Economic Indicators 2009

Forecast: Indicators Point to 2009 Recovery New Congress to Support Bill to Tackle Old Infrastructure

By Pete Sigmund CEG EDITORIAL CONSULTANT

Leading economists say the strength of the U.S. and world economy in 2009 depends on the U.S. construction industry, especially the recovery of the singlefamily housing market and greatly increased multibillion-dollar investment in the nation’s infrastructure.

A nationally recognized economist for the housing industry told Construction Equipment Guide (CEG) that the housing recovery, which is a critical leading indicator for the recovery of the entire economy, will begin about the middle of 2009.

“We think that single-family housing starts will bottom about late spring or early summer of 2009, helping pull the economy out of recession as demand and sales pick up,” Bernard Markstein, director of forecasting of the National

Association of Home Builders (NAHB) in Washington, D.C., told CEG. Markstein’s prediction came as the construction industry remained a fulcrum for the nation’s future recovery from recession. A mammoth highway and transit measure — the largest in U.S. history — may be enacted.The government is modifying Fannie Mae and Freddie Mac loans to help homeowners avoid foreclosure, and may take further steps in the year ahead, using some of the $700 billion Troubled Asset financial bailout money.

Congress will consider a new infrastructure stimulus proposal that could allow transportation projects valued at $15 billion to $20 billion to be put out to bid within 30 days of passage.

Also very important — the incoming Obama Administration has pledged to make rebuilding the nation’s infrastructure one of the top items on its agenda.

ConstructionEquipmentGuide.com Industry Indicators 2009

Housing Recovery to “Open the Pipeline” Markstein expects 633,000 total single family starts in 2008, compared with 1.05 million in 2007 and 1,464,000 in 2006. At the mid-year bottom in 2009, he said only about 500,000 single family homes will be under way but expected the total to increase to 600,000 homes by the end of 2009.

“As the housing recovery proceeds, we look for 740,000 starts for 2010,” he said. “This increase would be the opening of the pipeline for construction. It would be a leading indicator for the economy because housing often helps pull our economy out of recession.”

Multifamily housing starts won’t fare as well, dropping 21 percent from 303,000 starts in 2008 and 309,000 starts in 2007 to 240,000 starts in 2009, Markstein said.

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The residential housing market and associated services accounted for approximately 15 percent of gross domestic product (GDP) in 2007.

The downturn in single-family housing starts has hit all regions of the United States.

McGraw-Hill Construction estimates in its 2009 Construction Outlook that total starts will be down 38 percent in 2009, with the largest declines being in the West ( down 47 percent) and South Atlantic (down 41 percent), followed by the Midwest (down 36 percent), South Central (down 31 percent), and Northeast (down 27 percent).

“For 2009, all five regions are expected to see weaker activity, with much smaller declines than were registered during 2007 and 2008,” the Outlook said.

Home Sales to Improve “We also expect sales of new singlefamily homes to bottom in the first quarter of 2009 and then begin improving in the second quarter,” Markstein said.“That’s also a positive leading indicator. When demand turns up, that will power residential activity. Sales of existing homes, meanwhile, have held up reasonably well. However, a lot of these are foreclosure sales.” An estimated one million properties were classed as foreclosed in 2008 and some estimates say five million more foreclosures will occur by 2010.

Ken Simonson, chief economist of the Associated General Contractors of America (AGC) in Washington, D.C., said, “I think single-home sales are close to the bottom and will increase in the first half of 2009 to the point where builders will be ready to pick up their tools in the second half.”

Loosening Credit for Construction Economists said the industry’s slow, painful, recovery from the “financial meltdown” will be aided by increasing willingness of banks to lend money to contractors in good standing.

It has taken time because the meltdown has been the worst since the Great Depression of 1929.

“People facing foreclosure generally fall into one of three categories,” Markstein said. “They were overly optimistic — hoping their income would rise enough to meet their mortgagepayment obligations; ill-informed as they were sold a bill of goods; or involved in fraud. Now we’re all paying the piper. We haven’t seen this since 1929. We’re still recovering from a massive failure of capital instead of intelligent flow of capital. We kept thinking the darkness was past and the dawn was coming, but then it got darker.

“In this bleak environment, builders have experienced great difficulty obtaining operating capital through short-term loans to pay off suppliers.

This across-the-board tightening of credit has held back recovery. We expect this situation to loosen in 2009 and that banks will begin to again lend money to construction firms.”

Forestalling Foreclosures Government actions to help prevent foreclosures are another positive. The emergency Hope Now Alliance, established in early October, encourages banks to renegotiate mortgages, reducing mortgages loans to 90 percent of the home’s current assessed value.

“If a bank is willing to take a major haircut and renegotiate a loan, a foreclosure can be avoided,” Markstein said.

“We’ve seen the rate of foreclosures beginning to ease up.”

Other steps to help stabilize the mar-

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ket include a tax credit of up to $7,500 for first-time home buyers. The Bush Administration has begun a new program modifying Fannie Mae and Freddie Mac loans for homeowners owing more than 90 percent of the home’s value, extending repayment time to 40 years and lowering interest rates, in order to prevent foreclosures.

Though many are not in actual foreclosure, nearly one in six homeowners — 12 million households — owe more than their home is worth. Average home prices are 20 percent off their peaks.

Robert A. Murray, vice president of economic affairs of McGraw-Hill Construction in New York, N.Y., said he doesn’t expect to see the decline in home prices to come to an end “until 2009 at the earliest.”

New Transportation Bill Will Spur Activity The new Congress next year must enact a new six-year multimodal transportation bill authorizing funds for highways, bridges and transit from 2010 through 2015. Funding proposals are almost staggering, as befits the escalating infrastructure needs.

“We are pointing out to the new administration and Congress that America’s transportation system needs $545 billion over the [next] six years,” Tony Dorsey, media relations manager of the American Association of State Highway and Transportation Officials (AASHTO) in Washington, D.C., told CEG. “This includes $345 billion for highways and bridges, $93 billion for transit, $43 billion from sources outside the Highway Trust Fund for freight improvements and $35 billion dedicated funding for inter-city passenger rail.”

AASHTO’s recommendation dwarfs the SAFETEA-LU transportation bill, enacted in 2005, which provided more 3

than $286 billion. SAFETEA-LU expires Sept. 30, 2009, the end of the fiscal year.

The Transportation Appropriations Bill for 2008 included $41.2 billion for the federal-aid highway program.

Under a continuing resolution signed

by President Bush on Sept. 30, spending will remain at about this level for most of the first six months of Fiscal 2009. A proposal for a second economic stimulus program would provide an additional $4.7 billion for highways.

Highway Trust Fund Faces Funding Crisis During the transportation reauthorization process next year, Congress also will consider proposals for new ways of funding the Highway Trust Fund (HTF).

The fund ran out of money during 2008 because motorists drove less, resulting in less gasoline tax revenues, which supply 90 percent of HTF funding.

As a result, Congress passed, and the President signed, legislation approving a transfer of $8 billion to the trust fund from the general fund.

Construction organizations stress the urgency of putting more money into the fund because incoming revenue can’t support current federal highway and public transportation investment beyond Sept. 30, 2009. AASHTO’s Dorsey said the current HTF provides approximately $40 billion a year while “the need is somewhere in the neighborhood of $70 billion a year.”

“Without increasing the revenue stream to the Highway Trust Fund after Fiscal Year 2009, we are facing a disastrous 45 percent year-on-year cut in federal highway program funding in Fiscal 2010 that would threaten as many as 700,000 American jobs,” said William Buechner, vice president of economics and research of the American Road & Transportation Builders Association (ARTBA) in Washington, D.C.

Buechner said the unemployment rate in the construction industry at the end of September was 9.9 percent, more than four percentage points higher than the 6.5 percent rate for the economy as a whole.

Unemployment rose 1.3 million from August through October, to more than 10 million people throughout the United States.

The 18.4-cents-per-gallon fuel tax has been unchanged since 1993.

Construction industry groups have usually supported raising this tax.

Highway Projects Remain at High Level AGC’s Simonson said he expects highway spending (value put in place on projects under way) to total approximately $79 billion for 2008, an increase of 4 percent or 5 percent over 2007, and then complete 2009 at about the same level.

“Highways are one of the slower growth categories,” he said.

McGraw-Hill’s Outlook said highway and bridge construction is expected to decline 4 percent in 2009, to $50 billion, the lowest level in four years, after declining 3 percent in 2008 to $51.9 billion. It said leading states in terms of dollar volume of construction are California, Illinois, Pennsylvania and Louisiana.

Typical major projects across the United States: • Massachusetts is in the first year of an eight-year $3-billion accelerated bridge reconstruction plan that will reduce the number of structurally deficient bridges by 15 percent; it also plans to spend $540 million in 2009 on roads and bridges.

• Wisconsin begins work in 2009 on its $1.9-billion reconstruction of the I-94 corridor from the Illinois state line to Milwaukee; the project will run through 2016.

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• The California Transportation Commission has allocated $191 million in new transportation funding from the Proposition 1B transportation bond.

Projects include a new high occupancy vehicle lane, new interchange and repaving on Interstate 580 in the Bay Area community of Livermore.

• A public-private partnership will break ground in January on a 40-mi. stretch of State Highway 130 from southeast of Austin, Texas, to Seguin, Texas. This toll road from Austin to San Antonio, a $1.3-million investment, is to be completed by 2012.

• Georgia will complete its $83.4-million I-75/I-475 interchange reconstruction, including four bridges, in the fall of 2009. The work began in 2006.

New Administration Supports Infrastructure Work “We’re optimistic because we have a new administration which has spoken time and time again on the importance of investing in infrastructure,” Dorsey said. “President-elect Obama has expressed willingness to put transportation high on its agenda.”

The Obama presidential campaign produced a three-page position paper on strengthening the transportation infrastructure, calling this “a top priority.” The president-elect also has said that his top priority was to help Congress pass a new economic-stimulus program.

Democrats hold a majority in both the House and Senate, which would help Obama’s programs.

In addition, voters in 17 states approved more than $71 billion in ballot initiatives related to transportation funding.

Further Infrastructure Spending Urged Construction groups are urging 4

immediate action to increase infrastructure spending as part of a second economic stimulus bill in 2008 or 2009.

(The industry says every billion dollars spent on highways creates more than 42,000 jobs.)

As part of this, a new special infrastructure investment program is being proposed by Buechner of ARTBA and 12 other scholars.They declare in a letter to the Federal Reserve chairman and the secretary of commerce:“We project that there are $15 billion to $20 billion worth of transportation projects that could be put out to bid in the next 30 days, leading to contractors on site in 60 to 90 days, and generating a considerable flow of money back into the economy.

Thousands of transportation construction projects appropriate for a stimulus program are ready to go.”

Besides targeting work like resurfacing highways and addressing the “enormous” backlog of needed bridge repairs, the group asserted that “state transportation departments have identified more than 3,000 projects totaling approximately $18 billion that could be under construction within 60 to 90 days after enactment of economic recovery legislation.”

They pointed out that “during the 1982 recession, President Reagan increased the federal gas tax by five cents per gallon and expanded federal highway investment more than 50 percent to provide an economic stimulus.

That action helped boost employment in the construction industry between 1982 and 1985 by almost 700,000 jobs.”

The proposal includes real innovations, including 100 percent federal financing, with no required state match.

States would be required to let projects before a set time or lose the funding.

Slump in Non-residential Construction May Continue AGC’s Simonson predicted that “nonresidential construction, including public works as well as buildings, will drop anywhere from 3 percent to 9 percent in 2009 after increasing between 6 percent and 10 percent in 2008.”

“Non-residential construction is on the verge of a potentially long slide,” Simonson said. “Contractors have been reporting that developers put lots of projects on hold because of the credit freeze and weakening demand for stores, offices and other facilities.

Meanwhile, states had to postpone construction bond issues or defer budgeted projects in order to meet balancedbudget mandates.”

Simonson also said a survey of corporate economists indicated that “companies on balance plan to trim spending on structures in the next 12 months.”

Said McGraw-Hill’s Robert Murray: “The lending environment for commercial projects will probably grow even more difficult in the near term, before some credit easing begins to take hold, perhaps in the latter half of 2009. This means that the downturn in construction starts shown by commercial building in 2008, particularly for stores and warehouses, will grow more widespread in 2009, dampening offices and hotels as well.”

Murray added, however, that, if the government’s steps to stabilize the economy are successful, “a rebound in commercial construction could occur earlier than expected, perhaps as soon as 2010 or 2011.”

Murray expected public works spending to fall 5 percent in 2009 “due to funding constraints at both the federal and state levels of government.”

CEG

ConstructionEquipmentGuide.com Industry Indicators 2009

Gradual Improvement Predicted for 2009 Assuming that the financial crisis will be contained by the government’s emergency actions in the fall of 2008, McGraw-Hill Construction’s Outlook for 2009 said that “the economy is expected to show improvement over the course of 2009, with growth by year’s end reaching 2 percent to 3 percent.”

The Outlook bases its projection on “improving liquidity in the financial markets.”It said the gross domestic product (GDP) reading at the start of 2009 will be “flat to negative” but will grow gradually after 1.6 percent expansion in 2008.

“The upheaval in the financial markets has presented the construction industry with its most difficult environment since the early 1990s,” the Outlook said. “Against this backdrop, it’s forecasted that the overall level of construction starts in 2009 will slide another 7 percent to $515 billion, after the 12 percent decline in 2008.”

The Outlook warned that “most states are facing deteriorating revenue outlooks” and that this fiscal stress “will prevent them from using their general revenues to bolster highway and bridge spending. Some might even be forced to borrow against state gasoline tax receipts to temporarily patch their budgets.”

Because of fiscal constraints, Georgia, for instance, is using gas tax receipts from Fiscal 2009 to meet balanced budget requirements for Fiscal 2008.

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Charts courtesy of McGraw Hill Construction’s “Construction Outlook 2009” 2009 National Estimates 2007 Actual 2008 Preliminary

2009 Forecast

% Change 2009/2008

582 325 907

560 300 860

-4 -8 -5

2,064 592 2,656

1,274 404 1,678

1,230 365 1,595

-3 -10 -5

201,194 62,940 264,134

128,775 44,025 172,800

126,650 41,425 168,075

-2 -6 -3

Nonresidential Buildings Floor Area (Millions of Square Feet) Stores and Shopping Centers Office Buildings Hotels and Motels Other Commercial Buildings Manufacturing Buildings Total Commercial and Manufacturing

313 218 85 431 88 1,135

220 180 88 337 85 910

188 147 71 292 77 775

-15 -18 -19 -13 -10 -15

Educational Buildings Healthcare Facilities Other Institutional Buildings Total Institutional and Other Total Nonresidential

220 103 198 521 1,656

223 104 191 518 1,428

207 98 180 485 1,260

-7 -6 -6 -6 -12

Contract Value (Millions of Dollars) Stores and Shopping Centers Office Buildings Hotels and Motels Other Commercial Buildings Manufacturing Buildings Total Commercial and Manufacturing

29,513 32,151 13,988 24,101 17,491 117,244

23,050 31,850 15,200 19,700 29,625 119,425

20,700 27,675 12,900 17,700 20,275 99,250

-10 -13 -15 -10 -32 -17

Educational Buildings Healthcare Facilities Other Institutional Buildings Total Institutional and Other Total Nonresidential

52,712 24,028 39,880 116,620 233,864

56,900 26,675 40,875 124,450 243,875

55,025 25,975 39,950 120,950 220,200

-3 -3 -2 -3 -10

Nonbuilding Construction Contract Value (Millions of Dollars) Highways and Bridges Environmental Public Works Other Public Works Total Public Works Electric Utilities Total Nonbuilding Construction

53,437 37,026 30,482 120,945 15,452 136,397

51,900 36,900 26,000 114,800 24,000 138,800

50,000 35,200 24,300 109,500 16,800 126,300

-4 -5 -7 -5 -30 -9

All Construction Contract Value (Millions of Dollars) Total Construction Dodge Index (2000=100)

634,395 134

555,475 117

514,575 109

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Residential Buildings Dwelling Units (Thousands of Units)* Single Family Housing Multifamily Housing Total Residential

937 449 1,386

Floor Area (Millions of Square Feet) Single Family Housing Multifamily Housing Total Residential Contract Value (Millions of Dollars) Single Family Housing Multifamily Housing Total Residential

*McGraw-Hill Construction Dodge basis ConstructionEquipmentGuide.com Industry Indicators 2009

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2009 Regional Estimates (Millions of Dollars)

2007 Actual 2008 Preliminary 2009 Forecast % Change 2009/2008 Northeast (Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont) Residential Buildings Single Family Housing 16,925 12,700 12,625 -1 Multifamily Housing 12,070 10,250 9,350 -9 Total Residential 28,995 22,950 21,975 -4 Nonresidential Buildings Commercial and Manufacturing Institutional and Other Total Nonresidential Nonbuilding Construction Total Construction

15,411 21,384 36,795 22,330 88,120

20,175 23,825 44,000 21,275 88,225

16,075 20,425 36,500 19,375 77,850

North Central (Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin) Residential Buildings Single Family Housing 31,436 20,325 20,200 Multifamily Housing 10,042 6,025 5,925 Total Residential 41,478 26,350 26,125 Nonresidential Buildings Commercial and Manufacturing Institutional and Other Total Nonresidential Nonbuilding Construction Total Construction

22,878 22,802 45,680 30,352 117,510

21,725 23,775 45,500 33,700 105,550

16,575 23,300 39,875 27,350 93,350

-20 -14 -17 -9 -12

-1 -2 -1 -24 -2 -12 -19 -12

South Atlantic (Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia) Residential Buildings Single Family Housing 54,141 33,075 32,275 Multifamily Housing 15,780 10,600 10,100 Total Residential 69,921 43,675 42,375

-2 -5 -3

Nonresidential Buildings Commercial and Manufacturing Institutional and Other Total Nonresidential Nonbuilding Construction Total Construction

20,850 24,800 45,650 24,600 112,625

-7 -2 -5 +2 -3

33,300 6,050 39,350

-1 -8 -2

24,375 23,725 48,100 24,100 111,550

-26 +1 -15 -8 -9

30,046 22,120 52,166 27,589 149,676

22,500 25,425 47,925 24,175 115,775

South Central (Alabama, Arkansas, Kentucky, Louisiana, Mississippi, Oklahoma, Tennessee, Texas) Residential Buildings Single Family Housing 46,529 33,525 Multifamily Housing 7,542 6,575 Total Residential 54,071 40,100 Nonresidential Buildings Commercial and Manufacturing Institutional and Other Total Nonresidential Nonbuilding Construction Total Construction

20,397 20,353 40,750 23,807 118,628

32,975 23,600 56,575 26,250 122,925

West (Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming) Residential Buildings Single Family Housing 52,163 29,150 28,250 -3 Multifamily Housing 17,506 10,575 10,000 -5 Total Residential 69,669 39,725 38,250 -4 Nonresidential Buildings Commercial and Manufacturing Institutional and Other Total Nonresidential Nonbuilding Construction Total Construction

28,512 29,961 58,473 32,319 160,461

ConstructionEquipmentGuide.com Industry Indicators 2009

22,050 27,825 49,875 33,400 123,000

21,375 28,700 50,075 30,875 119,200

-3 +3 — -8 -3 7

Voters Surprise Industry With Widespread Approval of Bond Referendums California OKs Single Biggest Bond Issue at $9.95 Billion

A high-speed rail will bring many construction jobs along its route, such as this rail station in Anaheim, Calif.

By Giles Lambertson CEG CORRESPONDENT

On Nov. 4, American voters seemed to shrug off the financial crisis that hammered the nation in the days leading up to the election. In state after state, ballot referendums on transportation, water and sewer projects were decided in favor of new construction and rehabilitation.

“The public’s willingness to approve significant investment in infrastructure in difficult economic times is a testament to voters’ awareness of our national infrastructure needs, demonstrated by their willingness to tax themselves and borrow to fund it,” said Stephen Sandherr, CEO of Associated General Contractors of America.

Most of the new funding authority is for mass transit and road work, or for water and sewer projects, but public building and pedestrian traffic projects also were endorsed.

In respect to transportation-specific

tax and bond measures, nearly threequarters not only won voter backing, they did so comfortably; the average rate of approval for such ballot issues was 63 percent, according to post-election analysis by staffers at American Road and Transportation Builders (ARTBA).

As referendums go, this election day was one for the record books.The financial publication Bond Buyer reported that 696 bond issues were on the ballot, which was “the second largest amount ever for a single election day.”

In California, voters considered the single biggest bond issue ever placed on that state’s ballot — $9.95 billion for planning and initial construction of a high-speed rail system.

The historically large ballot measure won approval, but by a much narrower margin than in the average bond vote across the country: Just 52 percent of voters said “OK.” That was enough for Judge Quentin Kopp, chairman of the high-speed rail authority.

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“In turbulent economic times, this vote is particularly satisfying,” he said immediately after referendum results were announced. “The voters have demanded we face the future by planning for continued population growth at a time in which airports and freeways have reached capacity.”

Kopp is the godfather of high-speed rail in California. He first rode France’s high-speed train, which rockets between Lyon and Paris, in 1984, just three years after the train’s inaugural run. Kopp stepped from the train impressed. He returned to California and shortly introduced legislation to establish a high-speed rail commission.

In ensuing years, Kopp continued to collect information and to promote the project, riding the French train a halfdozen more times, as well as fast trains in Japan and Germany. In 1995, a legislative report on the desirability and practicality of a high-speed rail system for California concluded that it was a good idea; the next year, Kopp, as chairman of 8

the state senate transportation committee, authored a bill creating the highspeed rail authority.

Kopp left the legislature in 1999 when he was appointed to the state Superior Court system, retiring in 2004 from full-time bench work. An exception in the state’s canon of judicial conduct allows anyone on the bench working in the system’s part-time assigned judge program to hold appointed public office. Subsequently, Kopp was appointed to the authority in 2006 and immediately named chairman.

That long start-up scenario is a prelude to what will be a long rollout of the 800-mi. (1,280 km) train system.

Engineering design and environmental studies, along with the first acquisition of property along the route, will eat up much of the next two years. The first scoop of dirt won’t be moved until late 2010 at the earliest. Not until 2016 or 2018 will the first trains begin speeding along a 150-mi.-long (240 km) segment between Merced and Bakersfield, Kopp said.“That will be our test.”

If the test is passed, the longest phase — San Francisco to Anaheim — will be undertaken in earnest, not to be completed for eight years. In the following five years, end segments from San Francisco to Sacramento and Anaheim to San Diego will be tacked on.

The high-speed train’s tracks will run through cities, across desert-scape and through mountainous terrain. That means construction of numerous grade separation structures at urban highway intersections and tunneling through mountains. Artists’ renderings show massive, airy station structures with 1,300-ft.-long (394 m) passenger platforms and expanses of track running to the horizon — all of which adds up to lots of work for contractors. An estimated 150,000 construction-related jobs will be created over the next 20 years by the massive project.

Bidding is “wide open,” Kopp said, with international firms having high-

speed rail experience possibly joining the queue.

The nearly $10 billion ponied up by voters in November is less than a third of the projected overall cost of the project. The rest will come from the federal government and from the private sector, making this project one of the first large-scale public-private partnerships in the country. Private investment groups are expected to plunk down anywhere from $5 billion to $7 billion.

Water and Sewer Projects Public works bond issues approved elsewhere around the country pale in scale to California’s whopper, but they nevertheless represent significant new funding sources for local contractors.

In Pennsylvania, for example, 62 percent of voters approved $400 million in new bonding for drinking water and storm sewer projects. Some of the money targets 183 publicly owned water systems that federal authorities have mandated must clean up their outflow; the polluted discharge is entering the Susquehanna and Potomac River basins and finding its way to the Chesapeake Bay. But all urban and rural municipal systems in the state will draw from the bond pool, half of which will be disbursed as grants, the rest as loans.When all $400 million is in the system and spurring new construction, an estimated 12,000 general contractor employees will be working on the projects.

Bob Glancy welcomes the infusion of new money. He is chairman-elect of the 170-member Associated Builders and Contractors of Western Pennsylvania, a region of the state where, he said, infrastructure funding has gotten “a little tight.”

Glancy is president of R.A. Glancy and Sons, a general contracting firm principally involved in university, community college, homeland security and Air National Guard projects. He said because of the nature of his company’s

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work, the water bond issue will have minimal impact on him directly.

However, it is the biggest pool of construction money available at the moment and, as such, will have a measurable impact on work in the region.

“This will open up the bidding competition considerably more,” Glancy said.

A majority of Arkansas residents who entered a polling booth Nov. 4 also hit the “Yes” button on a statewide bond issue, approving $300 million for water projects. The new bonds actually are a continuation of a bonding program begun in 1981 and periodically reapproved thereafter. The program was only interrupted in 1996 when the bond issue was defeated at the polls.

Voters authorized the program again in 1998 and this year’s referendum seamlessly continues it.

“When we found out how easily our question passed, I was surprised,” said Mark Bennett, chief of water development for the Arkansas Natural Resources Commission, which administers the program. Sixty-six percent of ballots were marked in favor of it.

The money — of which no more than $60 million can be issued in each twoyear period — is eligible for just about anything to do with water, including water systems, wastewater projects, water pollution control, irrigation, flood control and wetland mitigation.

Bennett said the typical funding application is for water lines, storage tanks or treatment plants.“The average project might be a quarter-of-a-milliondollar elevated water storage tank, I suppose. That’s not huge by Philadelphia standards, but it’s good sized for Arkansas. Actually, it is getting to where we don’t see many projects that are below a half-million dollars.”

Irrigation projects also are a popular application. Some of the bond money will be diverted to the ongoing Grand Prairie area demonstration project supervised by the U.S. Corps of Engineers in the east-central part of the state.

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A hundred years ago, irrigation turned that region into a highly productive agricultural region. However, before long farmers were pulling water out of the ground faster than it was being replenished. Only in the past 20 years did the dire drop in the water table spark action from authorities.

To supplement the water left in the region’s aquifers, the corps is overseeing construction of reservoirs that eventually will cover some 8,800 acres (3,520 ha). A pumping station on the White River also is part of the rescue plan.

(Unfortunately, work slowed on that station after an ivory-billed woodpecker was spotted; it heretofore was thought to be extinct.)

Bennett said bidding for water system work generally is “extremely” competitive. The exception is water tank projects. “The number of bidders on tanks seems to be well down,” he said.

“A lot of times we have two, and no more than three. But now that steel prices have somewhat come back to normal, whatever normal means, we hope we will see more bidders on tank and pipe projects.”

Mass Transit and Street Repair In Rhode Island, an overwhelming 77 percent of voters approved a transportation bond. It will provide $87 million for bridge and highway projects and will ensure that more than $400 million in matching federal funds will stay in the state. Some $20 million will boost work on the Warwick Intermodal Facility, partly because that money also guarantees $80 million in matching federal funds.

The Warwick project will connect busy T.F. Green Airport with Massachusetts Bay Transportation Authority commuter trains linking Providence, Rhode Island and Boston.

Train service is scheduled to begin in 2010.

“It [the bond issue] is a good thing,” said Eric Anderson, executive director of

Rhode Island Associated General Contractors. “Probably in a year or so we’ll see the impact of the money. It takes time to put the financial package together.”

Anderson’s AGC chapter has 32 contractor members. He said the new bonding authority could be the last for the foreseeable future.

“I think this is it for a while,” Anderson said. “We’re all up against it. There are not going to be a lot of public works projects for a while, and a lot of people depend on them to keep busy.”

In Tulsa, Okla., infrastructure contractors on Nov. 4 also were inoculated against a work shortage. Residents approved both street repair bond issues on the ballot.

One asked to continue two sales tax revenue programs producing almost $170 million for repair of main streets that crisscross the community. The other ballot issue was for general obligation bonds raising $285 million for residential street repair. Together, the ballot proposals represented funding for five years of street and bridge work.

Mayor Kathy Taylor congratulated voters afterward for their cumulative good judgment — 60 percent of voters approved each issue — and for backing city council’s decision not to put off street repair any longer. “This plan will reverse decades of neglect and provide one of the most significant public investments in our infrastructure in Tulsa history.”

An online site operated by Citizens for Tulsa Streets that promoted the ballot issues offered a reason for the infrastructure’s neglect: expansion of the city limits. Over the past 40 years, the city grew some 300 percent but the population increased just 12 percent.

The deferred maintenance was blamed on insufficient revenues.

“Streets have been pretty much ignored over the last 15 to 25 years and we’re paying the consequences now,” said the city’s communication’s director,

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John Durkee.

Chris Cox said it simply was a matter of priorities. “There were other needs that had to be taken care of,” said Cox, who is Tulsa’s transportation rehabilitation manager. “That was true throughout the whole country. Everybody has needs. The city leaders here finally said, ‘We need to significantly fund our streets.’”

So now the city has a pot with $160 million in it for arterial streets, $254 million for residential streets and about $30 million for bridge work. Some work will begin immediately, using existing tax revenue, but street repair and renovation will not seriously get under way until next summer. Cox said 88 lane mi.

(14. 2 km) of asphalt main streets and 202 lane mi. (32.5 km) of asphalt neighborhood streets are targeted for upgrading — some in each of the city’s nine council districts — as well as 41 lane mi. (65.9 km) of concrete streets.

That is a ton of work and city officials expect plenty of bidding for it, perhaps especially because of current economic conditions. At least five bids from “good-sized” contractors are the rule, Cox said. More than five are expected when bids begin to be solicited in 2009.

“I think it [the street overhaul program] will be significant for contractors,”Cox said.“When it gets up and running, it will greatly add to what is already out there. Some of our sales tax revenue will be tapering off and this will be picking up.

“Overall, it probably is significantly more than what contractors have had in the past. Bond issues here have not been that large in that past.”

CEG

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By Giles Lambertson CEG CORRESPONDENT

General contractors and subcontractors across the United States have good reason to feel hopeful as 2008 expires. A new year brings a new president, a new Congress and a new sense of urgency about the need to undertake massive public works projects. What is there not to feel hopeful about?

Well, this: Even as consensus grows about upgrading the nation’s infrastructure, two stubborn questions remain.

The first is of direct significance to contractors: Where will the money come from to pay for the work? The second is more glancing in its impact on the industry: Will taxpayers get their money’s worth this time?

Some would argue that the latter concern is not the industry’s problem.

After all, political leaders choose projects and set spending priorities. General contractors, engineers and project architects are out of the decision-making loop. But that perspective assumes American taxpayers have limitless patience with bridges to nowhere and earmarked goodies for favored districts.

Janet Kavinoky, who among others is

involved in lobbying Congress for new capital investment in roads and bridges, believes taxpayer patience has about evaporated. “I don’t believe you are going to get real change in transportation funding,” said Kavinoky, a director of the U.S. Chamber of Commerce, “I don’t think you are going to get a real increase in investment, unless the American people really believe their dollars are going to real transportation priorities. Reform must be a necessary part of increased funding.”

But the first consideration is money.

Where will billions of dollars be found to tackle the huge backlog of infrastructure work? Industry lobbyists in everyday contact with federal officials believe two funding sources will be tapped for separate phases of the public works surge.

General revenues will be spent — or borrowed against — to pay for fasttrack projects to quickly stimulate hiring, thereby hacking away at recessionary pressures that seem to be engulfing the economy. These appropriations will be found in the same place $700 billion was found in response to the banking emergency. The new Congress is

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expected to appropriate the money without worrying about increasing the federal deficit, having concluded that stimulating the economy overrides any other consideration.

“There are three phases of funding in this,” said John Horsley, executive director of the American Association of State Highway and Transportation Officials (AASHTO). “In January, the president and Congress will look at a stimulus bill, an economic recovery bill. It might include billions of dollars for highway and transit projects. We have submitted a list of $64 billion of projects that are ready to go. We think the stimulus bill will mean a boost in highway spending.

“But the federal highway program [SAFETEA-LU] may run out of money before October next year. It ran out in September this year. So that underlying highway funding problem will be there for Congress to fund as well.”

Finally, Horsley concluded, SAFETEALU expires on Oct. 1 and Congress will need to approve a six-year successor program. It is relevant to note that the expiring program, which authorized projects for years 2004-09, was not passed until August 2005, one year late; ongoing projects relied on stopgap 11

funding in the interim.

This need to pass two new transportation-funding measures in pretty quick succession concerns some industry leaders. They fear that the first surge of spending, welcome as it is, will be deemed sufficient by lawmakers.

“Budgets are very tight,” said Richard Juliano, a vice president of American Road and Transportation Builders Association (ARTBA). “State highway programs are not in good shape in most states. We do hope there will be stimulus legislation that will improve the situation. We will have to see what the legislation looks like.

“But,” he added, “we don’t want the stimulus legislation to be in lieu of the next piece of legislation, the highway bill. One comes right after the other. We don’t want members of Congress to come back later and say,‘We have done our part for transportation.’ The two pieces of legislation need to be connected in a way, both of them kept in mind as they are being worked on.”

Juliano said he is “optimistic” that the separate legislative measures will complement one another.

Paying for authorized projects in the next transportation bill is another matter.

Everyone contacted by Construction Equipment Guide seemed to agree that a more stable and sufficient funding source needs to be found — raising the fuel tax, perhaps, or indexing it, creating a new method of taxing vehicles using public roadways, and/or expanding the reach of toll roads.

“It is fascinating that you ask that question today,” Horsley said in early December, “because the Washington Post this morning said that now that gas prices are down, the time has come to raise fuel prices. We clearly do need additional revenue.The question is how this is going to jibe with the stimulus bill. After all, when the current bill expires is when it will be especially

important to add revenue.”

ARTBA previously has been a proponent of a 10-cent raise in the federal gas tax, which currently is 18.3 cents per gallon. The association now wants a 13cent increase, which is a fairly conservative jump among those who propose fuel tax boosts.“It is all about where we want to go with this,”Juliano said.“What is our objective? Do we want to keep funding levels for construction and maintenance where they are or go ahead and improve the situation? All of that goes into the calculus of how much to raise the tax.”

The U.S. Chamber of Commerce also backs raising the federal fuel tax, according to Kavinoky. “The chamber recently approved a policy stating that every option should be considered and we specifically said that included an increase in the fuel tax — if there is accompanying policy reform. Clearly with gas prices lower, a fuel tax could be more easily absorbed.”

“Here is the thing: It would be one thing if what you are trying to do is get general funds, limited discretionary dollars. If we want increased transportation funding, we are going to have to make a very public decision about raising revenue for it.”

The Chamber has been pushing its Let’s Rebuild America campaign since early this year. It convened a summit in Washington the second week of December to promote its agenda of addressing “the nation’s ailing infrastructure system.” Coincidentally, across town another summit addressed the same subject. The International Bridge, Tunnel and Turnpike Association held a “transportation finance summit” and Juliano was there moderating one session.

“There were a number of speakers talking about raising the fuel tax,” he said. “I talked about our group’s priorities, which include a higher fuel tax. We

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have to talk about revenues now, but in the long term we also have to look at other options.”

More user fees — toll roads — are one option that, naturally, came up repeatedly at the tunnel and turnpike summit. U.S. Secretary of Transportation Mary Peters led the charge, noting that the fuel tax mechanism is deeply flawed.

“This past year has dramatically highlighted the contradictions inherent in relying on gas taxes to fund surface transportation,” Peters told summit participants. “September marked the 11th straight month that Americans have put fewer miles on their cars and trucks than the month before. And consistent with our national objective to reduce fossil-based fuel consumption, our vehicles are becoming more fuel-efficient than ever.

“But with Americans filling up at the pump less often, federal fuel tax revenues — the primary source of the Highway Trust Fund — have plummeted. The Trust Fund took in $3 billion less in fiscal year 2008 than in the previous year.”

The secretary went on to promote such alternate funding sources as state infrastructure banks and more reliance upon new investment dollars available through public-private partnerships.

And tolls.

“I would like to issue a challenge to the toll road operators here today,” she declared.“You hold the key to speeding the transition to open-road tolling, the key to attracting more investment, and the key to unlocking gridlock through dynamic pricing. Open-road tolling equipment can be installed quickly and easily, and I am asking you to commit to making tollbooths obsolete in the United States of America by the time the next surface transportation authorization expires. Let’s send these relics the way of the horse-and-buggy.”

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On Capitol Hill, the ranking minority member of the House Committee on Transportation and Infrastructure said all of the above are in the mix of conversations on the eve of a new session of Congress. Rep. John Mica, R-Fla., believes there are “a host of options.

There may be some attempts to alter the current gas tax, maybe some efforts to change the way fees are charged for vehicles (congestion pricing and distance-traveled pricing), maybe some indexing.

“What will come out, I don’t know,”he said,“My committee won’t be making all those decisions. Some of it will come out of House Ways and Means.”

In the longer term, Mica said he believes discussions indeed will turn to such revenue producing mechanisms as tolls — including states charging motorists for use of federal interstate highways, which raises unresolved questions — and public-private partnerships.

“And our building process needs to be done in a better manner,” the congressman said.

He related how he stood up at a banquet last summer and held up a sign with a numerical message: “437.” That was how many days were required to replace the Minneapolis, Minn., bridge on Interstate 35, which collapsed in August 2007. Normally, projects of that magnitude require years to design and build. Mica and others want the process sped up through more efficient regulation and management practices.

One of the bedeviling factors in any talk of raising the fuel tax is the impact a higher tax will have on consumption.

In fact, at least half of proponents pushing an increase want it to force people to conserve gasoline by driving less or buying more fuel-efficient cars. That obviously creates a quandary: Are the goals of conserving petroleum use and increasing fuel tax revenue mutually

exclusive? Can we have it both ways?

“It could work against each other,” Mica conceded.“I walked into the building a day or two ago and the car at the end of the line was plugged into the building, recharging its batteries. That’s a car from which we will receive no fuel tax revenue. More efficient cars are driving farther and paying less in taxes.

“The system is broken. Even if you increase the fuel tax $5, you have a problem,” said the Florida congressman.“Again, at this juncture, I can’t predict what the committee is going to do, but we have to end up with more net revenues.”

AASHTO’s John Horsley is aware of the dichotomy in wishing for more fuelefficient cars and more fuel tax revenue.

“We are in consultation with the environmental community on just that issue. Some people are first for global climate change and energy security, some for sustaining fuel at a higher price to fund construction. It is an interesting situation to be coordinated.”

Coordination is precisely how Juliano sees the issue being resolved. “There is continued talk about federal alignment of energy priorities with transportation funding policies,” said the Road and Transportation Builders executive.

“There needs to be better alignment. If we are promoting conservation, which we should, and alternative fuels, which we should, that should not come at the detriment of transportation funding.”

In the end, if all the revenue-producing issues are resolved, the question of reform remains. Juliano said at the summit there was “a lot of talk about reform, of setting better priorities and having better vision.”

The same conversation is heard in Capitol hallways, according to Congressman Mica. “Yes, that is part of the discussion. We have to address that issue, have to clean up the earmark process. We have to make sure projects

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are part of a national infrastructure plan, not just scattered plans. We have an obligation to do that.”

Horsley said that State Highway and Transportation Officials are behind reform completely.“We believe that it is absolutely essential that the next transportation bill feature top-to-bottom reform. People have had it with bridges to nowhere. We are proposing that taxpayers be given top value for their tax dollars and that the planning process reflect local community priorities.”

Still, with so much evidence arguing that efficient and necessary infrastructure projects receive top priority in appropriations, the temptation to lard bills with favorite, relatively low priority projects continues to be felt. The Wall Street Journal notes that in early December the U.S. Conference of Mayors presented Congress with a $73 billion list of more than 11,000 “infrastructure projects.” The Journal noted that infrastructure is defined by Dictionary.com as “fundamental facilities and systems serving a country, city or area,” and questioned how “fundamental” some projects on the list really are. The newspaper cited $2.5 million for a “waterfront park duck pond” in California, a $4 million tennis center in Texas and a $9.5 million “sports complex” in Mississippi.

Such special interest projects as those might well continue to poison the well of taxpayer goodwill, from which government ultimately must pull its revenue. Yet Kavinoky at the Chamber office believes both funding reform and new levels of investment in transportation are possible. She said she remains “very hopeful.”

“Changing things in Washington is like turning a pretty big ship,” she says.

“Change that comes is going to be incremental, but we have to move it.”

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By Giles Lambertson CEG CORRESPONDENT

The incoming administration of Barack Obama is proposing to invest in the neighborhood of a trillion dollars to stimulate the economy and there is no shortage of takers. Local, state and regional entities are hurriedly cobbling together lists of infrastructure projects on which to spend the money.

What is lacking are clear guidelines for how the money will be distributed and what kind of projects will qualify for funding. The only original criterion for an acceptable project was that it be “shovel-ready,” which was interpreted to mean that dirt on a project could be

turned “quickly.”Unfortunately,“quickly” was variously defined as anywhere from 30 to 120 days; it still lacks clear definition.

Project ideas have proliferated and been sent to Washington from all across the country. The National Governors Association’s list of projects, for example, totaled $136 billion. The U.S. Conference of Mayors quickly came up with $73 billion worth of work. The American Public Works Association conducted a mini-survey of its members who reported back with $15 billion in work just waiting to be funded.

Some of the lists probably overlap, with a project being listed more than once. The likelihood of duplication

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increases when various agencies and associations in an individual state produce individual lists. Furthermore, the definition of “shovel-ready” also has grown more elastic, with “quickly” now being defined by some authorities as six months down the road.

The very swiftness with which the public works idea was proposed and seems to be moving toward fruition has created a reverse reaction among some observers, who worry that massive spending will inevitably produce massive waste. Economist Alan D. Viard, a former senior official of the Federal Reserve and visiting scholar at the Treasury Department, said he is put off by the scale of the Obama stimulus 14

planning when combined with the speed of its enactment.

“You hope all the stuff in it is a good investment,”Viard said,”but when I hear some of these huge numbers, my concern is that much of it is bound to be poorly planned. The problem is, spending it all as quickly as you can — to get the stimulus — undermines the goal of making sure they are good investments.”

What follows is a sampling of late December project proposals from agencies across the United States:

APWA The American Public Works Association’s (APWA) $15 billion list is not intended to be comprehensive, said Jim Fahey, the association’s director of government and public works. “We were interested in finding out where things stood at the time we took the survey in November. Given the interest in how many ready-to-go projects there are out there, we thought it was important to survey members at that particular moment. It is pretty clear there are a significant number of projects.”

APWA has nearly 30,000 members and reports from many of them came back from 43 states. Identified needs ranged from a single project in North Dakota costing about $750,000 to 196 projects in Arizona totaling more than $2.5 billion. California members alone listed 572 of the 3,600 unfunded projects in the survey.

“We didn’t ask for specifics,” Fahey said, “but we did find out many are for transportation work.” These include road widening, paving and intersection improvement jobs. Other tasks include sewer line and pumping station upgrades, pedestrian underpasses and sidewalk repair.

Can an Infrastructure Stimulus Work?

Spending lots of government money on public works is not guaranteed to stimulate the national economy. General contractors and others in the construction industry will benefit, obviously, but it is problematic whether the work will spur a more general economic recovery.

Economists generally agree that while the potential for stimulus is there, timing is crucial. If the infusion of public money is too slow, the economic impact is minimal.

Dr. Alan Viard, a resident scholar of the American Enterprise Institute and former Federal Reserve economist, testified in late October on stimulus spending at a U.S. House and Ways Committee meeting. In support of his view, he cited testimony of a variety of economists, including remarks in January 2008 by Jason Furman of the Brookings Institution; Furman now is a senior economic adviser to president-elect Barack Obama.

“I don’t know what Jason would say now,” Viard said in an interview in late December.“He might say today that it is going to be a long recession, so maybe not starting quickly is less of a problem, an argument that we are kind of desperate.”

In his testimony, Viard noted that for each dollar appropriated for highway work, less than a third of it normally is spent within a year of its appropriation.

“Accelerating the pace of spending on public works for stabilization purposes would be inefficient and wasteful. In short, there is a virtual consensus that variations in infrastructure investment are not an effective way to provide short-run stimulus and smooth the economy,” he told the committee. “And grants to fund state and local governments’ infrastructure projects are likely to pose timing problems even more severe than those posed by federal projects.”

Viard testified on Capitol Hill that he is not arguing against trying to stimulate the economy with spending on public works, only observing that it is a risky bet. And he has more confidence in spending on repair work than on new construction. “Road repairs could be a stimulant because you can spend it somewhat quicker. I am a little bit less concerned when I see that kind of stuff,” he said. “Traditionally, however, there has been a de-emphasis on repair work versus sexy, high-profile new construction.”

The level of investment the incoming administration is talking about only has parallels with Works Progress Administration spending by Franklin Roosevelt at the beginning of the Great Depression.“My understanding is that most of the historians who look at it conclude the WPA did not do anything decisive to get us out of the Depression,” Viard said. A more contemporary example is the Japanese government’s attempt to spend its way out of recession in the 1990s, which economists and others generally judge to have been a failed policy.

“The track record of stimulus spending is pretty uninspiring,”Viard said.“My feeling is that if it is a good investment, do it. If the bridge is crumbling, we need to repair the bridge. We ought to do it anyway. Doing it as a stimulus, however, is not a compelling enough reason. Do a project on its merits and hope you get some stimulus on the side.”

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Ohio Regional Agency The Northeast Ohio Areawide Coordinating Agency came up with two lists all by itself. The agency serves five counties along Lake Erie in the greater Cleveland area.

A primary list has a price tag of $197 million, according to Jonathan Giblin, the agency’s transportation planner.

“These are approved projects that have been through the vetting process and we can vouch for them.They are shovelready.”

The second group of projects from various agency members includes sewer and water construction jobs and will cost in the hundreds of millions of dollars to complete. “Some are more ready than others,”Gilbin admitted, noting that a really firm timeframe has not come from Washington. Indeed, the agency is hoping the “shovel-ready” guidelines will be loosened some more.

The agency board formally asked that Congress “consider some flexibility in the timeframe for encumbering these funds.”

“Our lists are simply illustrative to show Congress what the needs are in northeast Ohio, not necessarily that these projects are the ones that will be funded,” Gilbin said. In other words, please don’t put strings on the money.

“Our understanding from legislators is that the appropriations bill will not contain a specific list of projects.”

Rather, the agency wants the money to be distributed through normal appropriations channels and the agency will, in turn, fund projects according to a pre-existing order of projects. One task the coordinating agency did prioritize is the Innerbelt Bridge in Cleveland that serves three interstate highways.

The 50-year-old bridge has been slated for rehabilitation. However, a more recent Ohio Department of

Transportation audit closed the bridge to truck and bus traffic and now considers it a candidate for new construction.

The agency argues that the bridge “should be awarded sufficient funds for completion as soon as possible, over and above any other stimulus or formula transportation funds allotted to Ohio.”

Ohio DOT has not submitted a statewide stimulus list of its own.

However, Gov. Ted Strickland joined other governors in appealing to the new administration for a quick “recovery package” including infrastructure investments.

Arizona DOT Several project lists are circulating in Arizona, but Arizona Department of Transportation spokesman Doug Nintzel sees no conflict in multiple lists.

“I wouldn’t use the term ‘competing lists.’ You simply have different entities with their own work to do. They are all preparing their lists in anticipation of a [stimulus] program. We will see what the criteria turn out to be and we will have a better idea of what can be funded.

“It is correct to use the term ‘wish list’ at this point,” he added.“At some point we will find out what projects qualify.”

One ADOT wish list of 100 projects asks for $870 million. Those undertakings range from pavement resurfacing and sign replacement to new freeway construction. A separate category for mass transit projects totals $8.5 million.

Eight aviation projects will require $356 million to complete. They range from several small community airport jobs to a $166 million people-mover project at Sky Harbor International Airport, which serves Phoenix.

Meanwhile the Maricopa Association of Governments, an Arizona metropolitan planning organization, has its own

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list of 725 projects (which includes some ADOT work) that will cost just under $7 billion — $6.995 billion, to be exact. And that is not yet a firm number.

“The number might be revised as we go forward,”said Nathan Pryor, the association’s senior policy planner. “We want to be responsive to legislation when it does move and not limit our options.”

The $7 billion is broken into three categories: projects that can be started in 30 to 120 days (approximately $1.6 billion), started in 121 days to 180 days ($2 billion) and started in 6 months or longer ($3.4 billion). The work is distributed among 26 town, city, county, transit agency and Indian jurisdictions.

Connecticut Qualms The Connecticut Conference of Municipalities (CCM) compiled a list of 1,300 projects in 94 towns that are ready to go as quickly as $2.6 billion can be found to pay for them. The organization estimates the sum needed to upgrade infrastructure in all towns in the state is $3.35 billion.

The CCM list identifies 568 transportation jobs — 163 bridges, 260 local roadways, 76 dams, 40 mass transit and 29 rail.The remaining projects vary from wastewater facilities to parks to municipal buildings. “I can assure you — Hometown Connecticut is ready to go,” declared James J. Finley, the conference’s executive director, when the list was revealed.

The CCM board also recommended that 60 percent of stimulus funding bypass the state bureaucracy and be pumped directly to regional and local governments. That recommendation might not have set too well with Gov. M. Jodi Rell, who in a subsequent news release pushed back against the organization of municipalities. The governor said that the organization’s list of proj16

ects didn’t meet the criteria as she understands them to be.

“While the [municipalities] survey is rich with variety, it is light on details essential in developing a prioritized list of projects that will reinvigorate the state’s economy and create dependable jobs,”Rell declared.“In many cases, what has arrived in my office is a ‘wish list’ of municipal projects — everything from tennis courts to new paint jobs – that have likely languished at the bottom of priority lists for years.

The governor went on to say that,“to be truly ‘shovel-ready,’ projects have to meet some fairly strict definitions. They have to be fully designed; they have to be fully permitted — and that includes not only all of the state, local and federal permits needed but also any inspections, surveys or reports required from agencies such as the U.S. Environmental Protection Agency or the U.S. Army Corps of Engineers; and they have to be ready to break ground within 180 days of getting the money.”

While breaking ground in 180 days is an expansion of the original understanding of “shovel-ready,” apparently even six months is too soon for the Conference of Municipalities projects: Rell said it is not clear that any of the surveyed projects even qualify.

far between,” said Amacker. She cited the widening of U.S. 281 in south Texas to four lanes from two as one of the pricier projects and erection of a flyover interchange in the state capital of Austin as another.

Some Lone Star State officials are questioning whether maintenance work is the best use for a sudden infusion of money.“What I want to do is … not act like we’re getting a big ol’ Christmas gift where the only issue is the money. We need to be sure we’re going to spend the money well,” a Houston newspaper quoted state Sen. Kirk Watson.

Texas highway officials have not prioritized their projects. Amacker said the funding order would depend upon the specific provisions in stimulus legislation and subsequent decisions by Texas transportation officials.

“It is way above my pay grade to determine the status of any project,” the spokesperson said. “Anyway, we haven’t had those kinds of conversations yet.”

It should be noted that other “wish lists” are floating around the state.

Example: San Antonio is asking for $1.1 billion for green energy projects, a convention center overhaul and street and drainage work.

Texas Ready to Go to Work

Reluctant Idaho

The Texas Department of Transportation has pulled together $5 billion in projects for the new administration. “They would start between January and August of ’09,” explained DOT spokesperson Karen Amacker.

“These are projects in which we can put shovels in the ground and put people to work.”

A large percentage of them are small, as construction projects go, she said.

Applying seal coats to pavement, for example. “Larger projects are few and

Gov. Butch Otter’s reaction to Obama’s stimulus proposal was atypical, to say the least. He wasn’t sure Idaho wanted any part of it.

“If you are just going to give us money that is going into our general fund, you might as well keep it,” the governor’s media person, John Hanian, said when the idea was first floated.

“That’s like giving alcohol to an alcoholic. Our governor is very cautious about taking blank checks from the federal government. We do not want to

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add to this country’s problems.”

That said, Idaho authorities have worked up a list of jobs that will cost $2.5 billion to complete. Hanian insisted the process is still tentative, however, because Idaho officials are still trying to clarify the format for submitting a list.

For example, he asked if the number of jobs created by projects is part of the equation? “If we are competing with other states for stimulus money, we need the criteria Congress is looking for.

Those questions are rapidly getting figured out now. When we can get those questions answered, we can submit a list in the form they want it.”

Part of Idaho’s tepid response to the offer of federal aid can be traced to an already uneasy relationship with Washington. Hanian noted that threefifths of land in Idaho is controlled by the federal government through the U.S. Forestry Service, the Department of the Interior and other federal agencies.

Idaho communities abutting forests have seen their economies shrink after federal authorities withdrew permission to use natural resources in local industries. Consequently, some of the projects on the list will address those economic situations.

Reluctance aside, Hanian said the governor “applauds”the federal government for reaching out to states. If infrastructure projects can be funded at a level that the nation can afford and will truly benefit Idaho without adding to the state’s burden of federal mandates, Otter is said to be supportive of the effort.

“We’re cautious,” Hanian said. “And we’re optimistic that we can access some of the stimulus funding. But we’re not just going to back up the U-Haul and say,‘Fill’ er up, boys.’”

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Online Issue #1

January 16th, 2009

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