Highway construction waits for funding from 2009 economic stimulus package | Notes from Jim Haughey

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Notes from Jim Haughey
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Highway construction waits for funding from 2009 economic stimulus package

Jim Haughey

RCD Chief Economist

Dec 23, 2008

It is now very likely, but not yet certain, that additional economic stimulus funds will offset the slim growth in federal funding now forecast while Congress debates renews the 6-year highway funding plan. Year six of the expiring plan and year one of the new plan have often been periods of slim growth in highway construction spending as state DOT’s wait for their final allocation to be fixed in signed legislation.

The debate on draft legislation may begin within two weeks with a push for passage by the January 20th inauguration. Experience suggests that the debate will last much longer. The full stimulus package will be hundreds if not thousands of pages long. And the price tag will be the biggest one Congress has ever considered. Every lobbyist in Washington will be working overtime to get as many dollars as they can for their clients. Dividing the pot in the every six year highway bill between states and types of projects has always taken many months of debate.

Additional design and planning spending from existing funds will be underway early in the winter but job site spending will come much later. The final legislation will likely provided earmarked funds for many projects but most of the new money will be in a yet to be divided pot will the rules for project selection specified but not the specific projects. A token amount of job site spending could occur as early as the spring quarter. But the full of the new money will likely come no sooner than the fall quarter.

Congress can specify that only projects ready to begin in 90 days will be funded. But this mandate does not instantly free up the massive amount of design, estimating and project management resources or the specialized materials, equipment and labor to put all of the newly appropriated funds to work in 90 days. This much money will attract lawsuits from losing bidders, environmentalist want some of the money for their favorite projects and anyone who wants the road to be built somewhere else.

The stimulus plan is likely to provide a bigger boost to highway and other heavy construction spending in 2010 than in 2009.