U.S. Highway Funds Have Greatest Effect on Rural States, Reason Study Says

Smaller, rural states with the least traffic congestion felt the impact of about $27 billion in U.S. highway economic-stimulus funds more than those with large urban areas and the biggest budgets for roads and bridges, a national study said.

For states such as North Dakota and South Dakota, stimulus funds can comprise more than 40 percent of their annual highway spending while in New York and Texas, they account for about 14 percent, the Reason Foundation, a self-described “libertarian” policy group based in Los Angeles, said in the report.

“Given the focus of stimulus funds on projects that are likely to significantly impact system condition, their impact should be largest in smaller rural states that already have relatively good systems,” the report concluded. Funds distributed through the stimulus package made up about 22 percent of all states’ road spending in 2008, it said.

Nationwide, the overall condition of the state-owned highway system “has never been in better shape,” the study said. Reason based that assessment on 11 “indicators” that include spending on highways, pavement and bridge condition, urban interstate congestion, fatality rates and narrow rural lanes, which are reported to the Federal Highway Administration.

The highway funds, from the $787 billion American Recovery and Reinvestment Act passed last year, included $26.6 billion to finance almost 13,000 projects through Feb. 26. The money mostly went into “shovel ready” projects near bid and construction.

No Allocation Changes

“Allocations of stimulus funds paralleled the existing federal highway aid program allocating funds to each state,” said Cathy St. Dennis, a Federal Highway Administration spokeswoman. “When you look at the data, California and the other big states got the most money. There was no intent to favor the small states.”

North Dakota, followed by Montana, Kansas, New Mexico and Nebraska, led all 50 states in road performance, the Reason study said. North Dakota spent $371 million on its roads and bridges in 2008 and received $167.1 million, or 45 percent, in highway stimulus funds in 2009, the foundation said.

Rhode Island, Alaska, California, Hawaii, New York and New Jersey stood at the bottom of the rankings. New York, which ranked 46th in performance, just behind New Jersey, spent $6.6 billion on roads in 2008 and got $944.5 million, or 14.4 percent of its road budget, in U.S. stimulus funds last year. California, ranked 48th, spent $10 billion and received $2.5 billion, or 25 percent, from the federal program, the study said.

Accentuating Differences

“The impact of stimulus funds is likely to accentuate the differences between high-performing (generally smaller, rural) and low-performing (generally larger, urban) states,” the report concluded.

Because of the recession, automobile travel fell about 3.5 percent in 2008 from 2007, reducing congestion, fatality rates, and road deterioration. That result, combined with the infusion of federal aid, “has given the states some breathing room in addressing long-delayed construction work, and may have led to better overall system performance,” the study said.

“The recession is partly responsible for the improvement in road conditions,” the foundation said in announcing the results of its 19th annual assessment of U.S. highways. “People are driving less, which has helped slow pavement deterioration and reduced traffic congestion and fatalities.”

A continuing recession would slow future federal and state fuel tax revenues, and make future repairs more difficult, the report warned, citing a national unemployment rate that jumped to 9.5 percent in July from 4.4 percent in May 2007.

“These economic shocks have had a significant effect on the flow of tax revenues to state coffers,” the report said, “perhaps making future repairs more difficult.”

To contact the reporter on this story: Henry Goldman in New York City Hall at hgoldman@bloomberg.net

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