Government spending on transportation infrastructure declining

Kerry Clines

August 17, 2017

Road Work Construction Site

Government spending on transportation infrastructure, which the Census Bureau reported as only 1.4 percent of the nation’s output in the second quarter of 2017, is in decline, as federal funding has become stagnant and state and local governments are scrambling for funds, The New York Times reports.

The deterioration of the nation’s infrastructure has both political parties concerned about safety, quality of life, and the impact on economic growth, but there is no sign of a solution so far. In 34 states, spending on government construction projects was lower in 2016 than in 2007, after adjusting for inflation. The trend is continuing with public construction spending in June 2017 reportedly 9.5 percent lower than during the same month in 2016.

Ken Simonson, chief economist for the Associated General Contractors of America, told the news agency that many states were struggling financially and that “It’s always easier to defer new construction than to stop paying people who are on the payroll or the welfare rolls. A lot of states are under real stress.”

While governments have cut back on new construction projects, existing infrastructure continues to age and deteriorate. The average road surface was 28 years old in 2015, up from 23 years old in 2000. Arizona, for example, has reduced spending on public construction every year since 2007, because state lawmakers, who are reluctant to raise taxes, have diverted highway funds to pay for public services like Medicaid and prisons. One county increased the time between repaving roads from every 20 years to every 40 years. 

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Roads account for about a third of annual public works spending. The federal gas tax, which is the largest source of funding for public works projects, has been 18.4 cents a gallon since 1993 and has not been raised to meet inflation. It should be 31 cents a gallon, but Congress has been reluctant to raise it.

According to the news agency, the Trump administration says it is still working on an infrastructure plan, but Trump’s budget proposes just $200 billion in new infrastructure spending, with unspecified incentives for private investment that he hopes will add another $800 billion within 10 years. However, he also proposed larger cuts in public works funding. Senate Democrats have unveiled their own $1 trillion infrastructure plan, which calls for the federal government to provide all the funding.

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