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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.