City A builds a new road connecting a to b. The economy benefits from the material purchases and the wages paid. it also got a new capital good which would open up new areas to development (new gas stations and shopping centers along the new road) which requires new employees who require new services (dentist, doctor, grocery store etc.
Very little of the 0 Stimulus was stimulative because very little was actually shovel ready jobs but instead was money give to local and state governments to keep union workers employed. Now the money is running out, the economy has not recovered and those jobs still have to go. All the 0 stimulus did was delay the pain.
I agree a lot went to states to keep public employees on the payroll for another year or two just delaying the pain.
Addtionally, a lot went to studies, grants and academic research programs to line the pockets of leftist academics and reasearch teams. No new jobs were created as it takes six years to make a PHD — instead grants funded higher incomes for these chosed few of the right (I mean left) qualifications.