BC-Obama-Fixing Up America, 1st Ld-Writethru,850
Cash-poor states eager for a piece of Obama plan
Eds: RECASTS to RAISE references to concerns about Obama’s plan and its impact. Moving on general news and financial services.
By BETH FOUHY
Associated Press Writer
NEW YORK (AP) — President-elect Barack Obama’s plan to overhaul the nation’s roads, bridges and transit systems has local officials clamoring for their share of those federal dollars despite concerns that creating millions of jobs won’t deliver the intended jolt to the economy.
“Borrowing money and cutting checks to fund infrastructure is not the best way to juice the economy,” Republican Gov. Mark Sanford of South Carolina said in an interview. “And this notion that Washington, with a blink of a wand, can create 2.5 million jobs is strange in a market economy.”
The deepening economic crisis has wreaked havoc on state budgets across the country. At least 40 states are running deficits, forcing governors to raise taxes and trim spending while postponing urgent repairs to roads, bridges, hospitals and ports.
“California’s fiscal house is burning down,” state Treasurer Bill Lockyer declared recently after a state regulatory board halted financing for some 1,600 infrastructure projects because of the state’s nearly $15 billion deficit.
California’s woes are far from unique. “Because of the downturn in revenues, we’re all starting to delay construction projects that are clearly maintenance. That risks public safety,” said Maryland Gov. Martin O’Malley in an interview.
The rescue plan, which Obama has called “the largest new investment in national infrastructure since the creation of the federal highway system in the 1950s,” is part of a broader legislative package intended to create up to 3 million new jobs, provide tax relief to middle-class families and help governors cover the soaring costs of education and Medicaid, the public health program for the poor. It is estimated to cost as much as $1 trillion.
Lest the plan seem too much a throwback to the public works projects of the Depression-era New Deal, Obama has added several 21st-century goals, such as expanding broadband into underserved areas and making public buildings more energy efficient. But the bulk of the plan is old-fashioned construction and repair, much of which would be done by union laborers.
To avoid waste and hasten an economic recovery, Obama wants to target projects deemed “shovel ready” — meaning the design and permitting has been completed and the projects would be ready to launch within 90 to 120 days of being funded. He also is insisting on a “use it or lose it” policy, warning states that they would lose the money if they didn’t begin building promptly after receiving it.
Obama, who summoned governors to a meeting in Philadelphia in December, has said he will hold local governments accountable for money spent.
“If we’re building a road, it better not be a road to nowhere,” Obama said last month. “If we are building a bridge, it better be because an engineer identified a bridge that has a structural weakness and that has to be dealt with.”
So far, the proposed restrictions haven’t been much of a deterrent. States have already identified about $136 billion in shovel-ready projects, according to the advocacy organization Building America’s Future. And interest groups are lining up with their own requests: A ski area in northern Minnesota wants $6 million for snowmaking and maintenance, while the Association of Zoos and Aquariums announced it too will ask for money.
Most governors professed to be thrilled by the promise of federal help while acknowledging the responsibility attached to it.
“We have to protect the integrity of this effort and invest in things that have value after dollars are expended,” O’Malley said. “Let’s face it, we’re borrowing from our kids.”
Polly Trottenberg, executive director of Building America’s Future, argued for a balance between immediate need and long-term investment that could have a more transformative impact on the economy.
“There’s a pretty broad consensus on ‘fix it first,’ but we also want to capture projects that might take more than 120 days but could bring real long-term value,” Trottenberg said, citing light rail and other infrastructure projects that take years to develop and build.
While Obama’s team wants to avoid the kind of special-interest feeding frenzy that has soured taxpayers in the past, many Republicans are doubtful it can be done.
“Taxpayers are in no mood to have a single dollar wasted, but it’s not yet been explained how their tax dollars will be protected,” Senate Republican leader Mitch McConnell of Kentucky said in a statement.
On Monday, McConnell and House GOP leader John Boehner of Ohio said they would seek greater input on the proposal and more information on how the money would be spent. Democratic congressional leaders have been working with Obama’s economic team on legislation to be voted on in January.
Although he has argued that Obama’s plan would plunge the country deeper into debt, Sanford declined to say that he would turn down federal help for South Carolina if the plan goes through.
“We’ll see where we are,” Sanford said.
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