Stimulus-Funded Transportation Projects Bogged Down in Red Tape

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Researched by Industrial Info Resources (Sugar Land, Texas)--Earlier this year, as the country reeled from the affects of a year-long recession, a collapsing financial market, a decimated automotive sector and a housing market that was almost nonexistent, the federal government developed the Stimulus Bill as a method of creating jobs and pumping much needed funds into the economic quagmire. However, as with most government-run operations, the promise of quick action soon gave way to the reality of the way government actually operates. As part of the Stimulus Bill, $19 billion was allocated to transportation-related, shovel-ready projects--projects that were supposed to put out-of-work people back into jobs almost immediately, helping to alleviate the national unemployment situation that was going from bad to worse on a monthly basis. However, halfway through 2009, all that the Stimulus Bill has done for the transportation sector is create piles and piles of red tape.

Of the $19 billion allocated for transportation-related projects, the majority was geared to road projects, to be spread across the United States based on a complex formula created to allocate funds. A little more than $8 billion of that total was aimed at rail-related projects across the country. Even before the Stimulus Bill became a reality, transportation agencies at the state and local levels were lining up projects for funding, projects that had, for the most part, been sitting in planning departments across the nation just waiting for financing to begin.

Planners and executives alike at these agencies were licking their chops at the thought of being able to finally get a number of projects under way, not only creating jobs, but also filling holes in their respective rail systems' capital budgets with projects that needed to be completed, but had been unable to obtain funding because of the budgetary problems facing transportation agencies across the country.

The reality of the situation, after the Stimulus Bill was approved, was that the amount of red tape involved with funding and moving to the construction stage on these projects became almost impossibly harder. Typically, transportation projects are required to go through approximately five levels of approvals before they are released for construction. Post-Stimulus, this increased to about fifty levels of approval. Governmental red tape and bureaucracy had emerged, sticking its ugly head into a process that was tried and true, a process that had been working for decades, and mucked up the works.

Rather than putting people to work, transportation agencies are finding themselves buried under piles of paperwork. Very few of the projects that were supposed to provide immediate help to the unemployed workforce have found themselves actually reaching the construction stage of development. To date, only $369 million of the $19 billion allocated for transportation related projects has actually been released--less than 2% of the total. The majority of the money has gone to road projects.

On the rail side of the equation, transportation agencies rapidly put together lists of "shovel-ready" projects, added sections to their respective web pages outlining which projects they were requesting funding for and began filling out the required paperwork to get that funding, only to find that they are still filling out paperwork months later and little to none of the projects have received funding.

Almost every agency across the country in charge of rail transportation, whether light or commuter rail, has been facing budgetary problems in recent years. Americans, in general, have not taken to rail transportation as rapidly or readily as their European and Asian brothers and sisters have, and as a result budgets here in U.S. are suffering. Without much needed revenue each year, the majority of the expansion, upgrade and modification projects that rail agencies would like to accomplish will not happen in a timely manner.

Rail executives saw the Stimulus Bill as a way to get at least some of those projects off the ground in a rapid fashion. The catch-22 of this situation is that without these expansions, upgrades and modifications, the rail entities will have a more difficult time attracting new customers, which increases ridership and shows the public that rail is a viable option to taking their own cars to work or play. Thus rail companies' budgets continue to suffer.

While the Stimulus Bill offered hope to help alleviate this situation, in typical governmental fashion, the bill has fallen far short of the mark. Now the layers of bureaucracy have increased to almost unheard of levels, creating far more problems than they solve. While it is understandable that there is additional red tape with a program such as the Stimulus Bill, the amount generated has gone well past reasonable and into the realm of the insane. Hopefully, before the year is out the Obama administration will take steps to address these problems and get the financing flowing. If they don't, the Stimulus Bill will have become just another bad governmental idea in a long history of such ideas.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.