Stimulus Bill Allocates $8.3 Billion of $48 Billion in Transportation Funding to Rail Initiatives

---

Researched by Industrial Info Resources (Sugar Land, Texas)--With the nation's economy tanking, more than a half million jobs being lost monthly, the foreclosure rate climbing and consumer confidence shot, President Obama has had to make his much-vaunted stimulus bill a priority once he took office last month. After weeks of wrangling, the bill passed. Yet, despite all of the talk about creating jobs through transportation spending, only $48 billion of the almost $800 billion allocated for the stimulus bill went to the transportation sector, and of that money, a mere $8.3 billion was allocated for rail initiatives.

The money set aside for rail project activity across the United States is much needed. During the Bush presidency, rail projects were not a high priority, and federal funding, which typically makes up about half of the total funding for both light and commuter rail projects, was in short supply. While the rules governing the distribution of federal rail funding are still somewhat prohibitive, President Obama's administration is expected to rewrite the rules in the near future. They are all that the government currently has to work with and thus will dictate how the stimulus funding will be allocated.

Most analysts feel that the money from the stimulus bill will be put toward projects geared to maintain existing rail infrastructure rather than new start programs. While this in itself is fine, each year every rail entity across the nation spends up to hundreds of millions on maintenance and state-of-good-repair initiatives. It will not create a large number of new jobs as a result. In most cases, the entities that manage rail systems in states, such as New Jersey Transit in New Jersey, the Southeastern Pennsylvania Transportation Authority in Pennsylvania, and Massachusetts Bay Transportation Authority (Boston, Massachusetts) utilize in-house crews to do this type of work with only a limited amount of outside contractors needed each year.

More long-term jobs will be created in this sector once the administration redoes the new start regulations and begins funding expansion projects. Your average light or commuter rail expansion project takes several years to construct and requires the hiring of thousands of construction workers over the course of construction, meaning more long-term job creation. The maintenance and state-of-good-repair projects that rail entities perform annually tend to be completed within a single fiscal year.

Industrial Info is tracking more than $100 billion in light, commuter and freight rail projects in the U.S. that are in various stages of development. Many of these projects are still in the alternative analysis or early planning stages, and it will be a number of years before any construction activity will occur. Approximately 30% of the projects are at a point where they need federal funding to move forward. Once they receive that funding, they could begin construction-related activities within a matter of months.

While the $8.3 billion allocated by the stimulus bill is heralded as a good first step in funding necessary rail sector project activity, it is obviously just that: a first step. The administration needs to be proactive on examining how new-start funding is allocated on an annual basis and needs to adjust those rules and regulations to make more funding available faster for rail projects. Once that is accomplished, more new jobs can be created and projects of this nature will help stem the flow of job losses currently being felt by the U.S. While rail projects alone will not make a large dent in the total projects being lost on a monthly basis, at least with the current funding regulations, it is a good place to start if the president is serious about wanting to stop the bleeding.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.