{ "id": "R46343", "type": "CRS Report", "typeId": "REPORTS", "number": "R46343", "active": true, "source": "EveryCRSReport.com", "versions": [ { "source": "EveryCRSReport.com", "id": 624622, "date": "2020-05-05", "retrieved": "2020-05-19T13:47:40.144892", "title": "Transportation Infrastructure Investment as Economic Stimulus: Lessons from the American Recovery and Reinvestment Act of 2009", "summary": "Congress is considering federal funding for infrastructure to revive an economy damaged by Coronavirus Disease 2019 (COVID-19). Congress previously provided infrastructure funding for economic stimulus in the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5). Enacted on February 17, 2009, ARRA was a response to the \u201cGreat Recession\u201d that officially ran from December 2007 through June 2009. This report discusses the economic impact of the transportation infrastructure funding in ARRA.\nARRA provided $48.1 billion for programs administered by the U.S. Department of Transportation (DOT), with more than half, $27.5 billion, authorized for highways. Other funding included $8.4 billion for public transportation, $8.0 billion for high-speed rail, $1.3 billion for Amtrak, $1.3 billion for aviation programs, and $1.5 billion for Transportation Investment Generating Economic Recovery (TIGER) grants, which could be used for a wide range of transportation projects. Most of the ARRA funding was distributed by DOT agencies to their usual grantees via existing formula programs. The high-speed rail funding and TIGER grants required the establishment of two new discretionary programs.\nBased on approximately a decade or more of program and other data, the following are among the observations that can be made with regard to the economic effects of ARRA funding for transportation infrastructure:\nInfrastructure spending was slower than other types of stimulus. ARRA transportation funding was expended more slowly than other types of assistance, such as unemployment compensation. About 9% of DOT funding was spent within the first six months of availability compared with 44% of unemployment compensation. The majority of DOT\u2019s ARRA funding was spent in FY2010 (37%) and FY2011 (24%).\nCharacteristics of infrastructure funding affected expenditure timing. Funding that was distributed by DOT agencies to their usual grantees via existing formula programs was expended relatively quickly. This included most of the funding for highways, public transportation, aviation, and maritime transportation. Discretionary funds for programs established in the law, such as for the high-speed rail program and TIGER grants, took much longer to expend on construction because DOT had to design the programs, issue rules, advertise the availability of funds, and wait for applications from state and local agencies, which then had to complete their own contracting procedures to get work under way.\nThe level of infrastructure investment depended on nonfederal entities. State and local expenditures make up around 75% of transportation infrastructure expenditures. In some sectors, such as highways, the growth in federal spending due to ARRA was accompanied by a decline in state and local government spending.\nMaintenance-of-effort requirements were difficult to enforce. The federal share of transportation projects using ARRA funds was generally 100%, but states were required to certify that they would spend amounts already planned. These maintenance-of-effort requirements in transportation were challenging to comply with and to administer.\nEmployment effects were modest. Employment in highway construction, for example, rose slightly in the year following the passage of ARRA. A sustained increase in employment did not begin until 2015.\nFinancing infrastructure did leverage state resources. ARRA included the Build America Bond (BAB) program, which permitted state and local governments to issue tax credit bonds for any type of capital investment. The attractiveness of BABs may have accelerated the timing of capital financings and, thus, capital investment. BABs had a relatively generous subsidy rate, but compared with ARRA grants, the issuance of BABs for infrastructure ensured a state funding match of 65%.\nStimulus-funded projects can provide transportation benefits. Most ARRA transportation funding went to routine projects such as highway paving and bus purchases that were quick to implement. According to DOT estimates, such projects often have higher benefit-cost ratios than large \u201cgame changing\u201d projects that build new capacity.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/R46343", "sha1": "77b41d966ceebe215fd971f416162b55a5f79cc9", "filename": "files/20200505_R46343_77b41d966ceebe215fd971f416162b55a5f79cc9.html", "images": { "/products/Getimages/?directory=R/html/R46343_files&id=/2.png": "files/20200505_R46343_images_c297360072ac13eba1c772edd524dad0e2ba0a7f.png", "/products/Getimages/?directory=R/html/R46343_files&id=/0.png": "files/20200505_R46343_images_2a99fe68506c07021a507eab659cff7c81c77234.png", "/products/Getimages/?directory=R/html/R46343_files&id=/1.png": "files/20200505_R46343_images_21ea01609b7b31649c48a2511d0d87150b9568b2.png" } }, { "format": "PDF", "encoding": null, "url": "https://www.crs.gov/Reports/pdf/R46343", "sha1": "d86483c27052a29205f4fdc034d07bf3e7975ada", "filename": "files/20200505_R46343_d86483c27052a29205f4fdc034d07bf3e7975ada.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4800, "name": "Public Transit & Passenger Rail" }, { "source": "IBCList", "id": 4826, "name": "Highways & Highway Vehicles" }, { "source": "IBCList", "id": 4867, "name": "Transportation Funding" } ] } ], "topics": [ "Economic Policy", "Transportation Policy" ] }