How best to get our economy and jobs back: Lessons from ARRA

By Beth Osborne

The current COVID-19 pandemic has created unique transportation challenges for cities and states. This includes everything from maintaining transit with plummeting ridership to facing a needed economic recovery with major decreases in the taxes that pay for transportation maintenance and improvements. With the CARES Act passed and more stimulus and recovery funding being considered, the national experience with the ARRA funding from the last recession might hold lessons for how to jump-start the economy and job creation.

To address the mounting challenges caused by COVID-19, Congress has considered a series of relief packages, including the recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act. This bill included $25 billion in transit operating assistance to ensure that transit continued to operate for essential workers and the transit dependent through this crisis. It also contained billions in loans and loan guarantees for air carriers and general aviation, cargo air carriers, industries supporting national security, and other businesses and municipal governments.

Congress is now considering another relief bill with a focus on supporting medical facilities, small businesses, and essential workers. Congressional leaders hope that after that is completed, likely in early May, they can turn their attention to an economic stimulus bill with funding available to promote job growth and economic activity as businesses reopen and people return to work.

Many transportation stakeholders are already making recommendations for what should be included in future bills for COVID-19 relief and economic stimulus. The American Association of State Highway and Transportation Officials requested $50 billion as a backstop to lost state revenues due to decreased driving and decreased economic activity. This funding would allow state departments of transportation to maintain their work planned before the COVID-19 pandemic. Much like the relief for transit, state DOTs want this funding to go to DOT operations to allow them to meet payroll and avoid furloughs and layoffs.

The AASHTO letter also makes recommendations for a stimulus including to “double the amount of federal surface transportation funding and reauthorize these programs for at least another six years.” That would equal around $800 billion. By comparison, the Administration and the House have been considering a funding package closer to the $425 billion range.

A letter from the American Public Transit Association (APTA) to Congress calls for a similar approach, asking for a federal investment of “$178 billion over six years to fund critical projects that will repair, maintain, and improve our public transit and passenger rail systems today and in the future.”

Both groups see an opportunity to get surface transportation reauthorized without having to solve for the funding shortfall in gas taxes that has been challenging the program since 2009 and getting worse each year. However, it is interesting that neither organization is calling for immediate one-time funding to stimulate the economy in the near term, like Congress did under the 2009 American Recovery and Reinvestment Act.

While the intention behind ARRA infrastructure spending was to sustain and increase job opportunities in the construction industry, transportation agencies found it difficult to move a huge increase in funding quickly with existing staff and equipment. And temporary funding did not allow for increases in permanent staff. This probably explains why both APTA and AASHTO are asking for a long-term increase in transportation investment, rather than a true stimulus package.

House Democrats did announce a desire to incorporate an infrastructure package in a stimulus bill including:

  • $329 billion for highways and bridges with an aim to increase electric vehicle charging stations and alternative fueling options;
  • $105 billion for transit;
  • $55 billion for rail;
  • $30 billion for airports;
  • $50.5 billion for wastewater;
  • $86 billion to expand broadband; and
  • $10 billion for community health centers.

It is also likely to include school construction and housing funds.

As Congress considers a bill to stimulate job creation, there are lessons they could learn from the country’s experience with ARRA. Smart Growth America released recommendations for a recovery bill as well as lessons from ARRA that Congress might want to consider as they approach a COVID-19 stimulus bill. The two key lessons identified were that 1) ARRA was meant to create jobs, but funding was not targeted to projects likely to create the most jobs per dollar spent, and 2) this is because Congress defaulted to existing programs rather than programs designed to induce immediate job creation.

Beth Osborne is Senior Policy Advisor for SSTI.