Abramson Hopes For Infrastructure Stimulus

by Gabe Bullard on December 8, 2008


The nation’s mayors and governors have been making their case in Washington for a federal infrastructure stimulus package that would put billions of dollars toward new roads, bridges and other projects.

In October, the unemployment rate for construction workers jumped to 10.8 percent – it’s been one of the worst-hit industries. Construction economist Ken Simonson says it accounts for nearly half of all jobs lost in the last year. He blames the economy.

“It’s a lot easier to delay building a new library than it is to fire the librarians who are already on the payroll,” he says. “So construction and maintenance work tend to get short shrift when money is tight.”

As unemployment rose, municipal revenues shrank, creating shortfalls in cities and states around the country. In Kentucky, the state is looking at a $456 million deficit, while Louisville is scrambling to cut $20 million in order to balance the budget.  Among the first items to be cut are infrastructure improvements.

“Projects like widening roads out in the suburbs, fixing some of the suburban bridges, modernizing schools, upgrading some of the school facilities, upgrading and investing in sewer lines,” says Louisville Mayor Jerry Abramson.

Abramson says Louisville has a backlog of projects, from road repairs to buying new buses, that have been put off due to the shortfall. He recently testified before Congress on behalf of America’s mayors on the need for an infrastructure stimulus package.

“We have done an analysis of projects that could be ready within 90 days to 120 days to be let and could be completed within a year thereafter,” he says. “It was somewhere in the neighborhood of $28 billion.”

$350 million of which would go to Louisville. Economist Ken Simonson says a federal stimulus package is practically a foregone conclusion. He expects the new Congress to pass a multi-billion dollar package next month to President-elect Barack Obama sign. Abramson says that would help shore up the city’s $20 million shortfall.

“When you have almost 60% of your revenue stream that comes into city coming from occupation tax – that is wage withholdings from people who are working – the more people that are working, the better it is for the city of Louisville,” says Abramson.
“Any ideas how many jobs this would create?”
“Yeah, they were talking about anywhere from 4 to 6 thousand jobs.”

“At least they’re talking about infrastructure,” says Dr. Eric Schansburg. “Compared to the recent stimulus packages which have been purely just cranking out checks to people.”

Schansburg teaches economics at Indiana University Southeast. He also ran as a Libertarian candidate for Congress this year. He says an infrastructure stimulus can be more effective than other stimulus plans because it can improve transit and commerce.

“It has to be infrastructure that is actually going to enhance efficiency. Just building something to build it doesn’t qualify. It has to actually increase overall efficiency,” he says. “So an Ohio River Bridge for example would be a fine example of something like that that would presumably increase efficiency.”

But the Ohio River Bridge isn’t included in Mayor Abramson’s proposal for infrastructure improvements. Only projects that could be ready in a few months and completed within one or two years made the list. Schansburg says smaller projects could be effective, but they’re not a permanent solution to the nation’s economic woes.

Abramson says a temporary fix is better than nothing, though, as road repairs and other projects face further delays until the economy improves.

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