Georgia’s roads' stimulus money waiting to work

By KRISTI E. SWARTZ and ARIEL HART

The Atlanta Journal-Constitution

To get the money, Georgia needed to beat the clock.

By June 29, the state needed to name transportation projects that would be financed with a sizeable chunk — $326 million — of its federal stimulus road dollars, or risk losing the money.

It designated scores of projects it predicted would cost more than that to complete. With those projects and others that had later deadlines, the state was firmly on the march to spend its entire $932 million stimulus road fund.

But when the bids started rolling in, the total price tag kept coming up significantly less. The 86 projects awarded so far were estimated on federal stimulus lists to cost $341 million. But the bids totaled just $213.8 million.

Wise spending, or will the state pay the price in the long run?

The answer depends on how people interpret the intent of the federal stimulus package. The primary goal is to create and save jobs. The extra money won’t be lost, but it will take longer to get into workers’ pockets, as Georgia finds new projects to spend it on.

Georgia needs to spend all the transportation money by February — and state DOT officials pledge that it will. But by coming in so far under budget, Georgia has essentially left money on the table for a few months.

“It certainly slows things down,” said Dean Baker, co-director for the Center for Economic and Policy Research, a nonprofit, nonpartisan think tank based in Washington, D.C. “You’d like to get the money back into the economy as quickly as possible.”

Bids awarded for Georgia’s stimulus road projects so far have come in 37.3 percent under the public estimates used to set aside stimulus money. Estimates done by cost experts before bidding began — kept secret to give DOT an idea of the market rate without tipping off contractors — were much closer to the actual bids. DOT officials said those early estimates were just 13 percent over.

“Transportation is the one part of the stimulus that actually puts people to work” said Kelly McCutchen, executive director of the Georgia Public Policy Foundation.

Having project bids come in under estimate is just another example of how much the cost of commodities such as asphalt has plummeted.

But large chunks of the savings aren’t about falling prices. They include contingency buffers, for unexpected costs, that are built into the estimates to begin with but aren’t included in bids; and costs that can vary for inspections and moving utility lines.

And, said Georgia DOT’s chief engineer, Gerald Ross, part of the gap has resulted from engineers, who are not skilled in cost estimating, compiling the public estimates. That is about to change, he said. In addition, from now on contingencies will be deducted from another pot of money that doesn’t have to be spent so fast, he said.

“I think we will be reducing that gap,” Ross said. “Will that gap go down to where [estimates and bids] are the same? No.”

Georgia was among the last five states to name its road projects. It beat the June 29 deadline by 12 days, just two days ahead of last-place Hawaii.

“No one wants to be the first state to have a real screwed up boondoggle on their hands,” said Georgia DOT spokesman David Spear.

Bert Brantley, spokesman for Gov. Sonny Perdue, said this spring that Perdue was the one who would be held accountable for the project list, and “he won’t sign it until he’s comfortable that the list meets what’s set out in the certification, but more importantly what his standards are in identifying projects that are a benefit and a value to Georgians, that create jobs.”

Part of the reason for the low bids is the recession. “It’s an indication of how hungry the contracting community is and how badly they want this work and to create and to retain jobs,” said Deputy U.S. Secretary of Transportation John Porcari during a June 30 visit to celebrate metro Atlanta’s first stimulus-backed road project.

Porcari said the focus was “getting work out the door as quickly as possible. A job that you create now is more valuable than a job six months from now.”

Porcari is not concerned about Georgia leaving money on the table through high cost estimates, saying the remaining stimulus money will create more projects with more jobs.

Think of it as bargain- basement pricing, one economist says.

“You’re getting these projects at fire-sale prices,” said Jeff Humphries, aneconomist at the University of Georgia.

Alan Essig, executive director of the Georgia Budget and Policy Institute, said as long as there’s another list of road projects that can be completed with that money, then it shouldn’t make a difference whether the funds are spent now or in a couple of months.

“It’s a question of getting the projects, whatever they are, and getting the money into the economy,” said Essig.