Final Word

Kirk Landers

|  February 01, 2012 |

Understanding the Transportation Act

By Kirk Landers

As construction industry leaders push Congress to enact a long-term federal transportation program, some heavy construction contractors will remember feeling little or no surge in work in the months following the enactment of the last two long-term bills.

The federal transportation program does play an important role in the heavy construction market, but its role is more nuanced than many contractors understand.

First of all, many months elapse from the time legislation is signed into law until the money from the new bill results in work taking place. That is just the nature of the beast.

Second, and more germane to this discussion, how the money gets spent has a lot to do with which construction industry segments feel the warm glow of new cash and which are left shivering in the cold.

For example, many states were dealing with serious bridge deficits when the last two federal programs came into being. Bridges are breathtakingly expensive to repair, rebuild or replace, so when they get priority, billions of dollars of road projects get put on standby. And rightfully so. After all, in a time of inadequate funds, the condition of the road on either side of the river doesn’t matter as much as being able to cross the river in the first place.

The DOTs spent much less on big-buck, long-term projects such as lane additions, new roads and road reconstruction.

And despite the enormous outlays for bridge work, the companies doing that work are highly specialized. If you’re an earthmoving contractor, you won’t see much action from this infrastructure investment.

How long funds are available affects work, too. The highway portion of President Obama’s economic stimulus package in 2008-09 emphasized “shovel ready” projects, and the money was short term. State departments of transportation welcomed the new funds and invested them wisely, but the investment heavily favored pavement interventions like milling and overlays, tactics that would extend the life of healthy pavements.

The DOTs spent much less on big-buck, long-term projects such as lane additions, new roads and road reconstruction.

That strategy made perfect sense for taxpayers and created more work for paving and milling contractors, but earthmovers and companies specializing in work related to new construction felt less affect from the stimulus dollars.

As the new Congress grapples again with a transportation bill, two factors will most affect how many heavy construction firms benefit from new work: the amount of federal money that goes into the program; and the length of the new program.

Prospects for a positive outcome seem dim as the new Congress convenes. The House is talking in generalities about a five- or six-year plan, but at dramatically reduced funding levels. The Senate has a two-year bill at current spending levels ready to go. Neither satisfies the country’s need for good roads, and neither will generate much new work for construction firms – one because the funds are inadequate, the other because the commitment is too short-term.

There is a solution of course, but it involves the dreaded “t” word, along with such rare qualities in our body politic as foresight, leadership and courage. EW

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