What $36 billion buys: Not enough

stimulus_road.gi.top.jpgA shot of stimulus funds is helping Florida widen its roads.By Tami Luhby, senior writer


NEW YORK (CNNMoney.com) -- Nearly $36 billion in stimulus money has been spent so far on highways, bridges and transit systems. So what have we gotten for our money?

Not nearly enough, according to contractors and representatives of the construction industry. They say the stimulus money has kept some projects on track and some people on the job, but hasn't resulted in a lot of new hiring.

Work is underway on 8,587 projects and nearly 24,000 miles of road have been improved. This activity has directly resulted in more than 250,000 jobs.

But private industry work has yet to revive, while state and local governments are still cutting their budgets. More than 40% of transportation construction companies anticipate they will have to lay off employees this year.

Improving infrastructure was a key feature of President Obama's $787 billion stimulus program, which marks its one-year anniversary next month. The administration touted these enhancement as a way to boost employment and fix the nation's aging roads.

Counting on the stimulus money to spur employment, the administration required that the projects ramp up quickly with a focus mainly on so-called "shovel-ready" projects.

Still, the total stimulus is relatively small. As part of its 2009 spending plan, the U.S. Department of Transportation had appropriated $48 billion for highways, roads and bridges. The stimulus package adds $27.5 billion to that over a two-year period.

"It has not been that big shot in the arm of new projects that would have turned around or blunted the hemorrhaging going on in the construction community," said Mark Casso, president of the Construction Industry Round Table, a group of 100 large construction and design firms.

"The enthusiasm and hope for this process has waned dramatically over the last half year," he said.

Nearly 70% of transportation contractors reported receiving stimulus-funded work in 2009, according to a November survey by the Transportation Construction Coalition. Yet, 63% also reported they had to lay off employees last year due to the poor economy, and 44% expect to let people go this year.

"The job effect is difficult to pin down, invisible I might say, because it comes at a time when much else is shrinking," said Ken Simonson, chief economist of the Associated General Contractors of America.

The labor statistics confirm the sad state of the industry, with employment within the highway, street and bridge construction sector down 10.3% in the first 11 months of 2009, according to federal data.

2010 and beyond will not be pretty. Private sector work remains non-existent, while most states and localities are curtailing non-stimulus funded projects.

"Governments and local agencies don't have a plan for capital spending," said Paul Posillico, senior vice president of Posillico Civil Inc., a Farmingdale, N.Y.-based construction firm that has not landed any stimulus work.

Construction industry executives are lukewarm about a second stimulus bill that passed the House in December and would allocate another $36 billion to infrastructure projects. The bill awaits action in the Senate.

Though the industry would welcome additional money, executives say it's more important for Congress to reauthorize the six-year $286 billion federal transportation funding act, which expired at the end of September. Rep. James Oberstar, D-Minn., who heads the House Committee on Transportation and Infrastructure, wants to increase the funding level to $450 billion over six years.

Reauthorizing the act, the main source of federal money for state transportation agencies, would allow states to plan and execute a wide range of short- and long-term projects.

"Our infrastructure needs are so large," Casso said. "What's required is sustained expenditures and a commitment of dollars over time."

Real projects and real jobs

To be sure, work is getting done. A wide variety of stimulus projects are underway. For instance, Route 2 in Colchester, Conn., is being repaved and I-405 in Los Angeles is getting widened.

Some 82.5% of those projects -- more than 19,760 miles -- were for pavement improvement. About 3.6% -- or 853 miles -- were for new construction or road widening projects. The rest were for safety enhancements or other upgrades.

The preponderance of pothole repair projects has drawn some criticism from industry observers, who would have liked to see more of the nation's larger-scale infrastructure needs addressed.

About $29 billion, or 85%, of the funds devoted to roads, bridges and public transit has been obligated as of Nov. 30, said Oberstar. This has resulted in 251,000 direct jobs and another 379,000 at companies supplying them.

Oberstar, who has prodded state officials to maintain monthly progress reports, said the stimulus funds have put people back on the job and benefited drivers and commuters nationwide.

"It's real," Oberstar said. "We know where the projects are and where the work is taking place. You have a benefit you can put your hands on."

States have tailored their stimulus projects to their specific needs, said John Horsley, executive director of American Association of State Highway and Transportation Officials.

Take Pennsylvania, for instance. The state has a lot of aging bridges, so officials have set aside one-third of their infrastructure funds for bridge repair. Florida, on the other hand, has not had the money to expand its roads to handle the influx of residents who came during the housing boom. Thanks to stimulus, it can start widening highways.

"States were able to decide on projects that made the most sense for them," Horsley said.

Ranger Construction of West Palm Beach, Fla., is one of the beneficiaries of the state's push to increase capacity on its roads. It landed a $20.5 million contract to add lanes to I-95 in Brevard County. That helped blunt layoffs at the firm, which let go of 200 people or about 30% of its workforce last year.

"It saved about 20 jobs, guys we would have had to let go if we hadn't gotten the contract," said Bob Schafer, a vice president at Ranger, which also won a handful of small repaving bids. To top of page

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