Weekly Wrap: Report Questions States’ Use of Stimulus Road Funds

By: - July 2, 2009 12:00 am

State governments so far are using almost all of their stimulus transportation dollars to build and improve roads and highways, while devoting only about 6 percent to public transit systems, according to a 50-state study released this week by a group seeking to improve urban planning.

Smart Growth America criticized the $6.6 billion that states have allocated for building new roads while providing relatively little for public transit projects that could create 31 percent more jobs than new road construction, according to the group.

“Given our huge road and bridge repair backlog and inadequate public transportation system, $6.6 billion for new highway capacity just doesn’t make sense,” Geoff Anderson, president of Smart Growth America, told Reuters in a statement. “It’s like adding a new wing to your house when the roof is falling in.”

Reuters noted that Kentucky will spending the biggest share of its stimulus transportation money – 86 percent – to build new roads, while Delaware will spend the biggest share – 16 percent – on public transit projects.

Some state officials said the report provided a skewed picture of states’ stimulus spending.

In Colorado, a spokeswoman for Gov. Bill Ritter (D) noted that the study looked at only one pot of transportation money included in the stimulus plan – the discretionary dollars included in the Surface Transportation Program – and failed to include the more than $100 million the state will receive from a separate pot earmarked specifically for public transit, the Denver Business Journal reported.

In Virginia, Transportation Secretary Pierce R. Homer told The Washington Post that the report – which was released on the same day that states were required to have allocated at least 50 percent of their stimulus transportation dollars – may be premature, and that state spending patterns still could change.

A letter sent by Michigan Gov. Jennifer Granholm (D) to her Republican counterpart in California, Arnold Schwarzenegger, provided another glimpse of the grim fiscal conditions facing state corrections departments.

In the letter, which was obtained by Reuters , Granholm offered Schwarzenegger a quid-pro-quo to ease both states’ prison problems, “perhaps in one fell swoop.”

California, Granholm wrote, could ease the strain on its severely overcrowded prison system by transferring inmates to Michigan, which recently announced it would close eight facilities to save $120 million. The deal would benefit Michigan – which has the nation’s highest unemployment rate – by allowing some state prison workers to keep their jobs.

“I believe this opportunity has great potential and could be mutually beneficial at a time when states need to rely on each other like never before,” Granholm wrote, according to Reuters.

She did not say how much Michigan would charge California for use of the prison space. California corrections officials expressed interest in the offer.

While cash-starved states increasingly are trying to generate new revenue by imposing taxes on online goods and services, Amazon.com is fighting back.

The world’s largest Internet retailer has resisted plans in North Carolina and Rhode Island that require it to collect sales taxes from consumers even though it does not have a physical presence in either state, The Wall Street Journal reported.

Amazon.com was working with marketing affiliates in both states – making it fair game in the eyes of state lawmakers – but the retailer responded to the legislation by cutting all ties with those affiliates.

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