An 18-month extension of federal funding for highways and bridges only buries problems in fertilizer.
That was the warning issued by the American Road & Transportation Builders Association (ARTBA) during a stimulus/authorization briefing on Monday just days before the House of Representatives was to embark on its annual August recess. The Senate goes on break a week later, and transportation lobbyists are working frantically to convince both bodies of Congress that a long-term bill passed by the end of the year is the way to go.
“With an 18-month extension you are not addressing the fundamental funding problem,” said Bill Buechner, vice president of economics and research at ARTBA. “The impact on federal highway investment would not be different from what we saw the last time.”
Buechner was referring to the long line of funding extensions issued after TEA-21 expired, which sent those at the state DOT level into an extremely cautious spending pattern when it came to the highway and bridge industry. Buechner compared the current wounded economy with two other recession-plagued years—1982 and 2001. During the crisis eight years ago, state and local highway investment dropped from $32.1 billion in 2001 to $27.6 billion in 2002, and did not rise above $30 billion until 2005. In terms of jobs, the conditions were much worse in 1982 until the market bottomed out this year. According to ARTBA research, over the last 12 months the increase in unemployment has been steeper than what it was at 1982’s lowest point, when the jobless level reached 10.8%.
Although Buechner did not see unemployment moving as high as it did over two decades ago, he does see a frightening resemblance between now and the last two times of economic crisis.
“There are about 48,000 fewer people employed by highway contractors in May of this year compared to May two years ago,” he said. “We are not seeing the growth that we would like to see, so there is a substantial need for stability in this market right now.”
Funds passed with the American Recovery and Reinvestment Act has curbed the recession. Buechner pointed out before ARRA was passed “if you look at January through April [new contract] data we were looking at a shortfall of half a billion to a billion. If we did not have this ARRA program I think that this is what we would be seeing all year with this industry in a much more severe recession,” he said.
However, ARTBA did stress that most of the ARRA dollars will not reach the wallets of workers until 2010 and 2011, even though two-thirds of the $27.5 billion for highways and bridges have already been obligated by the states.
Still, all the progress created by ARRA will be lost if a six-year highway bill is not installed soon. With an 18-month extension, funding would peak in 2010 at $51.9 billion before retreating. A six-year, $450 billion bill similar to the one being introduced in the House would generate a flow of money that would steadily increase through 2015, when $61.2 billion will be offered in federal assistance.
“Our concern is if we just time-warped to 18 months from now we are in the same exact situation,” said David Bauer, ARTBA’s Senior Vice President of Government Relations. “Whereas if Congress were continuing to force folks to be looking at this and trying to address the challenges we would have a better likelihood of success in a timely matter.”