On Feb.17, 2009, President Obama signed the $787 billion federal economic stimulus package – the American Recovery and Reinvestment Act of 2009 – which targets more than $46 billion nationwide for transportation and mass transit projects, with $3.67 billion dedicated to transportation in California.

It is important to note that the federal stimulus program is an attempt to create jobs in California, not a transportation program designed to meet all the legion of funding criteria that make the development of projects a bureaucratic nightmare.

Using economic forecasts that project that every billion in public works spending creates 18,000 jobs, the implementation of this stimulus proposal will lead to the creation of almost 50,000 new jobs in California.

A majority of the Federal Transportation dollars are for Highways and Local Streets and Roads (with the approximate share for California set at $2.6 billion) as well as Mass Transit (approximately $1.07 billion of which is dedicated to California transit operators). These pots of money are set by formula, and the amount to be received by each state is already determined.

In addition to the $43.67 billion in funding for American highways and transit, the Recovery Act also provides significant funding for special programs that will be awarded competitively, including $8 billion for high-speed rail and intercity rail programs, $1.5 billion in supplemental discretionary grants, $1.3 billion for aviation infrastructure and $850 million for other transit grants.

Highway Funds

California will receive about $2.6 billion in federal economic stimulus dollars for highways and road projects. Of this amount, the Recovery Act provides $1.7 billion can be used by Caltrans for state transportation programs and projects. The federal act requires that about $770 million is allocated to regional transportation agencies for local transportation projects. In addition, the Recovery Act requires that about $77 million is allocated for transportation enhancement projects, such as bicycle and pedestrian paths and landscaping.

The federal act has stringent use-it-or-lose-it provisions designed to ensure that the funds are expended in an expedited manner in order to provide immediate economic stimulus in the form of jobs. At least one-half of the Caltrans’ shares of the funds must be obligated within the first 120 days.

The balance of all the road and highway funds must be obligated within one year. Any funds that are not obligated by the deadline will be redistributed to states that have been able to meet the deadlines.

Transit Programs

Of the $7.55 billion in the Recovery Act to support transit programs, California’s share of the formula-based program is just more than $1 billion, which includes $968 million for the large metropolitan areas for bus, rail and capital assistance of which $66 million is specifically dedicated for light and commuter rail systems. Another $34 million is provided to the non-urbanized areas of the state. These funds are sent directly to the operators and have use-it-or-lose-it provisions similar to the road funds, requiring that 50% of the funds to be obligated within the first 180 days and all funds to be obligated within one year.

State Implementation Compromise

Anticipating the passage of the Recovery Act, the Schwarzenegger Administration, led by Caltrans Director Kempton, collaborated with regional transportation agencies to find an alternative distribution formula to current state law that would expedite and effectively use the federal funds.

This language is embodied in AB 20xxx, a measure authored by Assembly Speaker Karen Bass (D- Los Angeles).

This bill will ensure that many of the state’s “shovel-ready,” critical infrastructure projects get built as soon as possible, rather than waiting until the state can get bond dollars out of a risk-averse private sector.

Additionally, the revenues allocated to the state will provide an important investment in the repair and maintenance of the existing highway system through the other state programs.

On balance, the Caltrans compromise proposal is a responsible approach to getting federal dollars into critical infrastructure projects in the quickest possible manner.

The proposal balances several critical policy concerns, like maintaining existing infrastructure while also expanding the system, and it preserves local control to ensure that every area of the state can invest these dollars in the projects that are the most important to their constituents.