proposals are in the marketplace. My company (a Commercial GC) have postponed layoffs multiple times because the staff is needed if we were to win some of these projects. The market is bidding on this work- for one, the GSA has opened their floodgates and are putting projects in place as quickly as possible. Spending that amount of money is a daunting task. Normal project spending tops out, monthly billing for a large, fast track project only reach the $1M - $2M range and it takes months of planning and work to get there. The spending can only go as fast as crews can work.

After all- this money is being put into the economy through general contractors, and when was the last time a general contractor was able to do anything quickly? (only half joking)

Fla Joe

If the money had gone out without any safeguards or budget reviews the same critics of the Stimulus saying how slow it is, would then say look at the waste and fraud. No pleasing certain people.

PS - these grants will be going out & getting spent over the next 12-24 months and there is no probability of state and local tax collections climbing back to 2007-2008 levels in the the near future. So think of think as job salvation, preservation, or creation - but without this money things would be a lot worse.

Eric M. Jones

Some of you guys apparently don't get out much. Around here there are road crews and public works projects happening everywhere. Word is that it is mostly stimulus money.

Perhaps Massachusetts was ready to go and some states still aren't.

Nicolas Clifford

Relax, everybody. The stimulus funds are supposed to prevent the economy from grinding to a halt. In transportation, they have largely done that. Firms in the sector have avoided layoffs, planning bureaus are working overtime... a huge sector of the economy has NOT stalled, and the stimulus projects are the primary reason.

This "slowdown" is going to take a couple of / few years to smooth out, if we can do it at all. That most of the money be spent in 2010 instead of 2009 is not at all a bad thing....

Daniel

So I'll be getting my job back in a couple of months? Kidding, of course.

So I'll be awarded that grant I applied for in a couple of months?

Joe D

Think of Brewster's Millions: It's hard to spend a lot of money in a short period of time without unintended consequences.

There can't have been $200B in shovel-ready projects because that money simply wasn't there before ARRA. Wishlist projects? Those are of necessity months to years from the first orange cone.

another Andy

OK. You know the what, half dozen other countries that have mag-lev bullet trains? go find out what they did, then copy and adapt it. Afterall they got rich copying, adapting and advancing "American" technologies. Intellectual property rights are the main impediment to global development. As for the money, well ya gotta put it where your mouth is. And hina is looking to protect it's American "investments" when they propose a global reserve currency. You know what? If you guys had have instituted the Tobin tax and continued Carter era energy research it may well have been we all wouldn't have been in this mess right now, As it is now, well, there's the future to consider...

Luca

I think these are disheartening numbers. I think it would have been better then to use the stimulus money to avoid laying off state workers and closing services -- that would have had an immediate effect. Also, paying people salaries puts money in the right place for helping the economy. A larger of the money for transportation projects, on the other hand, ends up paying materials and supplies, which come also from abroad, providing less of an incentive for the US economy. After all, the number of people in the road construction industry is smaller than the number of state workers overall.

It makes no sense that California was putting workers on furlough and firing teachers while the money for transportation was not being disbursed. This is a plain example of bad planning, and poor administration. As it is, the money for transportation will be spent when the recovery will be already taking place.

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richard schumacher

At the same time some rather useless projects were indeed shovel ready and are now under way. One example is a city-owned convention center hotel in Dallas, where the city center is already oversupplied with hotel rooms in the face of a long-term decline in convention center business. And yet this project got $300 million of stimulus funding.

louie one eye

how long would it take to make substantial direct deposits into the bank accounts of every adult?

simple not difficult honest

helping people's lives NOW is the wise thing to do if the power brokers want to maintain the status quo in a sensible way.

Leland Witter

In Chicagoland, where we have 2 seasons - winter and road construction, the latter has been WAY more brutal than usual. There is construction everywhere. It is hard in places sometimes to find any routes that aren't under construction.

Of course, Chicago and Illinois have always been pretty efficient at spending government money. Not sure, but it seems like they have reworked the same stretch of 294 by O'Hare about three times in the last 5 years.

VinnyC

As a licensed NY State professional transportation engineer, I am right in the middle of the transportation stimulus process. The whole "shovel ready" concept was ill-conceived and caused a lot of frustration on the part of many potential sponsors of local projects. Small agencies like towns and villages rarely have plans for significant projects on the shelf waiting for funding, rather, they tend to design and build the local projects once funding is in place, mostly through bonding. This resulted in the major agencies, like NYSDOT and the counties, grabbing up all the early stimulus money, because they always have projects in the pipeline, which in turn led to the perception that the stimulus money was going toward resurfacing the whole country. Add to that the lack of familiarity with the process on the part of the local sponsors, and it was easy to see why local sponsors became disenchanted with the program.
To their immense credit, the administration has been issuing subsequent rounds of requests for projects, with timelines much more forgiving than the earlier "shovel ready" requirement, that will keep transportation stimulus money in the pipeline for several more years. I can personally attest that this program has saved jobs in this company, where we had had the first layoffs in its 25 year history, and were facing more.

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