Stimulus funding will be use-it-or-lose-it

Posted: Friday, February 06, 2009

President Barack Obama has promised the single largest new investment in our national infrastructure since the creation of the federal interstate highway system 50 years ago.

The stimulus will bring to fruition many projects with lasting benefits and deliver badly needed help to the construction industry, which has lost almost 1 million jobs since the beginning of 2007 and suffers an unemployment rate nationwide of 15.3 percent.

This program will include money for highways and bridge repair, transit, rail, aviation, sewer and water. We don't know how much Alaska will receive but it could easily equal the amount of federal funds we normally receive in all the various programs.

We have work to do to be prepared to accept and spend this new federal money.

The funds will likely be distributed by formula through existing federal agencies and programs. For example, highway and bridge projects will come through the Federal Highway Administration and all of the existing rules for using those funds will apply. That means that the state Department of Transportation has to be ready to receive and spend the funds.

A "use-it-or-lose-it" policy will likely apply. Any funds that are directed to a state by the program formula that are not obligated by a time certainly will be redistributed to other states. The package is unlikely to relax any current program rules and there will be no earmarks as we know them. Funds must be equitably distributed between urban and rural projects.

For highways, if a particular project is not in the State Transportation Improvement Plan, DOT cannot spend any federal funds on it. The DOT needs to immediately begin the arduous process of amending the improvement plan to include a stimulus project list. The amount of projects added should be well in excess of the amount we might be eligible to receive. Anything less than $350 million might be money left on the table, sent off to other states through the use-it-or-lose it policy.

DOT also has to receive authority from the Legislature to spend the federal stimulus funds on specific projects. The Legislature can appropriate more than Alaska eventually receives because you can't spend what you don't get. But if the Legislature appropriates less than what Alaska is allowed in the formula, that is money left on the table.

Statewide, DOT has dozens of projects that are designed, partially or completely permitted and that require a small amount of work to be "put on the street to bid." In DOT jargon, these are projects "on the shelf" and ready to go. DOT needs to dust off those projects and get each of them ready to bid. Alaska needs the jobs and Alaska needs the infrastructure.

Leaving money on the table should not be an option.

• John MacKinnon is executive director of Associated General Contractors of Alaska in Anchorage.

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