|Up North. Proposed bridge would link Ketchikan to sparsely populated Gravina Island in southeast Alaska. image courtesy of Gravina-Access Project|
At last. After nearly two years of delays and weeks of grueling Capitol Hill negotiations, a new, long-term transportation billthe largest public works measure in U.S. historyis about to become law. On Aug. 10, President Bush is expected to travel to House Speaker Dennis Hasterts Illinois district to sign the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, which guarantees $244 billion over five years. Big as SAFETEA- LU is, its passage was greeted more by sighs of relief than shouts of joy. Thats partly battle fatigue after the long struggle to finish the bill. But lawmakers and industry officials also say the funding infusion, though huge, falls well short of national needs. Click here to view chart
SAFETEA-LUs name combines the Senates SAFETEA and the Houses TEA-LU, which takes the name of the wife of House Transportation and Infrastructure Committee Chairman Don Young (R-Alaska). The bill spans fiscal 2005 through 2009. When 2004s funding is added, six-year authorizations total $295 billion. Of that, $286.5 billion is guaranteed obligations, including $228.7 billion for federal-aid highways, $52.6 billion for transit and about $5 billion for highway safety.
The $286.5 billion is a 38% jump over the preceding six-year statute, the 1998 Transportation Equity Act for the 21st Century. But its well below the $375 billion Young proposed early in 2003, which he says was based on U.S. Dept. of Transportation estimates of highway and transit needs. Young says SAFETEA-LUs total "is a good number. Its not good enough, but its a good number."
He also notes that its an increase over the $256 billion endorsed in early 2004 by the White House, which pressed all along the way to hold down the bills price tag. "I think the increase was fine," says Ann Warner, Bechtel Infrastructure Corp. vice president and manager of government programs. "I dont really think we could have done much better in this budget climate."
Transit officials are pleased with their funding, a 13% increase over TEA-21. "This kind of bill is right for the times," says Art Guzetti, American Public Transportation Association director of policy and advocacy. "Our goals were to grow the program, continue guaranteed funding and expedite program delivery."
Some observers say theres less true growth in SAFETEA-LU than meets the eye. Adjusted for inflation, the bills average annual funding gains are only 1.8%, says David Bauer, American Road & Transportation Builders Association senior vice president for government relations. He says TEA-21s annual real increases were 6.1%. Mike Pack, president of Frehner Construction Co., North Las Vegas, says, "The bill is barely enough to keep pace with inflation. Im sure its a bit different from state to state, but our state needs more."
Still, the bill will mean more construction work will start to move. That will be a welcome change for state transportation departments, design firms and contractors. Since TEA-21 expired Sept. 30, 2003, Congress had to pass 12 stopgap measures to keep federal transportation money moving to state and local agencies. The most recent, approved July 29, runs through Aug. 14. These short extensions, of varied lengths, amounted to funding on the installment plan.
"Weve seen a lot of things slowed down," with agencies splitting big potential engineering contracts into task orders or multiple phases during the stopgap period, says Tom Barron, executive vice president in Parsons Washington, D.C., office. "Now, we can look to a little bit of an acceleration."
Says Jim Riley, transportation market sector leader for HNTB: "Some DOTs really were stalled in their programs.... Now that [the bill is] passed, bigger projects will begin moving forward."
Whens the new work coming? After the bill is enacted, the pace of contracts will hinge on budget conditions in each state. Robert Alger, president and CEO of Lane Construction Corp., Meriden, Conn., says some agencies had many projects on the shelf awaiting long-term funding assurances. "The jobs are ready," Alger says. "I think the next six to eight months is going to be fairly busy."
State DOTs will push to obligate all of their 2005 federal highway aid allotments by Oct.1, when fiscal 2006 starts. If they dont use the 2005 money by then, they lose it. But contractors shouldnt expect a burst of new work right away.
For one thing, during the 22 months of stopgap bills, many states tapped their own funds to keep programs going, expecting to be reimbursed when a new bill becomes law. Those repayments wont fund new construction.
Nevertheless, in the next couple of months, "I think that theyll get quite a few contracts let," one Washington source says. It will take time to evaluate bids and make awards. But by next spring, industry "could start to see the real uptick in the work," the source says.
For example, Riley says SAFETEA-LUs funding stream can enable Ohio to finish preliminary engineering and decide on the scope of its $600-million to $800-million Cleveland Inner Beltway plan. Riley says officials faced a dilemma with this sort of project: Should they spend $300 million to patch up a deteriorating, 50-year-old highway? "But now [with the new bill] you can say, How much will be spent to actually improve the facility."
Once the money gets to contractors, it will give a boost to construction and its suppliers. Lobbyists and pro-infrastructure lawmakers kept repeating that each $1 billion in spending means 47,000 jobs. Over five years, it also will translate into $17 billion in sales of off-road construction equipment, estimates the Associated Equipment Distributors, Oak Brook, Ill.
Transportation bills have been late before, but why did this one take so long to complete? "Forget about everything else. This is all about dollars and cents," says Rep. Sherwood Boehlert (R-N.Y.).
White House lobbying to limit the bills size made it rough for legislators to satisfy the desires of donor states such as Texas and California, whose fuel tax payments into the Highway Trust Fund exceed the federal highway aid they receive. Initially, donors wanted to boost their minimum return to 95%, from 90.5% under TEA-21.
When administration officials threatened a veto above $284 billion, donors, led in conference by House Majority Leader Tom DeLay (R-Texas), sought 92% in the bills initial years. But that was impossible without inflaming donee states, such as New York and Pennsylvania, which get more than a 100% return on fuel-tax...