Do you happen to remember the American Recovery and Reinvestment Act of 2009?
A large portion of the funds allocated for this act were to go to infrastructure needs such as highways. States were not supposed to cut their own budgets and use these funds in their place.
Yet somehow, we never saw those massive investments pay off in Georgia did we? The St Louis Fed has now given us the reason why.
Why the 2009 Recovery Act Didn’t Improve the Nation’s Highways
Click on the link above to read the short but informative analysis on what happened.
Here is a summary in my own terms:
What happened was that Federal Funds replaced(or crowded out) state funds for the transportation projects. A major condition of receiving these funds was that states, such as Georgia, would continue to spend what they were planning to spend on highway construction and the new Federal Funds would boost that spending.
However there were more than enough loopholes for states to circumvent those conditions. And which state avoided the strings that were attached to those funds to the greatest degree?
That would be none other than our home State of Georgia, who reduced spending by $109 per resident on road projects. That is more than any other State. It doesn’t sound like much until you realize that the amount of spending Georgia did not do relative to past spending is close to $1 Billion dollars. Governments that look for loopholes to circumvent the intentions of Acts such as this one are a major problem and affect trust.
It’s funny, but I simply do not recall my State Representatives sharing this fact with me during those years.
Making these numbers more “local”, that equals $109 million that was NOT spent on behalf of Fulton County residents, and $8.9 million NOT spent on behalf of Johns Creek residents.
Residents of Fulton County, adopting a 5 year TSPLOST tax for road construction in 2016 should be asking themselves if the State spending had been maintained in 2009, would they have even needed to pass a TSPLOST for what are likely the very same projects?
Are the TSPLOST dollars merely replacing dollars that had been previously collected through others sources as well? And where are those local dollars that are no longer being spent for roads being spent on?
Most importantly, what happens if TSPLOST is not renewed? Will the local Cities now be pushed to raise their other taxes because during the last five years they grew government by spending dollars that would have previously been earmarked for road construction?
These issues are why many of us do not trust what is happening around us.
Time will tell.
And thank you to the St. Louis Fed for helping us to understand why we did not get what we would expected as a result of the American Recovery and Reinvestment Act.
