How the Stimulus Money Will Flow
Minutes after President Barack Obama signed the $787 billion stimulus package on Feb. 17, construction crews in rural central Missouri began replacing a 1,000-foot bridge in Tuscumbia. The project was timed to be the first in the nation to commence under the stimulus plan, as Missouri transportation officials sought to show their projects are indeed "shovel ready."
The speed and effectiveness of spending the money will determine how well the package provides jobs and promotes economic recovery. Yet it's far from clear how much of the stimulus money will be deployed with the same alacrity that Missouri displayed in beginning its new bridge. Because the stimulus bill doesn't have earmarks with specific instructions, it contains varying time frames for types of spending. So while long-established, formula-based programs such as Medicaid may be easily administered, it will be more complex to allocate other funding.
In fact, for all the debate in Washington, national leaders will be forced to rely on states to implement many of the main objectives of the stimulus package, both in terms of jump-starting economic activity and promoting long-term growth.
"A Niagara Falls of Money"
"There's no one model for how and when money goes from bill and into the economy," says Sarah Binder, a senior fellow of the Brookings Institution and a professor at George Washington University. "A Niagara Falls of money will flow from Washington into the accounts of state highway commissioners, governors and legislatures, mayors and local school boards. States will play a critical role."
How much stimulus money will states oversee? The White House estimates that there is $144 billion in state and local relief in the package, but that figure doesn't include entitlement programs, infrastructure, energy projects, and other measures that states will ultimately have a role in administering. The Center for American Progress has created a state-by-state estimate of how much money each state will ultimately oversee; the chart represents 69% of the total cost of the stimulus package. According to the center's projections, Alaska will oversee $1.5 billion of spending, while California will oversee $64.72 billion.
One portion of the spending that's heavily dependent on state allocations is public works. That includes most of the $27.5 billion in highway spending, the $6 billion for clean water, the $18.1 billion for transit and railways, and the $4 billion for public housing upgrades and school and college construction projects. Each of these provisions has a different time scale.
For example, highway building funds, over which states have considerable leeway to select projects, must be deployed within 120 days or they are sent back to the federal government. Another part of the highway money, called the urban areas allocation, can be spent by 2010. Allen D. Biehler, Pennsylvania's secretary of transportation and president of the American Association of State Highway & Transportation Officials, says he is getting together a final list of his state's projects and aims to finalize it by mid-March. Biehler says the priority is for projects that will bring transportation infrastructure into a "state of good repair," as such work creates jobs most quickly. "We're planning feverishly," he says.
Other governors are still rolling out their plans for projects. Less than a day after the federal stimulus bill was signed into law, Maryland Governor Martin O'Malley outlined his state's plans for the first phase of $365 million in new transportation projects, which may generate more than 10,000 new jobs. O'Malley is planning on a $3 million renovation of the BWI Rail Station in Hanover, Md., new hybrid buses, and improvements to the Port of Baltimore. In terms of highways, the state wants to emphasize repair and preservation rather than new projects.
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