July 2015

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>> SECTOR CHECK JOANNE COSTIN G ridlock plagues portions of our nation's highway system but it's the gridlock in Washington which has le our nation's aging infra- structure without sufficient funding. Construction spending on highway and bridge construction has been essentially flat since 2008 - reaching $84.05 billion in 2014. An AED report shows the federal road program creates more than $2.4 billion in annual construction equipment demand and supports 4,000 dealership jobs. Over the past decade, Congress has struggled to pass timely long-term transportation authorizations. e last five-year transportation act, the Safe, Accountable, Flexible, Efficient Trans- portation Equity Act: A Legacy for Users (SAFETEA-LU) was passed in 2005 aer a two-year delay. e most recent transportation act, Moving Ahead for Progress in the 21st Century (MAP-21), passed in 2012, authorized spending for just two years and was passed aer nearly a three-year delay. Aer Map-21 expired in September, Congress passed an eight-month extension, followed by the most recent two-month extension ending in July 2015. Short term extensions and delays in funding are not the only cause of our transportation problems. e federal motor fuels tax rates and other highway user fee rates have not been adjusted for more than 20 years. is, coupled with declining gas tax revenue due to improved fuel economy and people driving less, has led to the Highway Trust Fund taking in less than Congress has authorized for spending since 2001. Between 2007 and 2014, Congress has transferred more than $60 billion from the Treasury's General Fund to the Highway Trust Fund. Regardless of the passage of a new transportation bill in 2015, the uncertainty about federal funding over the last decade has had an impact on state and local authorities planning transportation projects. Stalled and Smaller Projects "ere is at least $2 billion in project lettings at risk because of what is going on," said Dr. Alison Primo Black, chief economist for the American Road and Transportation Builders Association (ARTBA). According to an ARTBA report issued in May 2015, 19 states expressed concerns about the feasibility of future transportation projects, with more than $1.1 billion in projects at risk if federal funding is disrupted. Six states have delayed or cancelled projects valued at $1.15 billion. States and metropolitan areas typi- cally develop long-range transportation plans in four-year cycles. Short-term transportation funding authorization, coupled with the financial instability of the Highway Trust Fund, leaves states and local agencies with tough choices: move forward on projects with their own funds without federal partnership—a risk that few states can afford—or delay construction of projects that are scheduled to break ground. Wyoming DOT Director John Cox explained the impacts of the most recent extension on construction activity. "With the uncertainty of when—or even if—Congress will authorize the rest of the 2015 program, Wyoming and other cold-weather states may miss this construction year for a full third of our programs. We have already delayed 18 projects worth $28.5 million. It will also force us to advertise projects late in the construction season, resulting in less competitive bidding, less value for the public's investment, and the potential for delaying important and needed projects that will improve communities and their economies." "e lack of a long term bill has caused states to fund different types of projects," said Jim Tymon, chief operating officer and director of Policy and Management for the American Association of State Highway and Transportation Officials. "Rather than taking on these big multi-year proj- ects, they are choosing projects that are less risky." Black believes that even those in the construction industry don't realize just how much federal funding contributes to construction outlays across the country. "We have looked at the FHWA data over the last 10 years and the ratio between the federal reimbursement for states and capital outlays, said Black. "Federal funds on average, provide 52 percent of annual state DOT capital outlays for highway & bridge projects." Why We Need a Federal Transportation Program Some politicians believe the federal government should get out of the transportation policy and funding business and leave it to state and local governments, and the private sector. e devolution advocates believe that spending will be more effective if done at the state level. AED and its allies disagree with this argument. "Only the federal govern- ment has the resources, scope, and constitutional authority to coordinate, build, maintain, and expand a national transportation network that serves the needs of the entire country," said Christian Klein, AED vice president of Government Affairs. "ere's a strong national interest in having a single, integrated transportation network to facilitate interstate commerce and allow Americans to travel freely." Tymon and Black also believe there is a need for a strong federal program. Breaking the Gridlock States raise revenues and employ new methods to maintain deteriorating roads and bridges. 28 | www.cedmag.com | Construction Equipment Distribution | July 2015 "There's a strong national interest in having a single, integrated transportation network to facilitate interstate commerce and allow Americans to travel freely."

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