With the American Recovery & Reinvestment Act (ARRA) stimulus package coming to a close, the mid-September extension of SAFETEA-LU and the late-year progress in the Senate of the MAP-21 two-year highway reauthorization, the construction industry is wondering: what's on the business horizon for 2012?
What does the future hold for the Highway Trust Fund (HTF)?
How will the role of preserving our roads change?
These are just a few of the questions Asphalt Contractor magazine asked four construction-industry experts. Here's what they had to say.
AC: What will 2012 look like for asphalt contractors and producers?
Alison Premo Black, senior economist for the American Road & Transportation Builders Association (ARTBA): We are forecasting market decline of about 6% for both highway pavement and bridge work in 2012 down to $72.6 billion. The key reasons for the projected downturn: continued weak growth in the overall U.S. economy, the end of transportation-related stimulus funding, persistent state and local budget challenges and a static federal-aid highway program. The bridge market, which has experienced several years of growth, is expected to drop from $26.3 billion to $23.6 billion. Pavement work is expected to continue to decline slightly from an estimated $45 billion in 2011 to $44.1 billion in 2012. Other work, which includes smaller projects that are highway related, but not specifically bridge or pavement work, is forecast to decline from $5.6 billion in 2011 to $4.8 billion in 2012.
Jack Basso, director of program Finance & Management for the American Association of State Highway and Transportation Officials (AASHTO): We continue to need long-term, well-funded legislation. Until we get it, we face the very real problem of deterioration of our highways and bridges. We are already experiencing this and we are already underfunded.
Obstacles to growth?
AC: What are the hurdles impacting construction's recovery as we move into 2012? From a legislative standpoint, what can be done to help the industry overcome these obstacles?
Basso, AASHTO: The reauthorizing of federal programs should bring stability and clear up policy concerns. This will also energize state and local governments. Reauthorizations allow states to know they have stable capital funding source going forward, which put them in a better position to act on long-term projects.
Anirban Basu, chief economist for Associated Builders and Contractors (ABC): The most substantial obstacles take the form in the accumulated national debt and ongoing federal budget deficits. Beleaguered state and local government budgets add to industry uncertainty, with spending on state highways and local roads now in decline in much of the nation. With federal stimulus monies steadily being spent down, road resurfacing and similarly-situated investment may decline materially over the next two years.
Funding the highway bill
AC: Proposals for the next highway bill do not contemplate an increase in fuel taxes. Where will the financing for constructing and preserving our highways come from?
Beth McGinn, director of public affairs for the American Road & Transportation Builders Association (ARTBA): There is no lack of available transportation financing choices; rather there is a lack of political will. An increase in the federal motor fuels excise is the quickest and most efficient way to generate the revenue necessary to support expanded transportation improvements. Tolling, congestion pricing, a freight-related user fee, public-private partnerships, innovative financing and bonding on mega-projects that add capacity are all options that should be on the table.
Basso, AASHTO: There are a matrix of different revenue options on the floor including custom fees and tapping into utilities. Fuel taxes are not on the list. We will have to wait to see what our politicians come up with . . . whatever it is; they can't go back to the general funds for additional transfers.