Part 8: Lessons Learned & Getting Prepared for Stimulus Funding
by Paul Schmitz, on Jul 30, 2020 2:35:00 PM
Over the past eight weeks we have looked at the various impacts of COVID-19 on transportation construction. Even though this pandemic has caused major disruptions across the board, we can take strategic actions now to make sure we are better prepared for potential stimulus funding that could become available. This week we asked our panelist to share their experiences with past legislation surrounding stimulus funding and important lessons learned along the way.
Could you share any experiences or lessons learned by your firm from the 2009 ARRA Infrastructure Act that could be applied to a potential infrastructure stimulus bill this year or next?
- Ken Simonson (Chief Economist – The Associated General Contractors of America – AGC)
Emphasize projects that improve connectivity and productivity beyond state borders, not immediate job creation. One of the bigger long-term benefits may come from projects to remove bottlenecks, such as the “CREATE” rail interchange project in and around Chicago, although that probably supported few jobs and took several years to complete (if it has been). In contrast, funds for “shovel-ready” asphalt repaving and training workers to do home weatherization provided little, if any, long-term benefit.
The most efficient use of ARRA funding for us was to use it in projects that were ready to go Preservation and Rehabilitation types. They were able to move on quickly and provided a benefit to the system health.
- Nick Goldstein (VP of Regulatory Affairs – American Road & Transportation Builders Association – ARTBA)
Ensure that any funding appropriated for surface transportation programs is indeed additive to the overall investment picture. In 2009, the federal ARRA investment only supplanted the cuts made by states to their programs. If states need additional funding this year to offset revenue declines, federal lawmakers should not confuse that as stimulus as it will not increase the overall transportation construction marketplace.
- Dan Baker (Director of Strategic Initiatives – Tensar)
This infrastructure act was instrumental in helping to facilitate scores of projects that otherwise would have been shelved for years or decades. What we noted was that agencies were very open to innovative solutions to help stretch these funds as far as possible, while getting a better pavement structure and more lane miles addressed in the process.
- Michael Mangione (Senior Vice President – WSP USA)
States need maximum flexibility to manage fund use to their distinct and varied needs. In 2009, ARRA and shovel-ready was extremely restrictive in terms of how/where project money could be spent and resulted in the use of dollars based on shovel-ready projects instead of being used where there were the greatest needs and economic benefits. As a result, there were a lot of highway paving done while not much in the way of expansions/safety/modernization. Additionally, the 2009 federal reporting requirements and certifications were inefficient and cumbersome.
New stimulus must address the long-term national infrastructure crisis. Our nation’s infrastructure was in crisis before COVID-19 and the pandemic has only made the crisis worse. Many local agencies have had to significantly reduce or completely eliminate their capital improvement programs this year due to reduced revenues needed to support program costs.
Recognition of the complexity of the federal program and how it is structured to help small agencies use the revenue for their projects. CCTA pushed for what we call the “Single Document” and it was included in the FAST Act. In order to allocate and expend federal dollars, a project must have a NEPA environmental document. In California, we also have CEQA. In order to “federalize” a project, you must have a NEPA document, and if you want to spend any state dollars on the same project, you need a CEQA document. Under the Single Document decision, local agencies like CCTA could have the ability to just do a CEQA document (which is more stringent than NEPA) to expend federal dollars, but the State of California has not completed the requirements as laid out in the FAST Act to allow agencies like ours to take advantage of this efficiency. Also, in the last infrastructure stimulus bill, the ARRA dollars were for construction. It would be great to have the flexibility to also use stimulus dollars to help get projects ready to go to construction – which is often a very long and expensive process.
Advancing infrastructure projects have proven time and time again as a good economic stimulant so it will be good to have another Infrastructure Stimulus Bill this year.
From our perspective, projects that are in the planning stage for construction are better projects than simply maintenance projects. Planning projects that go to construction provide better long-term value for the owner and the tax payer. Also, stimulus money going directly to offset lost sales tax or gas tax revenues would be well spent as it would also help local cities as well.
Does your firm have experiences and lessons learned from the 2009 ARRA Infrastructure Act that could be applied to a potential infrastructure stimulus bill this year or next?
Many of the projects were required to be shovel ready, but not necessarily the ones most needed by the communities. The funding measure appears to be more of an interest free loan than "free" money, which will increase the future tax burden of already leveraged governments.
ARRA focused mainly on "shovel ready" projects. This nation's infrastructure is well beyond anything that can be helped by "shovel ready" projects. Serious considerations to rehabilitating underground utilities, rebuilding bridges, improving capacity of roads and airports, and practical public transit solutions, need to be at the forefront of any stimulus or reauthorization.
This concludes our eight-part series on the COVID-19 pandemic’s influence on the transportation construction industry. We hope everyone reading these articles were able to gain some helpful insights from our group of panelists from agencies, engineering firms, contractors and industry associations directly involved in the transportation industry. Again, many thanks to this group of panelists for taking the time to contribute to this important and timely Q&A series.
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