Public Works Funding Falls as Infrastructure Deteriorates

Source: By BINYAMIN APPELBAUM, New York Times • Posted: Thursday, August 10, 2017

A water main and sewer renovation project in Somerville, Mass., this month. Public works projects have slowed across the country. Brian Snyder/Reuters

WASHINGTON — It’s basically the opposite of a major government infrastructure program.

Government spending on transportation and other public works is in decline as federal funding stagnates and state and local governments tighten their belts.

Such spending equaled 1.4 percent of the nation’s economic output in the second quarter of 2017, the lowest level on record, according to Census Bureau data.

In West Virginia, where President Trump on Thursday touted a vague $1 trillion infrastructure plan, public works spending has fallen for five straight years.

Nate Orders, who runs a construction company founded by his grandfather to build bridges for the state, said he had been forced to scramble for other kinds of business. Only three of the 15 projects on his current slate are bridges in West Virginia.

“My grandfather would not recognize the business we have today,” he said.

What’s worse, he said, is that he recently hit a highway pothole and had to replace a wheel. “We’re fortunate, I suppose, that we don’t have a growing population, so we don’t have a lot of congestion issues,” Mr. Orders said. “Our problem is safety.”

The deterioration of the nation’s infrastructure has raised widespread concerns about safety, quality of life and the impact on economic growth. Politicians in both parties have declared the issue a priority. So far, there is no sign of a solution.

In 34 states, spending on government construction projects was lower last year than in 2007, adjusting for inflation. The trend has continued this year. Public construction spending in June was 9.5 percent lower than during the same month last year.

Ken Simonson, chief economist for the Associated General Contractors of America, said many states were struggling financially. Illinois, for example, briefly suspended work on 900 projects in early July during a standoff over the state’s budget.

“It’s always easier to defer new construction than to stop paying people who are on the payroll or the welfare rolls,” he said. “A lot of states are under real stress.”

Governments have cut back most sharply on new construction projects. Even so, the nation’s existing infrastructure continues to age and deteriorate.

The average road surface was 28 years old in 2015, up from 23 years old in 2000. Schools, power plants and airports also are getting older. Slower population growth means less demand for new construction — but also fewer tax dollars for repairs.

Arizona has reduced spending on public construction every year since 2007. State lawmakers, reluctant to raise taxes, have diverted money from highway work to pay for public services like Medicaid and prisons. One Arizona county, Navajo, has shifted from aiming to repave roads every 20 years to repaving every 40 years.

Roads are the largest category of public works, accounting for about a third of annual public works spending. The federal gas tax, at 18.4 cents a gallon, is the largest source of funding for those projects, but it is not indexed to inflation and has not been raised since 1993. It would need to be 31 cents a gallon to restore its buying power.

Chris Spear, the president of the American Trucking Associations, said his group had testified before Congress at least 19 times since 2006 in favor of raising the tax.

But the price of gasoline has outsize importance in the American psyche, and Congress has demonstrated an extreme reluctance to consider a gas tax increase.

Since 2012, 31 states have enacted some kind of increase in transportation funding, according to Transportation for America, an advocacy group.

Indiana in April increased its gas tax and indexed it to future inflation.

California in April also passed its first gas tax increase in more than two decades.

And last month, West Virginia passed a package of higher taxes, including an increase in its gas tax, estimated to lift road funding by $140 million a year.

The Trump administration says it is still working on an infrastructure plan that would supplement the increases in state funding. Mr. Trump’s budget proposed just $200 billion in new infrastructure spending, plus unspecified incentives for private investment that it hopes will add another $800 billion over 10 years. But he also proposed larger cuts in projected public works funding.

However the details end up, Mr. Trump’s sagging popularity and his souring relationship with Republicans in Congress have jeopardized his ability to win their support.

At a minimum, there are some other issues that Congress needs to handle first.

Senate Democrats in January unveiled their own $1 trillion infrastructure plan, which calls for the federal government to provide all of the funding.

Another challenge is that workers are getting harder to find. Jobs in highway construction in July were 2.6 percent below the prerecession level. With fewer people working in road-building — and when almost everyone who wants a job has one — the industry can’t simply restock from the pool of unemployed workers. Skilled workers, in particular, are in short supply.

Total construction spending has climbed above the prerecession peak thanks to stronger activity in the private sector, particularly in commercial construction.

Tom Brown, the president of Sierra Pacific West, a construction company based in Vista, Calif., said that the company had seen a significant decline in state road work, but that it had managed to keep busy with building construction and military contracts.

Public construction spending in California last year was down 27 percent from 2007.

“We haven’t been able to make it all up,” Mr. Brown said, referring to the decline in road construction projects, “but we have gotten a lot more diversified lately.”

Mr. Brown said he sympathized with people who didn’t want their taxes to rise.

“It’s hard pill to swallow,” he said. “I don’t want to pay more money, either. On the other hand, it’s the lifeblood of what supports this firm. And I want the trash to get picked up and the sewage to go down the drain, and I want the roads to drive on.”