Unless Congress acts, federal construction programs face cuts totaling hundreds of millions of dollars on Jan. 2. The 2011 Budget Control Act mandates $1.2 trillion in "sequestration" cuts over 10 years because the House and Senate failed to pass a deficit-reduction plan last year.
The 2013 sequestration share is $109 billion, which would be split between defense and non-defense sectors. An Office of Management and Budget report, released on Sept. 14, estimates individual defense accounts would be sliced 9.4% and non-defense programs would face 8.2% cuts.
Construction programs would suffer. Army construction would be pared by $383 million, and Environmental Protection Agency aid to state revolving funds (SRFs) for water projects would take a $293-million hit. Tom Curtis, American Water Works Association deputy executive director, sees the need to address the deficit but says SRFs "are critically important. … Not every program, even within EPA, provides the same return on the American people's investment."
Some construction accounts would be spared in whole or part. Programs financed by the Highway Trust Fund and airport grants, which draw on the aviation trust fund, won't be cut. David Bauer, American Road & Transportation Builders Association senior vice president, says, "The general rule of thumb is that if it's contract authority coming out of a trust fund governed by obligation limitations, it's exempt." Federal Transit Administration formula grants, which use trust-fund dollars, dodge the knife, but FTA new-rail starts, which tap the general fund, would be trimmed by $156 million.
Brian Deery, senior director of the Associated General Contractors' highway and transportation division, says it appears the $18.8 billion Congress recently shifted to the Highway Trust Fund from the general fund would be subject to sequestration. That could push the trust fund into the red sooner than had been projected, he says.
Industry officials hope Congress will act by Jan. 3 to undo or delay sequestration's impact.