Reviewing the Recovery Act

Infrastructure Watch has been following the American Reinvestment and Recovery Act (ARRA) since it was enacted. While infrastructure accounted for a relatively small amount of the total supplementary appropriations provided by ARRA, tens of billions of dollars is noteworthy in any industry. Much of the money that went to infrastructure has been spent and ARRA will begin a slow wind-down from the perspective of infrastructure. It seems like a good time for a review of the program and it effects so far.

INFASTRUCTURE INVESTMENT

ARRA committed only a fraction of its supplementary appropriations to infrastructure. Even so, the $62 billion appropriated to transportation and water infrastructure was significant considering that federal spending in this area had been declining. In 2009, this resulted in a $6 billion increase in federal infrastructure spending, of which $4 billion was directly from ARRA.

The Congressional Budget Office (CBO) estimates that 90 percent of these funds will be spent by 2013. The Government Accountability Office (GAO) had reported that 90 percent of the highway funds had been obligated by February 2010 and about a quarter of that had been paid out to state transportation programs. The clean water and drinking water state revolving fund (SRF) programs had drawn almost 80 percent of the funds by June 2011.

The author and others working in these industries are already looking for what projects or business lines might have the potential to bring in revenues as the ARRA well runs dry in a few years. The prospects aren’t entirely gloomy. Generally, the federal government accounts for only 25 percent of the spending on transportation and water infrastructure. The rest comes almost entirely from state and local governments.

Though federal funding is a minority of the investment in infrastructure, it is a significant portion of the capital investment, with relatively little going to operations and maintenance. This trend continued with ARRA. Smart Growth America criticized ARRA because to much went the construction of new transportation assets and too little to repairing existing infrastructure. They thought the extra appropriation would have been better spent and had a greater economic stimulus if more of it had been spent on the repair of existing infrastructure.

Maintenance of Effort
Though states are already a significant contributor to spending on transportation efforts, ARRA required states to continue funding transportation at the level they would have without the extra funding. Congress wanted to increase spending on transportation infrastructure, not give states a way to shift money to other areas.

The requirement has proven problematic. States are facing losses of revenue that may have forced them to cut transportation spending anyway. In addition, ARRA didn’t require to report what there level of effort would be until several months after they began to use the funds. States may not have, strictly speaking, circumvented the maintenance of effort requirement, but it has become difficult to say they have continued funding as they would have anyway.

JOBS CREATION
ARRA recipients reported more than 580,000 full time equivalent (FTE) jobs in he last quarter of 2010. The way jobs are reported by recipients makes it difficult to determine the exact impact of ARRA on jobs.

ARRA recipients report work-hours that were paid for out of the ARRA funding. In the case of an infrastructure project, these work hours might involve construction trades, construction management, engineering design and oversight, and other services (legal, environmental, and more). The nature of these jobs means that the people may be working part-time on ARRA projects while working part-time on other projects, or temporarily work full time on an ARRA project. It is easy to add up the hours and calculate an FTE. It is difficult to know if any of these jobs were created ARRA, or if they might have ended except of ARRA, or might not have been affected.

This type of reporting has a built-in decline as ARRA money is spent down and projects end. Reported ARRA-related jobs is already declining in the SRF programs. ARRA-related jobs reported from SRF programs peaked in the Spring of 2010 and have declined since. Some foresaw a post-stimulus jobs drop even as it was just getting off the ground.

The author is an example these features of jobs reporting, ARRA work having accounted of about a quarter of an FTE in relation to him over the last 19 months. It’s impossible to say what, if any, other work the author may have done if not involved in ARRA projects; he’s glad to have good projects from wherever they come. When he transfers his effort to other work, hopefully, over the next year or so, his hours reported for ARRA will decline and end.

In addition, only some of the ARRA-funded programs are required to report jobs. Those that report jobs only have to trace them so far, to primary contractors and their subcontracts. It is a practical impossibility to count the jobs created or retained by such a program.

Even so, CBO made a go at estimating it. They estimate that ARRA increased the number of people employed by between 1.3 million and 3.5 million in the last quarter of 2010.

CONSTRUCTION COSTS
In the years before ARRA, construction costs had been rising more rapidly that prices the rest of the economy. Bucking that trend, GAO reported that many ARRA-funded projects were receiving bids that were lower than expected. The author has heard from water utilities and state revolving fund programs that a similar trend is occurring in drinking water and wastewater projects.

The thought is that the recession has made the environment very competitive and more bidders are going after each job. In response, contractors are taking minimal profits in order to get projects and stay afloat until the economy recovers. The Associate General Contractors of America has even suggested that contractors have bid projects at less than cost for that purpose.

This drop in bid prices is a reflection of the economic environment, not a response to ARRA. The touted “bid savings” that have ostensibly allowed the ARRA dollars to stretch farther have provide the same benefit to all the other money spent on construction.

MACROECONOMICS
CBO estimates that ARRA increased the gross domestic products (GDP) by between 1.1 percent and 3.5 percent in the last quarter of 2010.

FEDERAL DEFICIT
CBO estimates that the ARRA will increase budget deficits by $821 billion between 2009 and 2019. They estimated 70 percent of that, approximately $575 billion, was realized by the end of September 2010.

REFERENCES
The following references were used in the preparation of this review of ARRA.

Congressional Budget Office (CBO). Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output from October 2010 Through December 2010. Washington, DC: CBO, 2011.

-----. Public Spending on Transportation and Water Infrastructure. Washington, DC: CBO, 2011.

Cooper, M. Companies pretty up prices to win stimulus projects. New York Times. March 28, 2009.

Farley, R., & Grabell, M. ProPublica and PolitiFact test Obama claims on stimulus. ProPublica. Nov. 10, 2010.

Fields, G. Job cuts loom as stimulus fades. Wall Street Journal. Dec. 1, 2009.

Government Accountability Office (GAO). Recovery Act: Funding Uses for Transportation Infrastructure Projects, but Some Requirements Proved Challenging. Washington, DC: GAO, 2011.

-----. Recovery Act: Funds Supported Many Water Projects, and Federal and State Monitoring Shows Few Compliance Problems. Washington, DC: GAO, 2011.

-----. Recovery Act: One Year Later, States’ and Localities’ Uses of Funds and Opportunities to Strengthen Accountability. Washington, DC: GAO, 2010.

Smart Growth America. Recent Lessons from the Stimulus: Transportation Funding and Jobs Creation. Washington, DC: Smart Growth America, 2011.

The following references are offered for those interested in additional information on ARRA.

Infrastructure Watch (blog). Coverage of infrastructure economic stimulus. May 14, 2009.

-----. Coverage of infrastructure in economic stimulus. Apr. 14, 2009.

-----. Government Accountability Office watches Recovery Act implementation. August 23, 2010.

-----. Infrastructure & recovery news. Oct. 8, 2010.

-----. Infrastructure & stimulus news. June 17, 2010.

-----. Infrastructure economic stimulus in the news. July 1, 2009.

-----. Infrastructure stimulus. Jan. 27, 2011.

-----. Recovery Act and infrastructure in the news. Jan. 26, 2010.

-----. Recovery Act and infrastructure in the news & elsewhere. Aug. 1, 2009.

-----. Recovery Act and infrastructure news. May, 11, 2010.

-----. Recovery & stimulus news. Mar. 25, 2011.

-----. Show me the money: Stimulus & infrastructure news. July 7, 2010.

-----. Summary of transportation stimulus oversight findings. Sept. 27, 2009.

-----. USDOT redirects high-speed rail stimulus away from slow states. Dec. 21, 2010.

McNamar, T. Profiles from the recession. Blueprint America (blog). Sept. 15, 2010.

National News

Airport Improvement Program Extension Passes Congress

A bill to extend the Airport Improvement Program (H.R. 6190) and the taxes that fund it passes both the House of Representatives and the Senate. The bill awaits presidential signature.

Bill Would Alot Additional SRF Funds to Smart Growth States
Rep. Frank Kratovil (MD) has introduced a bill (H.R. 6182) that would provide additional capitalization grants to the clean water state revolving fund (SRF) in states that adopt smart growth principles. The additional appropriation would be 5 percent of the appropriation for the normal capitalization grants.

Infrastructure Bank Proponents

Infrastructure bank proposals have found advocates in Los Angeles Mayor Antonio Villaraigosa and the Treasury Department’s Assistant Secretary for Economic Policy Alan Krueger.

Gina McCarthy Nominated to Lead Environmental Protection Agency

We previously posted that President Barack Obama nominated Gina McCarthy for the post of Administrator of the Environmental Protection Agency (EPA). Given the president’s recent reemphasis on climate change, it makes sense that he might pick the director of EPA’s Office of Air and Radiation.

Emily Badger at The Atlantic Cities reminds us that McCarthy also had a connection to Mitt Romney. She was involved in the Massachusetts Office of Commonwealth Development, which promoted smart growth in the state during Romney’s governorship. So while picking a nominee with climate change credentials, he is also picking someone with a background in smart growth and land use.

Related posts and articles

Gina McCarthy, EPA’s air chief, nominated to head agency (Eilperin, J., Washington Post, Mar. 4, 2013)

News Brief (Infrastructure Watch, Mar. 5, 2013)

Recovery & Stimulus News

Colo. No. 25 for ARRA Jobs (Hicks, L. W., Denver Business Journal, March 25, 2011)
DOT’s Stimulus Payout Reaches $26.7 Billion (Boyd, J., Journal of Commerce, March 23, 2011)
GDOT: Stimulus Program a “Tremendous” Success (Dacula Patch, March 23, 2011)
Mo. Auditor: Oversight Lacking on Stimulus Funds (Jefferson City News Tribune [Associated Press], March 24, 2011)
Rebuilding Green: The American Reinvestment and Recover Act and the Green Economy (Infrastructure USA, March 14, 2011)

$590 million in federal passenger rail funding (Snohomish Times, Feb. 28, 2011)
House Passes Appropriations Bill (Infrastructure Watch, Feb. 21, 2011)
New report reveals smart transportation spending creates jobs, grows the economy (Smart Growth America, Feb. 4, 2011)
Recent Lessons from the Stimulus: Transportation Funding and Job Creation (InfrastructureUSA, Feb. 7, 2011)
Rejected Florida money now could be used for Washington State Railways (NCWTV, Feb. 16, 2011)

Infrastructure Stimulus (Infrastructure Watch, Jan. 27, 2011)

On a personal note, a (hopefully very short) hold on an ARRA-funded project could mean IW may have more time for blogging next week. Bloggingd doesn't pay the bills, so keep your fingers crossed that the project gets moving again,

Bill Watch—111th Congress

Amended Dec. 21, 2010.

H.R. 1—American Recovery and Reinvestment Act of 2009
Obama Signs Stimulus Bill
Transportation Secretary Discusses Economic Stimulus Package
House Passes Stimulus Bill
Drinking Water Not Getting as Much of Stimulus Package as Advocates Hoped
Congress to Consider Recovery Bill
Drinking Water Investment Could Create 400,000 Jobs
Drinking Water News

H.R. 537 - Sustainable Water Infrastructure Investment Act of 2009

H.R. 651—Northeast Corridor Rail Tunnel Safety Act
Amtrak May Benefit from Tunnel Bill

H.R. 1145--National Water Research and Development Initiative Act of 2009
House Passes National Water Research and Development Initiative Act
National Water Research & Development Initiative Reported Out of House Committee

H.R. 1262—Water Quality Investment Act of 2009
House Passes Water Quality Investment Act of 2009

H.R. 1682--Bridge Life Extension Act of 2009
Bridge Bill Could Require States to Address Corrosion

H.R. 1770—Dam Rehabilitation and Repair Act of 2009
Congress Considers Dam Safety Bills

H.R. 2104--Safety, Efficiency, and Accountability in Transportation Projects Through Public Inspection Act of 2009
Bill Would Require Surface Transportation Inspections by Public Employees

H.R. 2164—Federal Streetcar Revitalization Act of 2009
Bill Introduced to Bring Back the Streetcar

H.R. 2232
Bill Would Create National Tunnel Inspection Program

H.R. 2521—National Infrastructure Development Bank Act of 2009
Another National Infrastructure Bank Bill Proposed

H.R. 2707—National Freight Mobility Infrastructure Act
Bill Introduced to Improve, Tax Freight Transportation

H.R. 2847 – Jobs for Main Street Act
House Passes Jobs for Main Street Act

H.R. 2997 - Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act
Farm Bill Includes Environmental Funding
Water Roundup

H.R. 3183 - Energy and Water Development and Related Agencies Appropriations Act
Water Legislation — recycling, research, efficiency
Water Roundup

H.R. 3202—Water Protection and Reinvestment Act of 2009
Water Infrastructure Funding Bill Introduced

H.R. 3747 - Water Efficiency, Conservation and Adaptation Act of 2009
Clean Energy and Drinking Water Bills Working Way through Congress

H.R. 3598 - Energy and Water Research Integration Act
Water Legislation — recycling, research, efficiency
Water Roundup



H.R. 3727 - Drinking Water Adaptation, Technology, Education, and Research (WATER) Act
Environmental, Energy Bills Introduced in Congress

H.R. 4202 – Green Infrastructure for Clean Water Act
Blog coverage of H.R. 4202 from OpenCongress
Green Infrastructure Bill Introduced

H.R. 5679 – End the Stimulus Advertisement Act
What’s Up in Congress

H.R 5892 - Water Resources Development Act of 2010
Congressional Activity
H.R.5892 - Water Resources Development Act of 2010

H.R. 5897 - Economic Revitalization and Innovation Act of 2010
Congressional Activity

H.R. 5899 - A Roadmap for America’s Energy Future
Congressional Activity

H.R. 5922 - Small-Scale Hydropower Enhancement Act of 2010
Congressional Activity

H.R. 6182 – additional SRF funding for smart growth states
National News

H.R. 6190 - Airport and Airway Extension Act of 2010, Part III
National News

H.R. 6519 – Railroad Hours of Service Act of 2010
111th Congress Wrapping Up

S. 732—Dam Rehabilitation and Repair Act of 2009
Congress Considers Dam Safety Bills

S. 841 – Pedestrian Safety Enhancement Act of 2010
111th Congress Wrapping Up

S. 1318—Axe the Stimulus Plaques Act
Bill Would Axe Stimulus Plaques

S. 1498—Surface Transportation Extension Act of 2009
Senate to Debate Extension of Transportation Programs

S. 1711 - Water Efficiency and Conservation Investment Act of 2009
Environmental, Energy Bills Introduced in Congress

S. 1712 - Water Efficiency, Conservation and Adaptation Act of 2009
Clean Energy and Drinking Water Bills Working Way through Congress

S. 1713 - Water Efficiency via Carbon Harvesting and Restoration (WECHAR) Act of 2009
Environmental, Energy Bills Introduced in Congress

S. 1733 – Clean Energy Jobs and American Power Act
Clean Energy and Drinking Water Bills Working Way through Congress

S. 3262 – Sustainable Water Infrastructure Investment Act of 2010
America has Huge Need for Water Infrastructure Improvements

S. 3553 – Permanent Prevention of Asian Carp Act of 2010
What’s Up in Congress

S. 3561 – Green Infrastructure for Clean Water Act of 2010
What’s Up in Congress

S. 3736
Congressional Activity

Federal Agencies Agree on Sustainable Communities Principals

Transportation Secretary Ray LaHood, Housing and Urban Development Secretary Shaun Donovan, and Environmental Protection Agency Administrator Lisa P. Jackson announced an interagency partnership for sustainable communities. Testifying together before the Senate Banking, Housing, and Urban Affairs Committee, they outlined the six guiding ‘livability principles’ they will use to coordinate federal transportation, environmental protection, and housing investments at their respective agencies.

The six livability principles that will act as a foundation for interagency coordination are

1. Provide more transportation choices. Develop safe, reliable and economical transportation choices to decrease household transportation costs, reduce our nation’s dependence on foreign oil, improve air quality, reduce greenhouse gas emissions and promote public health.

2. Promote equitable, affordable housing. Expand location- and energy-efficient housing choices for people of all ages, incomes, races and ethnicities to increase mobility and lower the combined cost of housing and transportation.

3. Enhance economic competitiveness. Improve economic competitiveness through reliable and timely access to employment centers, educational opportunities, services and other basic needs by workers as well as expanded business access to markets.

4. Support existing communities. Target federal funding toward existing communities – through such strategies as transit-oriented, mixed-use development and land recycling – to increase community revitalization, improve the efficiency of public works investments, and safeguard rural landscapes.

5. Coordinate policies and leverage investment. Align federal policies and funding to remove barriers to collaboration, leverage funding and increase the accountability and effectiveness of all levels of government to plan for future growth, including making smart energy choices such as locally generated renewable energy.

6. Value communities and neighborhoods. Enhance the unique characteristics of all communities by investing in healthy, safe and walkable neighborhoods – rural, urban or suburban.

Related articles and posts:
Original DOT news release
Federal Housing and Transportation Agencies Team Up

ARRA Still News

Here is a summary of some recent news about the American Reinvestment and Recovery Act.

OSHA Activities Under the Recovery Act (Department of Labor, July 16, 2013)

OSHA, State Plans Did Not Use Almost Half Of Allocated Recovery Act Funds, Audit Finds (Rolfsen, B., Bloomberg BNA, July 25, 2013)

Upgraded Palm Springs Airport tower ready for increased business (Descant, S., Desert Sun, July 26, 2013)

Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output from October 2012 Through December 2012 (Congressional Budget Office, Feb. 2013)

In Congress (Infrastructure Watch, Feb. 22, 2013)

In Shovels, a Remedy for Jobs and Growth (Porter, E., New York Times Economic Scene, Feb. 12, 2013)

INSPECTOR GENERAL QUESTIONS $12 MILLION IN SMART GRID RECOVERY-RELATED COSTS (Recovery.gov, Feb. 20, 2013)

Crumbling Pipes and Underground Waste: A Glimpse at Our Ailing Sewer System (PBS News Hour, Jan. 3, 2013)

American Reinvestment and Recovery Act News (Infrastructure Watch, Dec. 4, 2012)

Recovery Act Review (Infrastructure Watch, Dec. 4, 2012)

Waiver From Rescission of Unobligated Funds Under the American Recovery and Reinvestment Act of 2009 (Obama, B., Federal Register 77, 70883, Nov. 27, 2012)

Clean-energy subsidies are vanishing. What should replace them? (Plumer, B., Washington Post Wonkblog, Apr. 18, 2012)

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