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Economic Stimulus Coming to State Highways

Most people take infrastructure for granted until something goes wrong. The bridge collapses in Minneapolis and Webber Falls, OK, have resulted in more spending on bridge inspection, repair and replacement nationwide. Hurricane Katrina prompted a surge of spending on levee repair and coastal restoration along the Gulf Coast.

March 16, 2009

Most people take infrastructure for granted until something goes wrong. The bridge collapses in Minneapolis and Webber Falls, OK, have resulted in more spending on bridge inspection, repair and replacement nationwide. Hurricane Katrina prompted a surge of spending on levee repair and coastal restoration along the Gulf Coast. The East Coast blackout of 2003 has placed more emphasis on modernizing the nation's electricity grid. The economic punch swung by oil prices last year has encouraged major players to invest in alternative energy. All these changes involve construction and its related supply chain

The American Recovery and Reinvestment Act (ARRA), aka the Obama Administration's Economic Stimulus Plan, will inject an estimated $150 billion to $160 billion into the construction market over the next two years. Although this boils down to more humble numbers when divided by 50 states, it is still a significant figure.

Boiled Down

Of the approximately $789-billion Economic Stimulus Bill, about $275 billion will be in tax cuts and over $500 billion will be directed to spending. Of that, perhaps $160 billion will be directed to construction-related spending.

As reported by the House Appropriations Committee, the bill includes $30 billion in new federal highway investment, $9 billion in public transit investment, $3 billion for the federal airport Improvement program (AIP), and $1.1 billion for passenger rail improvements. In addition the bill includes tax provisions of interest to the transportation construction industry. These include repeal for the penalty requirement of all levels of government to withhold 3 percent of their contracts, which is scheduled to take effect in 2011.

Jeff Kimball — president and CEO of L. Robert Kimball & Associates, one of the 200 largest professional EA engineering/architectural services firms in the industry — has been closely following the bill as it traveled through Congress. The company's clients include state and local governments in the infrastructure market — roads, bridges, airports, communication, and vertical construction. Kimball has broken the numbers down farther by region and market sector. His estimates for highway construction are given below.

The Arkansas Highway and Transportation Department, which let around $325 million in highway contracts in 2008, can expect an additional $370 million in stimulus funds over the next two years.

Although Louisiana's DOTD has benefited from the rise in oil prices, the state's infrastructure has suffered a great deal in the past few years. The approximately $470 million for highway construction will be welcomed.

Oklahoma is expected to receive about $460 million. ODOT let a little more than $605 million in contracts during calendar year 2008.

Tennessee could receive $613 million from the stimulus bill.

"This is a once-in-a-lifetime opportunity," Kimball remarked. "You're not going to see this very often where the government is willing and able to invest in economic stimulation and do it through infrastructure. We as professionals want to make sure that the money gets spent wisely and effectively on projects that will have a long-term economic impact."

Who Is Job-Hunting?

While the region's catastrophic-related infrastructure construction came about in succession, stimulus program projects will be hitting the ground simultaneously. This added work will once again underscore the shortage of U.S. workers in the construction fields. There aren't enough skilled welders, equipment operators, electricians, plumbers, and other tradespeople out there.

Will all this new public works spending place more attention on the worthwhile pursuit of employment through the construction trades? If this stimulus plan is about creating jobs, how do you convince white collar computer jockeys to go outside and work with their hands? Maybe one in 100 will. I just don't see it happening.

Construction Career Days events, which have been held in various locations over the past several years, began to improve the way the public perceives the construction industry in a few isolated areas. We need a Bob the Builder show for adults — not just sitcoms where the tradesman is the lovable buffoon. We've made the indoors too comfortable.

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