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.  

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Iowa turning stimulus road funds around quickly

The U.S. House Transportation and Infrastructure Committee has been keeping track of how states are spending the stimulus funds allocated for roads. On September 2 the committee released a report ranking the states according to how much of the American Recovery and Reinvestment Act funding for highways and bridges had been put to work as of July 31. This pdf file contains the state rankings.

Iowa ranked second overall, having put 75 percent of its stimulus road funds to work by the end of July. Join me after the jump for more details from the report and analysis.  

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Tax reform stalled, bonding package still moving

I was expecting a showdown in the Iowa House this week over the tax reform package that Governor Chet Culver worked out with key Democratic legislators. Republican State Representative Chris Rants announced his intention to amend the tax bill so that marriage would be defined as between a man and a woman.

However, the tax bill never came up for a vote before legislators went home for the weekend. House Speaker Pat Murphy said on April 15 that he had only 50 votes in favor of the proposal:

According to Murphy, he had lined up 52 Democrats to vote for the bill, but two Democrats changed their minds after adjustments sought by the governor broadened the number of Iowans who would get a tax cut — and amounted to a roughly $50 million reduction in the amount of income taxes collected.

“All we need is one person to change their mind,” Murphy says. “…We’re still optimistic we’ll get it done before we adjourn.”

Murphy is counting on Governor Chet Culver, a fellow Democrat, to help find the extra vote that will get the bill passed.

“We still believe that it is a middle class tax cut,” Murphy says. “We still believe it simplifies the tax code and we are optimistic that we will pass it yet this year.”

Murphy may be optimistic, but I’m feeling a sense of deja vu. Two months ago House Democrats were stuck at 50 votes for the “prevailing wage” bill heading into a weekend. The governor and legislative leaders failed to find the 51st vote to pass that measure.

If Murphy’s assessment is correct, two Iowa House Democrats supported the original tax reform bill but not the deal worked out with the governor. Does anyone know who they are, and why they are refusing to get behind the revised tax bill? Do they disagree with changes to the bill, or are they spooked by pressure they are getting from anti-tax conservative activists? It would be a big mistake for the legislature to let this bill die now. Overhauling the tax system won’t become politically easier during an election year.

In other economic policy news, Jason Hancock reports today that prospects look good for three bills which, combined, would approve $700 billion in bonding for infrastructure projects in Iowa. Click here for more details about the bills and what they would pay for. The main difference between this package of bills and Culver’s bonding proposal is that the governor wanted $200 million from bonding to pay for roads and bridges. Legislators have specified that the bonds must be used to fund other kinds of infrastructure projects.

Many Iowa legislators wanted to pass a small gas tax increase this year and next to fund more road projects, but a veto threat from Culver killed that proposal. The federal stimulus package approved this year did include about $358 million in highway funds for Iowa (click that link for more details). I’m with legislators on this one. I’d rather see money raised through bonding used for other kinds of projects.

I am glad to see Democrats move ahead on the bonding bills despite a recent Des Moines Register poll. The poll indicated that just 24 percent supported “Governor Chet Culver’s plan to borrow money to speed up public works projects,” while 71 percent said the state should “pay for the projects as it has the money over time.” That’s a badly-worded poll question if I ever heard one. I’ll bet that people who say we should only take on what we have cash for right now will change their mind once bonding money starts funding projects in their own cities and counties.

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Action: Public meeting on transportation policy tonight

I didn’t know about this event when I posted my weekly calendar, but I received an action alert from 1000 Friends of Iowa about an important meeting tonight in Des Moines. The full action alert is after the jump, including details on the place and time. Here is an excerpt:

The Federal Highway Administration (FHWA) & the Federal Transit Administration (FTA) have scheduled a Public Input Meeting to gather comments from citizens regarding the Des Moines Area Metropolitan Planning Organization’s (DMAMPO) transportation planning process.

Every four years the FHWA & the FTA conduct a certification review of the DMAMPO. The review evaluates the effectiveness of the DMAMPO’s transportation planning process, and ensures federal guidelines are being followed. Each MPO is required to solicit and utilize citizen input in local transportation decisions. If citizen input isn’t resulting in changes that reflect the unique transportation needs of the community, the public participation process must be adjusted to make certain it does. […]

The experience of 1000 Friends of Iowa is that the FHA pays attention to the comments of citizens. In the 2005 Transportation Planning Certification Review Summary Report under “Overview of Findings From the 2005 Certification Review”, the FHWA & FTA noted that “The Year 2030 Long-Range Transportation Plan appears to be a collection of local transportation desires rather than a document offering a regional focus for the Des Moines metropolitan area’s future transportation system. The Plan needs to provide a regional vision, rather than just serve as a compilation of local priorities.”  

(emphasis added) With federal stimulus dollars on the way and the state of Iowa potentially

issuing new bonds to pay for infrastructure, it is critical that we not blindly follow a bunch of local wish lists for new roads. We should fix what we have first.

Speaking of which, a new national survey by Hart Research Associates found that

An overwhelming majority of Americans believe restoring existing roads and bridges and expanding transportation options should take precedence over building new roads […]

To accommodate future U.S. population growth, which is expected to increase by 100 million by 2050, Americans favor improving intercity rail and transit, walking and biking over building new highways. When asked what the federal government’s top priority should be for 2009 transportation funding, half of all respondents recommended maintaining and repairing roads and bridges, while nearly one third said “expanding and improving bus, rail, and other public transportation.” Only 16 percent said “expanding and improving roads, highways, freeways and bridges.”

When asked about approaches to addressing traffic, 47 percent preferred improving public transportation, 25 percent chose building communities that encourage people not to drive, and 20 percent preferred building new roads. fifty-six percent of those surveyed believe the federal government is not devoting enough attention to trains and light rail systems, and three out of four favor improving intercity rail and transit.

Transportation for America, a new coalition of more than 225 organizations, has called on President Barack Obama and Congress to “launch a new federal transportation mission.” The federal transportation program comes up for reauthorization in Congress later this year.

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Borrow money for infrastructure, but fix what we have first

The highlight of Governor Chet Culver’s “condition of the state” address yesterday (video here and prepared text here) was a proposal to issue state bonds to borrow up to $700 million over the next few years:

Thousands of new jobs will be created, Culver said. Every $100 million spent on highway construction alone means more than 4,000 new jobs, he said.

“We’re cutting back on the day-to-day expenditures of state government,” Culver said in his Condition of the State speech this morning. “But, at the same time, we will be investing in bricks and mortar – to create jobs and keep our economy going.”

Culver said Iowa won’t need to raise taxes to pay for the plan. The state is in the position to issue bonds, which is essentially borrowing money. Existing gaming revenue would repay the bonds, he said.

Predictably, road industry lobbyists like the spending plans while expressing some doubts about the borrowing plans.

Republicans also don’t seem to like the bonding proposal, while statehouse Democrats think it’s a good idea. State Auditor David Vaudt, who may be a Republican candidate for governor in 2010, said he needed to study the details before expressing an opinion, but noted, “What we’ve got to remember is we’ve got to dedicate and set aside a piece of revenue stream to pay that principal and interest.”

Senate Majority Leader Mike Gronstal made a great point:

Gronstal deflected Republican criticism by pointing out that [Senate Minority leader Paul] McKinley, in his opening day speech, talked about a business he once owned.

“He borrowed every nickel he could and leveraged himself as far as he could because he believed in his future. I believe in Iowa’s future. I believe it makes sense now to borrow money and move this state forward,” Gronstal said.

He added: “This is probably one of the best times in our history to go out and borrow money with a dedicated repayment stream. Do you own a home? Did it make sense for you to borrow money? Or did you just pay cash?”

Gronstal is absolutely right. Iowa has a triple-A bond rating, interest rates are fairly low, and creating jobs is essential to bringing the economy back. Two-thirds of our economy depends on consumer spending, and good jobs generate the money people then spend at businesses in their communities. Construction jobs tend to be good jobs too.

Des Moines Register columnist David Yepsen, who is usually a deficit hawk, also likes the infrastructure bonding idea:

The money will be borrowed over the next few years, supervised by an oversight board and repaid with gambling profits, so no tax increases will be necessary. (If we have to have all this gambling in Iowa, wouldn’t it be nice to see something tangible in return?)

It will be the modern-day equivalent of the Depression-era Works Progress Administration, which built infrastructure we still use today, such as dams, sewers, parks and shelters. Previous American generations left us wonderful systems of interstates, canals, railroads, river locks and dams. What are we leaving our kids? Potholes, bridge collapses and sewers that pollute river ways.

Iowans are a frugal people. Perhaps we are too frugal. According to state Treasurer Mike Fitzgerald’s office, Moody’s Investors Service says Iowa’s per-capita level of public debt ranked 48th in the country last year. Iowa has $98 of state public debt per person. The national average of state debt is $1,158. You could double Iowa’s $98 of per-capita state debt to $200, and we would then rank 46th.

Culver should have told us that. Clearly, most other states saddle their citizens with more debt than is proposed here. And many are more attractive places to live, too, as our children attest when they leave for the better jobs and brighter lights elsewhere.

It’s funny to watch all these Republican legislators, who borrow all sorts of money to buy, expand or repair homes, businesses and farms, now turn prune-faced when Culver suggests doing the exact same thing in state government.

The Des Moines Register explained how Culver’s plan would work:

* Borrow $700 million in 20-year tax-exempt state revenue bonds

* Secure the bonds with about $56 million a year in gaming tax revenues

* Create a Rebuild Iowa Infrastructure Authority to issue the bonds. It will be overseen by a five-member board.

* The authority would be administered and staffed by the Iowa Finance Authority.

How money will be spent:

housing

trails

highways

roads

bridges

mass transit

railways

airports

water quality and wastewater treatment improvements

flood control improvements

energy infrastructure

disaster-relief infrastructure

public buildings

Projects will be judged on:

Whether they are ready to proceed

How quickly the project can be started and completed

Number of jobs to be created by the project

Contribution to sustainability

On the whole, I support the idea. My main concern is that infrastructure money be spent on fixing what we already have, not on building every new road on developers’ wish lists. In the past, our legislators and state officials have focused too much on funding new roads instead of a balanced transportation policy.

The housing slump is likely to continue for at least two more years, and there is no reason to spend large sums to build new highway interchanges and major new roads through undeveloped farmland now. We should spend the money to fix stretches of existing major roads and highways and crumbling bridges, as well as on modes of transit that allow alternatives to driving. These projects will improve the quality of life for large numbers of Iowans while also creating jobs.

As for airports, I would only support spending money on needed repairs and improvements to existing airports. This is not the time to start building a bunch of small regional airports that would benefit a handful of corporate executives.

Culver emphasized that he did not plan to raise taxes, but Gronstal indicated that raising the state gas tax is still on the table.

I would like to hear more lawmakers talk about closing various tax loopholes that mainly benefit wealthy Iowans. The Iowa Policy Project has documented this and various other flaws in our current tax policies.

If you’ve got the time and the inclination, the governor’s official website has a video Culver showed during his address, called “In Deep Water: The Flood of 2008.” Iowa Public Television has House Minority leader Kraig Paulsen’s response to Culver’s address.

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What kind of politicians make history?

The Des Moines Register ran a piece on New Year’s Day called Culver resolves to leave as premier Iowa governor:

Gov. Chet Culver, who plans to run for re-election in 2010, gave himself overall high marks for his first two years in office during an exclusive, year-end interview with The Des Moines Register this week.

Some of the accomplishments he touted include improvements to health care coverage for children, expanded preschool, alternative energy incentives and efforts to help Iowa in flood recovery.

Culver has a picture of former Iowa Gov. Horace Boies on the wall of his office at the Capitol, which he uses as inspiration.

“Some people say he’s the best governor we ever had and that’s my goal: To try to be the best governor we ever had, and I’ve got a lot of work to do to achieve that goal,” Culver said.

I don’t know a thing about Horace Boies, but the piece got me thinking about what Culver would have to do to go down in history as the best governor Iowa ever had.

What makes a governor, or any elected official, memorable in a good way for decades after leaving office?

Some politicians make history instantly by being the first something-or-other to reach a particular position. Whether Barack Obama turns out to be a great president or achieves as little as Millard Fillmore, he’ll be remembered for centuries as the first black man elected president.

Culver’s not going to be remembered for being the first of anything.

Some politicians are good at winning elections but don’t leave much of a legacy. Terry Branstad never lost an election and served four terms as governor of Iowa, but he’s not going to make anybody’s “best governors ever” list.

Bob Ray was a good man and had a lot of crossover appeal. He was re-elected by big margins. (He was the only Republican who ever got my mother’s vote, as far as I know.) He was tolerant and even encouraged foreign immigrants to move here, which may be hard to believe if you’ve only ever known Republicans since 1990. I don’t know whether Ray had any big accomplishments historians will be talking about far into the future, though.

If Culver does an adequate job governing Iowa through a difficult economic stretch, he should be able to win re-election. But if he wants to be remembered 50 or 100 years from now, he’s going to have to do something big to change business as usual in this state.

On January 1 former Senator Claiborne Pell of Rhode Island passed away at age 90. He’s been out of the Senate for more than a decade, he represented a small state, and according to his obituary he was a weak chairman of the Senate Foreign Relations Committee.

Nevertheless, people remember him because Pell Grants have helped thousands and thousands of Americans go to college. Millions of Americans have a friend or relative who received a Pell Grant. The grants may not be large enough to meet the need and have not increased at the same rate as college tuition, but they have improved people’s lives in a tangible way.

Lots of people serve in Congress for decades without ever achieving anything as significant as establishing the Pell Grant program. They may be more politically skilled than Claiborne Pell, but they won’t be remembered in the same way. He was passionate about expanding opportunities for children of modest means, and he made lasting change toward that end.

I don’t know what issues are particularly important to Culver. From my perspective, he needs to be ambitious about achieving some goal that benefits large numbers of Iowans. He’s more fortunate than Tom Vilsack, because the Republicans are not in a position to block his agenda in the legislature. He may need to spend political capital to get the Democratic leaders in the statehouse to back him, but he’s got a better chance than Vilsack to make big changes.

I haven’t seen Culver take a lot of political risks during his first two years. He’s done good things, like raising the minimum wage, making health care accessible for more children and allocating more money to the Main Street program. He’s tried to do other good things, like expand the bottle bill to include juice, water and sports drinks (the legislature did not approve that measure).

But Culver is not out there on any controversial issue. He said he was for local control over siting of large hog lots (CAFOs) when he was running for governor, but he hasn’t done anything to get the legislature to pass agricultural zoning. I don’t expect that to change, even though the Iowa Democratic and Republican party platforms ostensibly support “local control.”

When the legislature debated the TIME-21 proposal to increase transportation funding, Culver did not get behind efforts to increase the share of funds devoted to freight and passenger rail, public transit or maintaining existing roads. As a result, it’s possible that new road construction will consume all of the extra money allocated to transportation.

Culver supports renewable energy, but he hasn’t taken a position on the new coal-fired power plants proposed for Waterloo and Marshalltown. Nor has he leaned on the legislature to pass an ambitious renewable electricity standard (for instance, requiring that 20 percent of electricity come from renewable sources by 2020). That kind of mandate would require utilities to ramp up clean energy production more quickly.

Faced with a major revenue shortfall, Culver took the relatively safe path of imposing a hiring freeze, reducing out-of-state travel, and then cutting spending across the board by 1.5 percent.

Perhaps the Popular Progressive blog was right, and Culver should have spared some state agencies from cuts while imposing deeper cuts on the agencies that are not performing as well.

Depending on what Culver cares about most, and what he views as achievable, he could secure his legacy in any number of ways.

He could become the governor who made sure Iowa’s water was cleaner when he left office than when he arrived. But that would require addressing some conventional agricultural practices that cause runoff problems. Obviously, the groups backing the status quo in agriculture are quite powerful.

Culver could become the governor who took the climate change problem seriously and put us on track to reduce our carbon-dioxide emissions. That means getting behind the recommendations of the Iowa Climate Change Advisory Council and making sure budget constraints don’t become an excuse for doing little to promote clean, renewable energy.

Culver could become the leader who helped solve our budget problems by restructuring government to save taxpayers money without reducing essential services. That might require treading on politically dangerous territory. Maybe Iowa needs to take radical steps to save money, like reducing the number of counties.

My list is not exhaustive, so feel free to add your ideas in the comments.

I’ll wager that anything big enough to put Culver on the all-time great governors list would be risky for him to pursue. He might fail to secure the legislature’s backing and come out looking ineffective. Also, some policies with long-term benefits may be unpopular in the short term, either with the public or with well-funded interest groups.

Playing it safe may give Culver a better chance of being re-elected, but at a cost to his potential legacy.

What do you think?

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