Cutting Through the Infrastructure Investment Fog

"Overall, midway through 2009, we are seeing the national dollar value of transportation infrastructure construction put in place slightly behind the 2008 pace," says William R. Buechner., Ph.D., vice president for economics and research, American Road and Transportation Builders Association (ARTBA).

According to ARTBA, 15 states have cut transportation funding this year, and 19 report they plan to cut their transportation program funding in 2010.

"The only bright spot in the transportation construction market this year is the additional federal funding made available to the states and local governments through the ARRA," Buechner says. "Unfortunately, due to state budget challenges, the stimulus funds are allowing some states to simply maintain their 2008 activity level. In other states, stimulus dollars are, at best, serving to make overall state transportation program cuts less severe."

He adds, "The stimulus funds are saving a lot of jobs. But to really boost new job creation in the near term will require a strong signal soon to the states and private sector that the federal government is fully committed to a significant, sustained and multi-year investment in transportation improvement programs.

"This is absolutely required to get states to begin putting the larger, multi-year construction projects out to bid that spur significant capital investments in materials and equipment and create new jobs," he continues. "Otherwise, we're looking at a constricting or flat market in most states for several years."

The House Transportation & Infrastructure Committee is proposing legislation that would authorize a $500 billion investment in roads, bridges, transit systems and high-speed rail over the next six years.

ARTBA estimates the multi-year $337 billion highway and bridge investment called for in the House bill would generate almost 150,000 new jobs during 2010 if enacted this year. Over the six-year period, estimates place job growth at 540,000.

But the Obama administration has asked Congress to postpone action on the bill until at least March 2011, and maintain the current level of funding to states. This could dampen future work.

"Short-term authorizations are simply too disruptive," says Buechner. "It is virtually impossible for a state or local transportation agency to develop an effective program without a long-term funding horizon."