AASHTO Journal, 21 February 2014
A report released this week by the National Cooperative Highway Research Program (NCHRP) and the Transportation Research Board (TRB) titled “Transportation Investments in Response to Economic Downturns,” examines the transportation investments that were included in the American Recovery and Reinvestment Act of 2009 (ARRA). ARRA provided more than $48 billion to the U.S. Department of Transportation for programs and projects, designed to get people back to work, jumpstart business, and make major investments in the nation’s transportation infrastructure.
The report found that while there is some uncertainty in determining the size of its impact, a federal stimulus package is effective in the short term, increasing GDP and employment one or two years after spending that money.
“The state transportation departments delivered on the promise behind the Recovery Act, moving federal funding quickly to put people to work building and maintaining America’s transportation system,” said Bud Wright, AASHTO executive director. “Reports like this highlight the critical role federal funding plays in ensuring the health of our national economy and quality of life. Congress must work on funding the Highway Trust Fund this summer so that we can avoid the opposite of stimulus spending – loss of jobs, and a major blow to our economy.”
The TRB report suggested that it was appropriate to include transportation in a stimulus package, especially for more prolonged economic lulls, as construction prices are lower during these times and allow transportation departments to get more done for less money. However, the report said that states and the federal government should adopt improved financial and administrative practices that would help transportation agencies and the construction industry manage any future stimulus funds.
Those recommendations to prepare for any future transportation stimulus money include:
- Expanding transportation agency and construction industry capacity to absorb stimulus spending. Congress and states could adopt practices that would allow transportation programs to maintain or increase spending during recessions to absorb any future temporary federal help efficiently.
- Justify design of future transportation stimulus spending programs. Some aspects might include advance rulemaking, allocation of grants, maintenance of effort, timeliness requirements, and record-keeping and reporting requirements.
- Measure the effect of Federal-aid program changes on recipient actions and program benefits. USDOT should consider how changes in the level of federal aid affect spending decisions of grant recipients.
- Define a method for balancing the recovery and reinvestment goals of transportation stimulus spending, as most decisions in designing or managing a transportation stimulus spending program depend on balancing trade-offs between immediate and long-term benefits.
A free PDF copy of the report is available here.