Stimulating Transportation

California has about $1 trillion in infrastructure maintenance needs. So what good can just under $1 billion in federal transportation stimulus funding do for the state?

A lot, according to speakers at a special Commonwealth Club program today on "Transportation and the Stimulus." Tens of thousands of jobs are at stake, with the multiplier effect from their salaries spreading out throughout the state, according to the panel.

The panel discussion, underwritten by AAA of Northern California, Nevada and Utah, and moderated by San Francisco Chronicle transportation reporter Michael Cabanatuan, featured speakers Randell "Randy" Iwasaki, the incoming director of the California Department of Transportation; Joseph Cruz, director of transportation policy and government affairs at The California Alliance for Jobs; and Sean Randolph, president and CEO of the Bay Area Council Economic Institute.

"The Recovery Act couldn't come at a better time for California," said Iwasaki, noting that the roughly $910 million will help the state leverage funds already dedicated to transportation infrastructure on projects large and small. "When the contractor gets the money, ... that's when the rubber meets the road" in terms of job creation by the stimulus, he said.

Randolph noted that the stimulus effect is likely to be muted in 2009, due to the time it takes to choose worthy projects and get them going. "Most of the spending will be in 2010, trailing off into 2011," he said.

"There are very few projects that are 'shovel-ready,'" said Iwasaki, referring to the desired status of projects that would be able to bring the stimulus effect online as soon as possible. He said there's a complex process involved with choosing the project, including where it is located, how many jobs will it create, and what the criteria are from other funding sources.

But even if that stimulus doesn't really get felt until next year, the impact could affect many California families. Cruz estimated that this spending could support 40,000 jobs in the state, and he argued that projects should be chosen that use California-made and -sited project (as opposed to, for example, buying city buses that are manufactured in Detroit).

On a more somber note, Cruz noted that the state will have to be careful how it manages projects that use a combination of federal funds and state taxpayer-approved bond financing. "Our bond rating was downgraded to just above junk status," he noted. That means that the timing of the spend could be crucial, because when California has to go back to the bond markets to sell its next round of transportation bonds, it will be paying a much higher interest rate.