President Barack Obama announced Monday that highway projects spurred by the administration’s $787 billion economic stimulus plan are coming in “ahead of schedule and under budget,” but the program’s early success may owe more to the depth of the economic crisis than to efficiency in Washington.
State governments went into overdrive to grab a share of the $28 billion in funding for highways and bridges that was provided in the stimulus bill. Across the country, meanwhile, construction companies had seen their business plunge so fast that they rushed to submit unusually low bids for the federally funded projects — hoping to have at least some work to keep themselves afloat this summer.
“We haven’t seen prices like these in 2 1/2 years,” said Oklahoma Transportation Director Gary Ridley, who has funded $230 million in projects since the stimulus program took effect early last month. Speaking at the Transportation Department surrounded by construction workers from a highway project in Maryland, Obama said that the administration has approved 2,000 highway projects nationwide in the 41 days since the stimulus fund took effect. Citing a project to widen a section of Interstate Highway 94 in Portage, Mich., that will create 900 jobs by this summer, Obama extolled “how quickly, efficiently and responsibly [the] investments have been made.”
He predicted the highway program would create or save 150,000 jobs by the end 2010.
But in many respects, officials said, the speed of execution is a direct result of how badly states need the money and how hungry contractors are for work.
Gary Hannig, acting secretary of the Illinois Department of Transportation, said that before the stimulus package came along, cash-strapped Illinois had set up a five-year transportation budget so meager that a deterioration in statewide road quality was considered inevitable.
Now Illinois is the beneficiary of $937 million in federal largesse, $627 million of which is slated for state highway projects. In April, IDOT proposed projects ranging from a $7 million ramp improvement along the Eisenhower Expressway to $14.5million in bridge repairs along the Stevenson.
Bids have been “pleasantly at or below original estimates,” Hannig said.
John Horsley, executive director of the American Association of State Highway and Transportation Officials, said state highway departments have been gearing up for big federal spending ever since last summer when then-presidential candidates Sen. John McCain and Obama began talking about the need for further stimulus.
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States typically have a three- to eight-year master road-building plan in place, and most began going through their portfolios to see which projects they could push forward early by accelerating the voluminous engineering and environmental work necessary.
Consequently, when the stimulus bill was approved earlier this year, many of the states were ready to jump at the money. They were given 120 days to let out half of their allotment of money or they have to give it back.
At the same time, several factors have conspired to drive down project costs. At the top of the list was the searing downturn in residential and commercial real estate construction. Because the companies that construct highways also tend to build the roads and other infrastructure for housing projects, their business popped along with the housing bubble. Thousands of workers were jettisoned.
Now, state officials say, construction companies are submitting especially aggressive bids to win new business.
The cost savings won’t mean the government will spend less money.
“We now have more recovery dollars to go around,” Obama said. “And that means we can fund more projects, revitalize more of our infrastructure, put more people back to work and ensure that taxpayers get more value for their dollars.”
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