We are cautiously optimistic about the future. We don’t believe it is a foregone conclusion there will be fewer funds for highway construction. The fact is the transportation network at the federal, state and local levels is deteriorating because of age and because it was not built to carry the current volume of traffic. We need a 21st century transportation system to meet the demands of the motoring public and business community, and to help facilitate economic growth and job creation. The public gets it. We just need to bring the politicians along until they do the right thing.
Jack Basso, director of program Finance & Management, 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 are already underfunded.
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 a stable capital funding source going forward, which puts them in a better position to act on long-term projects.
Sullivan: Several factors will impact recovery in 2012 including:
State governments: State budget deficiencies are unlikely to improve because the economy isn’t generating jobs fast enough. For every person you hire, you hire a taxpayer. State revenues then improve and provide states breathing room for other priorities. Clearly, when states go through tough financial times, they have to shift priorities.
Federal spending: The best we can hope for in 2012 is a continuation of existing nominal funding. Every year funding remains the same, it generates less activity because inflation takes a bite. Keeping funding flat, we have a gradual decline.
ARRA continues to decline as a contributor: The stimulus money is winding down. However, $9 billion will be spent this year, adding some strength to an otherwise weak public sector.
Basu: The most substantial obstacles take the form of 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.
Rental: Proposals for the next highway bill do not contemplate an increase in fuel taxes. Where will financing for constructing and preserving highways come from?
Beth McGinn, director of public affairs, 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 in the table.
Basu: The electorate seems to have expressed a preference for user fees relative to taxes. This implies significant use of tolling to promote infrastructure investment going forward. Higher vehicle fees, including higher gas guzzler taxes, are also possible.
Basso: 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.
Simonson: The Senate Finance Committee may be able to cobble together enough revenue raisers and “loophole closers” to pay for a two-year extension, but a six-year bill seems out of reach without an increase in fuel taxes or new sources of revenue — both of which seem impossible before 2013.
Congress could help by recognizing that not all spending is created equal. Investments in infrastructure add to jobs and income now, and also create or maintain assets of lasting value that improve productivity, health and safety and quality of life. These investments must be paid for, and Congress should not rule out appropriate tax and user-fee increases.
Tara is the editor of Sustainable Construction magazine, an on-line/print publication dedicated to best practices to help contractors build more sustainably. Connect with us at Facebook/SustainableConstruction and Twitter/SustainableConstruction.