Rising material prices could nullify spending increases in highway bill

Increases in the cost of materials used for highway construction are lessening the impact of the new federal highway spending bill and could limit the ability of states to meet their transportation needs, according to an analysis by a national road builders’ group.

During the past two years, the price of materials essential to road building has jumped 22 percent. In 2005 alone, highway contractors paid 13 percent more for materials than they did last year, according to data from the Bureau of Labor Statistics.

“Construction costs are going up much faster than highway construction budgets,” said Alison Premo Black, the ARTBA research economist who conducted the analysis. In August, President Bush signed into law SAFETY-LU, a six-year spending program that increases federal funding for highways by about 4.5 percent per year. “This is only a fraction of the recent rise in construction costs,” Black said. “State governments will need additional financial resources to move forward on transportation projects that could improve road safety and reduce traffic congestion.”

Materials that have increased drastically in cost since 2003 include:

· Fuel for construction vehicles, up 88 percent
· Iron and steel, up 60 percent
· Ready mix concrete, up 18 percent
· Sand, gravel and crushed stone, up 11 percent