Archive for January, 2010

Highway Trust Fund reauthorization in limbo

Tuesday, January 5th, 2010

On December 19, President Obama signed a third extension of the Highway Trust Fund legislation that would otherwise have expired on September 30, 2009. The latest extension is through February 2010.

This is the same exercise the legislative and executive branches go through every time federal surface transportation funding comes up for reauthorization. That we’re used to it now doesn’t make it any less painful or troublesome to the industry.

In my recent report, PSMJ’s 2010 AEC Firm U.S. Market Sector Forecast, I noted in the chapter entitled “10 Issues Likely to Affect Your Firm in 2010” that the reauthorization issue was also on the list in the 2009 edition, adding, “[Let’s] hope it doesn’t make the list next year as well.”

Here is an excerpt from that section of the PSMJ Forecast:

[Last fall,] Rep. James Oberstar (D-Minnesota) attempted to pass a $500 billion, six-year transportation plan that was eventually set aside amid the health care and climate change debates.

[Immediate Past President of the American Society of Civil Engineers (ASCE)] Wayne Klotz says the reauthorization issue is critical for firms across the industry, even those not in transportation, as its effects reverberate throughout the AEC professions.

“If they let the legislation expire and pass a continuing resolution, as they did at the end of the last bill, people will lose their jobs all around the country,” says Klotz. “It happened last time. That’s why we’re making such a strong push to get this done.”

A lack of authorizing legislation could handcuff departments of transportation, forcing them to delay work on large, long-term projects. “Under our own state laws, DOTs can’t commit to a project unless they can show a revenue stream to fund it,” Klotz says.

The length of the delay will make a big difference in its impact on the industry, Klotz adds. “If they negotiate and can come up with something in March or April, that’s one thing,” he says. “But if it gets tied up in mid-term elections and shoved out until 2011, that’s a horse of a different color.”

Which is it going to be? Klotz says he has no idea. But, he says, the industry can’t even maintain the current, insufficient level of activity without a transportation funding mechanism in place.

Predictably, other AEC industry organizations are lining up to support passage of the new legislation. In a position paper, the American Council of Engineering Companies (ACEC) (Washington, DC) says, “While ACEC supported the investments for transportation in the American Recovery and Reinvestment Act, that funding has largely been directed to simple resurfacing projects, and much more needs to be done to address the serious backlog of more significant improvement projects.”

ACEC says that a new surface transportation bill, with dramatically increased multi-year funding guarantees, is necessary to allow states to invest in major design and construction projects.

The group cites a National Surface Transportation Policy and Revenue Study that says a minimum $225 billion in annual investment from all sources (including federal, state and local) for the next 50 years is necessary to upgrade existing systems to a state of good repair and create a more advanced surface transportation system. “The U.S. currently invests $85 billion annually from all levels of government, less than 40 percent of what is necessary,” ACEC says.

Oberstar’s bill would be a step in the right direction, but it won’t be an easy fight. For the transportation industry’s sake, we hope it won’t be a long one either.