SMART GROWTH AMERICA
TRANSPORTATION FOR AMERICA
Lessons from the previous stimulus and recommendations for the future
Between 2009 and 2010, the American Reinvestment and Recovery Act (ARRA, commonly known as “the stimulus”) gave states $26 billion in flexible dollars to spend on surface transportation capital projects and $8.4 billion in funding for public transportation capital projects. Because the purpose was to create jobs, the funds came with the requirement that states report how they spent that money, and how many jobs they created with it.
The United States now needs another stimulus. A COVID-19 recession is all but certain. Additional spending will almost certainly follow the CARES Act approved by Congress in late March. While there are enormous needs for relief and support all across the economy, the president and many congressional leaders have indicated that they want infrastructure to be a major part of some future stimulus bill. If Congress wants to use infrastructure spending to create jobs and support recovery, we should learn from the previous stimulus.
This report reviews broad lessons from transportation spending in the last stimulus, especially how that spending was used to varying degrees of success to create jobs and support short- and long-term recovery. The lessons here are drawn from Smart Growth America’s close analysis of the 2009-2010 stimulus spending which used state-reported documentation of how they spent ARRA money, and how many jobs their stimulus-funded projects created. We also use economic models based on broad economic data, but most of the lessons are drawn from ARRA-specific data. Because lessons do little good if we don’t learn from them, we offer recommendations for using any future infrastructure stimulus to produce the desired results.
This is not a comprehensive list of lessons. Smart Growth America and Transportation for America invite those who implemented Recovery Act programs or experienced the impacts of the programs locally to share with us the lessons you learned.
Lesson 1: Some classes of transportation projects create substantially more jobs than others
- An ARRA dollar spent on public transportation produced 70 percent more job hours than an ARRA dollar spent on highways.
- Each mode showed clear differences in jobs produced per dollar in ARRA: Transit preventive maintenance had by far the highest direct job-per-dollar result, followed by rail car purchase and rehabilitation, transit infrastructure, and bus purchase and rehabilitation.
ARRA jobs reporting did not distinguish between road construction and repair as the source, but a wide variety of other research consistently finds that on average, road repair produces 16 percent more jobs per dollar than new road construction. This makes sense considering the fact that new roadways and roadway expansions usually require right-of-way acquisition, which creates very few jobs (and no construction jobs), as well as more planning and environmental review, which also creates just a few jobs.
Overall, ARRA was meant to create jobs, yet that was not how we targeted or governed spending.
Recommendation 1: To create the most jobs per dollar, invest in transit and maintenance.
Lesson 2: Public transit spending creates jobs fastest
120 days after ARRA was signed into law, each dollar of available transit funding had been spent about 1.5 times faster than highway funding. At 10 months after signature, ARRA investments in public transportation produced almost twice as many jobs per dollar as investments in roads.
Operating money for transit typically produces the most jobs per dollar, because it is essentially all labor, and it can be implemented immediately by preventing layoffs. Yet states or urbanized areas over 200,000 in population were prohibited from spending any stimulus funds on transit operations. Nearly half a year into ARRA, Congress gave these recipients the flexibility to use up to 10 percent of their transit capital funds on operating costs. But largely because so much of the money had already been committed by that point, only about 17 percent of recipients used that flexibility, spending just 2.2 percent of Recovery Act transit capital assistance funds on operating expenses. Because of this limited spending, this analysis could not fully compare transit operations funding to other categories for job creation.
Because Congress decided to limit transit agencies to capital spending in ARRA, lawmakers both slowed recovery and created additional costs, leading to bizarre outcomes like agencies having money to buy new buses they couldn’t afford to operate.
Recommendation 2: Create the maximum number of jobs by investing in transit expansion and improvement, and provide emergency funding to stabilize operations and help transit agencies avoid layoffs, service cuts and fare increases.
On this front, the CARES Act is already a significant improvement to the approach in ARRA. The CARES Act included $25 billion for transit, explicitly intended for operations. TransitCenter estimates a national operations shortfall of $28-38 billion annually to cover existing service. If a new stimulus provides funding only for additional capital, expansions will come with operations costs that local economies will be unlikely to afford as they emerge from a recession.
In addition to investing in transit expansions and improvements to create the most jobs, the next stimulus must also continue the approach of the CARES Act to stabilize operations and help transit agencies avoid layoffs, service cuts and fare increases. Our economic and social recovery relies on everyone reaching jobs and necessities—including those not regularly using a car to get around. Millions will need transit service to survive through the crisis, and we’ll need transit service for the economy to bounce back quickly afterward. That requires operations funding.
About Smart Growth America
smartgrowthamerica.org
Smart Growth America envisions a country where no matter where you live, or who you are, you can enjoy living in a place that is healthy, prosperous, and resilient. We empower communities through technical assistance, advocacy, and thought leadership to realize our vision of livable places, healthy people, and shared prosperity.
About Transportation for America
t4america.org
Transportation for America is an advocacy organization made up of local, regional and state leaders who envision a transportation system that safely, affordably and conveniently connects people of all means and ability to jobs, services, and opportunity through multiple modes of travel.
Tags: Smart Growth America, Stimulus, Transportation for America
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