How well did Iowa use transportation stimulus money?

Last week the non-profit organization Smart Growth America released a report on “how successful states have been in creating jobs with their flexible $26.6 billion of transportation funds from the American Reinvestment and Recovery Act (ARRA).” The report demonstrates that “the states that created the most jobs were the ones that invested [stimulus funds] in public transportation projects and projects that maintained and repaired existing roads and bridges. The states that spent their [stimulus] funds predominantly building new roads and bridges created fewer jobs.”

Table 2 of the full report (pdf file) ranks the states in terms of percentage of road spending allocated to “system preservation” (road and bridge repair) versus building new capacity. Here Iowa did well, spending 93 percent of the stimulus road money on repair work. Iowa ranked 12th in this category; seven states and Washington, DC spent 100 percent of their ARRA road funds on repair.

Iowa didn’t score as well (30th place) on Smart Growth America’s list of states by the percent of stimulus transportation funding spent on public transit or non-motorized projects. Just 3.5 percent of Iowa’s transportation stimulus money went to such projects. That’s not surprising; it has long been difficult to persuade Iowa policy-makers to invest more in passenger transit, even though we have an aging population, and many older Americans want alternatives to driving. A long-range transportation funding plan adopted in 2008 didn’t require a single extra dollar to be spent on public transit in Iowa. The Republican-controlled Iowa House has already voted to scrap funding that would help bring passenger rail service to Iowa City, and Governor Terry Branstad didn’t include passenger rail funding in his draft budget for the next two years.

After the jump I’ve posted excerpts from the full report, which explain why repair and transit projects create more jobs per dollar spent. A memo about the recent opinion poll findings references below can be downloaded here (pdf).

Smart Growth America’s latest study didn’t assess the rate at which states turned around their stimulus transportation funding to create jobs. A 2009 study by the U.S. House Transportation and Infrastructure Committee showed that Iowa was the second-best state in terms of allocating stimulus road funds quickly. At the end of July 2009, 85.1 percent of the $358 million Iowa received for highway and bridge projects was under contract, and 74.9 percent was for projects already underway. Those percentages were more than double the national average.  

From a February 2011 report by Smart Growth America, Recent Lessons from the Stimulus: Transportation Funding and Job Creation.

Introduction

As part of the American Recovery & Reinvestment Act (ARRA), states and Metropolitan Planning Organizations (MPOs) received $26.6 billion in transportation funds that could be spent on almost any surface transportation needs. While there were many national goals for this money, arguably the most pressing need was to save and create jobs.

The question Smart Growth America answers in this report is whether states spent their flexible transportation money on projects that created the maximum number of jobs.

The short answer to that question, unfortunately, is no.

Too many states did not use ARRA transportation funds on projects that would have provided the greatest number of jobs-short- and long-term. This report explores how states allocated their believe that maintaining and repairing transportation dollars, analyzes the resulting num-ber of jobs created per dollar spent and provides recommendations on how states could have better invested their dollars to create the most jobs.

How States Could (and Should) Have Spent the Money

According to a recent national survey conducted by Smart Growth America, 91 percent of voters believe that maintaining and repairing our roads and bridges should be the top or a high priority for state spending on transportation programs, and 68 percent believe that expanding and improving bus, rail, van service, biking, walking, and other transportation choices should be the top or a high priority. […] When it comes to transportation spending, they don’t think we need to build more roads and highways, but rather we need to fix what we already have.

Not only does the public think maintaining and repairing roads and bridges and expanding public transportation options are the areas states should focus on, the data show clearly that this is the right thing to do.

In 2009, the University of Utah’s Metropolitan Research Center reviewed a wide set of literature and data on the job and economic impacts of transportation spending, and reported five conclusions relevant to choosing transportation stimulus projects.1

The key findings included:

1. Public transportation, and road and bridge repairs, produce more jobs. Public transportation investments generate 31 percent more jobs per dollar than new construction of roads and bridges, and repair work on roads and bridges generates 16 percent more jobs per dollar than new bridge and road construction.

2. Repair and maintenance projects spend money faster and create jobs more quickly than building new. Repair and maintenance projects are open to more kinds of workers, spend less money on equipment and more on wages, and spend less time on plans and permits. New capacity projects also require more funding for buying property, which has little or no stimulative or reinvestment value. The data show this clearly for road repair; the same logic applies to repairing public transportation assets.

3. Fixing existing infrastructure produces a higher return on investment than new construction because repair:

• prevents the need for reconstruction later, which costs 4 to 14 times as much;

• saves money by reducing damage from potholes and vibrations;

• Keep existing communities vibrant. Neglecting existing places while building new infrastructure drives growth out, and means the public ends up buying two of everything.

4. The best transportation investments improve connections between and access to different forms of transportation to regional centers. Economic returns from these investments exceed returns from other investments by significant margins.

5. Investing in areas with high job needs improves employment faster than investing elsewhere. Putting or keeping public transportation in communities with high unemployment produces up to 2.5 times more jobs than putting public transportation in communities with low unemployment.

Why do repair and maintenance projects create more jobs?

• They’re more labor intensive. Any repair project spends less money on land acquisition than does a new project. Dollars that go to real estate can’t go to jobs.

• They put more money into the economy faster. Almost all repair projects can be completed in a construction season. In contrast, the Federal Highway Administration (FHWA) says that most new construction projects pay out over seven years, with only 27 percent of funds actually spent in the first year. That means repair and maintenance projects will spend at least three times as much money in the first year than capital projects will.

[…]

Recall that going in to ARRA, studies of transportation job creation all showed that on average, road repair produced 16% more jobs per dollar than new road construction, and public transportation produced 31% more jobs per dollar than new road construction. The actual ARRA job-creation data confirm that public transportation creates more jobs per dollar than roads, and that repair creates more jobs than new construction and purchases.

Public transportation: SGA analyzed the data col- lected and published by the House Transportation and Infrastructure Committee, for all 50 states. The data show that:

• Every $1 billion committed to ARRA highway projects has produced 2.4 million job-hours.

An ARRA dollar spent on public transportation is yielding 70% more job hours than an ARRA dollar spent on highways.

• Every $1 billion committed to ARRA transit projects has produced about 4.2 million job-hours.

Repair: SGA did an in-depth review of ARRA public transportation investments in three states: Massachusetts, California, and Georgia. These states each committed substantial amounts of funding to public transportation, providing a rich set of data. SGA found preventive maintenance had by far the highest direct job-per-dollar result, followed by rail car purchase and rehabilitation, operating assistance, infrastructure, and bus purchase and rehabilitation. Because this is an analysis of only three states, we take these results as preliminary, but also as consistent with previous studies showing greater job creation from repair.

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