Weekly Wrap: States Dispute Charge that Stimulus Isn’t Working

By: - July 17, 2009 12:00 am

State and federal transportation officials are rebutting critics who say the $787 billion economic stimulus package is not working fast enough and has favored states over cities in distributing dollars for transportation projects.

In a flurry of recent articles and TV appearances, the critics, led by Republicans in Congress, have stepped up their attacks on the Obama administration’s plan to create or save 3.5 million jobs. Many, including House Majority Leader John Boehner of Ohio, had said before the stimulus was even approved that it wouldn’t work.

Then state and federal officials were put on the defensive by an analysis of 5,274 transportation projects in The New York Times showing that urban areas are getting less than two-thirds of federal transportation stimulus money even though most Americans live in those areas.

The American Association of State Highway and Transportation Officials put together a news conference July 14 in Seattle to refute the GOP criticism. Washington state Transportation Secretary Paula Hammond said 2,000 construction projects worth $6 billion are in progress nationwide – with more on the way. The stimulus program will channel $27 billion to states for highway and bridge projects, she said.

“We’d have a higher percentage of unemployment if we didn’t have these stimulus dollars,” Hammond said at the news conference. 
Officials did not dispute the Times’ analysis but said they are confident the money is reaching urban and rural areas. In an interview with Stateline.org , Hammond said 51 percent of the stimulus funds are being spent in economically distressed areas, which includes cities.

“Clearly the money didn’t go far enough to satisfy everyone,” Hammond said, adding that states were guided by the administration’s requirement to give priority to “shovel-ready” projects that were ready to go, regardless of where they were located in a state. “We think the money is being used where it’s needed.”

The Obama administration also weighed in. Transportation Secretary Ray LaHood said in a speech that in Pennsylvania, nearly 40 percent of the state’s unemployed live in about 40 economically depressed counties, where nearly half of the stimulus-funded road projects are located. “So these funds are indeed going to workers and their families who are most vulnerable during the recession,” LaHood said. “And that’s true around the country.

Day 17 of the State Budget-Showdown Crisis.As of July 16, the number of states without a budget was down to three. Still without a budget after missing the July 1 start of the new fiscal year: Connecticut, North Carolina and Pennsylvania.  Illinois Gov. Pat Quinn (D) signed a $26 billion operating budget Wednesday (July 15) that did not include the income-tax increase he wanted but averted deep spending cuts by relying on borrowing to balance the budget. Ohio is close: Legislators approved a two-year, $51 billion budget Monday (July 13) that Gov. Ted Strickland (D) was planning to sign. Arizona Gov. Jan Brewer (R) signed a budget deal July 15 but lawmakers are meeting in a special session this week to make fixes. California and New York approved budgets earlier in the year, but both have shortfalls now as revenue has fallen lower than projected and legislatures are working overtime to try to close the gap.

Meantime, two governors have turned to the Internet to build public support for their budget positions. Check out the YouTube videos of Pennsylvania Gov. Ed Rendell (D) and California Gov. Arnold Schwarzenegger (R) on their states’ respective budget crisis.

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Stephen Fehr

Stephen Fehr is a senior officer with Pew’s government performance portfolio. He is a lead writer on many of the products generated by the portfolio, specializing in state and local fiscal health.