Federal Transportation Follies

The 2009 stimulus bill gave the U.S. Department of Transportation $50 billion to distribute to the states for highways, roads, and bridges. A House bill passed in December would add another $28 billion. According to Washington folklore, spending on infrastructure is always good because it’ll create jobs and spur economic growth. However, three recent examples are a reminder that the government often does a poor job of allocating resources.

First, an Alaska legislative audit concluded that the state should not have spent federal transportation money building a road to the site of the proposed “Bridge to Nowhere,” which was canceled after a national outcry. Alaska kept the federal money originally earmarked for the bridge, and then-Governor Sarah Palin agreed to spend $26 million of it on the road despite the fact there was no bridge.

Second, the Department of Transportation is supposed to exclude “unethical, dishonest, or otherwise irresponsible” parties from receiving federal funds. But according to a report from DOT’s inspector general, the average case took DOT officials “300 days to reach a suspension decision and over 400 days to reach a debarment decision.” For example, Kentucky awarded $24 million in transportation stimulus money to companies with officials under review by the Federal Highway Administration for bribery, theft, and obstruction of justice. The FHA took 10 months to review the companies before ultimately suspending them, but Kentucky had already given the companies the money.

Third, a Tennessee television station analyzed the state’s use of federal transportation stimulus money and found that it “spent an average of $161,500 per job created and that some paving jobs, which were temporary, cost taxpayers more than $1 million each.” The station interviewed a construction company that had been busy during the summer when it had federal money. Now its trucks are idle and the workers it hired have all been laid off.

Randal O’Toole says that “The best test of infrastructure value is whether users are willing to pay for it.” There’s almost no connection between infrastructure projects funded by federal taxpayers and the typically local users. Leaving infrastructure projects to state and local governments to fund would make more of a connection. Privatization, which would utilize tolling and other user fees, would be even better.