States eager to start spending stimulus money

COUNCIL BLUFFS, Iowa (Reuters) - The lightly traveled stretch of road on the outskirts of a small Midwestern city may look like a minor two-lane street.

But local officials see the rutted road as a prime candidate for a $2.5 million face-lift, paid for by the federal government.

Council Bluffs, Iowa, is one of hundreds of U.S. communities eager to tap into an expected flood of money from the economic stimulus bill meant to combat the recession.

"It is going to create a lot of jobs, immediate jobs, right now," said Council Bluffs Mayor Tom Hanafan, who met with city planners and business leaders to craft $229 million in project proposals for the community of about 62,000.

On Friday, the U.S. Congress passed a compromise version of a $789 billion stimulus bill aimed at reviving the reeling U.S. economy. President Barack Obama is due to sign the measure on Tuesday.

The American Recovery and Reinvestment Act is aimed at reversing a deep recession in part by putting people to work. Infrastructure funds -- estimated at about $120 billion -- are earmarked for construction projects, including highways and bridges, transit systems and airports.

"This is the heart and center of the economy -- construction -- so it is important to get some of those jobs there," said Dean Baker, co-director at the Center for Economic and Policy Research consulting firm in Washington.

State and local leaders say the word from the White House is that the money should be spent quickly, preferably in ways that spur economic development and create jobs within a short period of time.

Around the country, small towns and big cities are rushing to comply, crafting an array of project proposals.

"Our plan foresees $1.5 billion in work that would employ roughly 45,000 people, exactly the kind of goal that President Barack Obama set," Pennsylvania Governor Edward Rendell said last week, as he outlined $443 million in proposed bridge work.

In California, among the states hardest hit by recession, there are $44 billion in "shovel-ready" infrastructure projects to pick from. The wish list includes $200,000 for a bicycle locker building with showers for bike commuters in Sonoma County and a $300 million civic center in Tulare County.

Cincinnati, Ohio, city leaders have $333 million in projects they say could create 3,700 jobs, including a $5.2 million airport upgrade they say would create 60 jobs and $2.5 million for street improvements in a low-income area that could create 53 jobs.

Fort Worth, Texas, officials want to use $471 million for a regional rail project and $177 million to improve the city sewage system.

UNEMPLOYMENT

In Iowa, where creeping unemployment is starting to take a toll, officials have a list of more than 4,000 economic development projects that could be started quickly with adequate funding. Last summer, widespread flooding in the farm state damaged infrastructure.

Governor Chet Culver proposed that the state spend $700 million of its own money on a range of job-creating, economy-boosting projects to supplement federal money.

In Council Bluffs, the city hopes to spend stimulus dollars developing a riverfront area with commercial space and housing at a cost of $24.5 million, including paychecks for 230 construction-related workers.

Most immediate, though, is the one mile rural road outside town. Transportation funds of $2.9 million have already been earmarked by the Iowa Department of Transportation to pass along to Council Bluffs when federal money arrives.

About $2.5 million will be spent to improve the road circling around the town's community college. As the college grows, it will likely become a busy thoroughfare, Council Bluffs public works director Greg Reeder said.

In a typical year, Council Bluffs receives about $1 million from the Iowa transportation department, he said, so the stimulus money would be a big bonus.

"Will it help boost Council Bluffs overnight? No," Reeder said. "But we are trying to find projects that will pay long-term dividends."

(Reporting by Carey Gillam, additional reporting by Andrea Hopkins in Cincinnati, Ed Stoddard in Dallas, and Peter Henderson in San Francisco; Editing by Peter Bohan and Stacey Joyce)