U.S. Transportation Construction Market Funding Trends Alison Premo

U.S. Transportation Construction Market Funding Trends Alison Premo

U.S. Transportation Construction Market Funding Trends Alison Premo Black, PhD ARTBA Senior VP & Chief Economist The Conway Conference February 27, 2019 Federal-Aid Program Highway & Bridge Investment FAST Act Obligations for the Federal Aid Highway Program $47,000,000,000 $46,365,092,000.0 $46,000,000,000 FY 2019; $45,268,596,000. $45,000,000,000 FY 2018; 0 $44,234,212,000. $44,000,000,000 FY 2017; 0 $43,266,100,000. $43,000,000,000 FY 2016; 0 FY 2019; $42,361,000,000. FY 2018; FY 2017; FY 2016; $42,000,000,000 FY 2016; FY 2018; FY 2017; FY 2019; $41,994,292,325.0 $41,821,185,357. 0 $41,682,885,918. $41,586,024,605. $41,530,392,156. $41,422,192,200. $41,417,209,517. $41,413,795,028. $41,373,010,714. $41,252,318,516.4 $40,256,000,000. 2 7 $41,000,000,000 9 9 FY 2015; 2 0 9 8 0 $40,256,000,000. $40,000,000,000 0 $39,000,000,000 FY 2015 FY 2016 Nominal Obligations FY 2017

FY 2018 Adjusted for Project Costs FY 2019 Adjusted for Inflation Source: ARTBA analysis of the FAST Act. Project costs are expected to grow in line with historical averages according to the ARTBA price index, which takes into account changes in material prices, industry wages and overall inflation. Inflation forecast of 2% from CBO's August 2015 report An Update to the Budget and Economic Outlook: 2015 FY 2020 Developments in Federal Highway Investment FY 2018 & 2019 Appropriations Over $13 billion in supplemental investments $5.8 billion two-year boost for highways $1.6 billion additional transit funding End six-years of stagnant airport investment Largest increase since stimulus package Outlook for Infrastructure Bill Billions of dollars The Highway Trust Fund Revenue Crisis Will Return $70 $58.0 $58.0 $56.0 $57.0 $55.0 $54.0 $52.0 $53.0 $60 $62.0 $60.0 $61.0 $50 $41.0 $40 $41.0 $41.0 $42.0 $42.0 $41.0 $41.0 $41.0 $41.0 $41.0 $40.0 $30 19 $20 19 22 22 24 $10 3 $0 2016 Total 2017HTF 2018 2019 2020 2021 2022 2023Proj. 2024 2026 outlays

HTF2025 revenues Source: Congressional Budget Office Highway Trust Fund baseline, April 2018 Total may not add up due to rounding. Federal funds, on average, provide 51% of annual State DOT capital outlays for highway & bridge projects Over 69% of state highway & bridge capital outlays 50 to 69% of state highway & bridge capital outlays 28 to 49% of state highway & bridge capital outlays NH 51%* 35% 92%* 49% * 61%* 64% 54% 68%* 72% 41% 69%* 62% 51% 70% 88%* 42% 55% 56%* 39% 72%* 64%* 54%* 74% 64% 40%* 59%* 70% 58%* 76% 71% * CT 63% RI 95%* DE 50%* NJ

28%* MD 39%* DC 54%* 46%* 70% 64% * 35% MA 41% 42% 44% 50% 47% VT 80% 74%* 53% 77%* 37% HI 82% Source: ARTBA analysis of FHWA Highway Statistics data, total ten year average 2007-2016 from tables SF-1 and SF-2. The percent is the ratio of federal aid reimbursements to the state and total state capital outlays and is indicative of the importance of the federal aid program to state capital spending for highways and bridges. Does not include local capital spending. Federal highway reimbursements are primarily used for capital outlays, including construction, right of way and engineering, but are also used for debt service for GARVEE bonds. * States that have issued GARVEE bonds before 2014. Developments in State & Local Highway & Bridge Investment 2019: 156 Transportation Funding-Related Bills in 36 States To-Date WA NH NH MT ME ND MN OR VT VT ID WI SD NY MI WY PA IA

NE CA IL CO KS AZ OK NM CT CT OH UT NV MA MA IN RI RI WV MO VA KY DE DE AR MD MD SC MS AL DC DC GA TX Recurring RecurringRevenue Revenue LA AK NJ NJ NC TN One-Time One-TimeFunding Funding HI

HI FL Non-Funding Non-Funding Introduced Introduced Ballot BallotPending Pending Source: ARTBAs Transportation Investment Advocacy Center Jan. 2019 State Funding Initiatives Report. * Indicates multiple bills in varying stages. 2019: 156 Transportation Funding-Related Bills in 36 States To-Date Michigan: 0 bills. WA MT Michigan Gov. Gretchen Whitmer (D) NH NH intends work with the state legislature to ME find funding for transportation fixes. VT VT ND MN OR ID WI SD NY MI WY PA IA NE CA IL CO KS AZ WV TX HI HI - Severance taxes DE DE NJ NJ NC

AR Kentucky: 2 bills. AL AK VA KY TN - RI RI West Virgina: 5 bills. IN MO OK NM CT CT OH UT NV MA MA MD MD SC DC DC GA MS Alter motor fuel taxLAand add EV fee Mileage-Based Transportation Funding Task Force Recurring RecurringRevenue Revenue One-Time One-TimeFunding Funding FL Non-Funding Non-Funding Introduced Introduced Ballot BallotPending Pending Source: ARTBAs Transportation Investment Advocacy Center Jan. 2019 State Funding Initiatives Report. * Indicates multiple bills in varying stages. 2019 State Transportation Funding Legislation Political Party of State Legislators Introducing Transportation Funding Legislation in 2019

Bipartisan; 13.85% Republican; 47.69% Democratic; 38.46% Source: ARTBA-TIACs Jan. 2019 State Transportation Funding Monthly Report States Introduced Over 214 Transportation Funding Bills in 2018 Legislation Legislation Approved Approved Legislation Legislation Introduced Introduced WA NH NH MT ME ND MN OR VT VT ID WI SD NY MI WY PA IA NE UT NV CA MA MA IL CO KS MO CT CT OH IN RI RI WV VA KY

DE DE NJ NJ NC AZ OK NM TN AR MD MD SC MS AL DC DC GA TX LA AK FL HI HI Source: TIAC State Funding Initiatives Report, May 2018 One State Approved a State Fuel Tax Increase in 2018 Proposed Proposed Approved Approved Ballot Ballot WA NH NH MT ME ND MN OR VT VT ID WI SD NY MI WY PA IA

NE UT NV CA MA MA IL CO KS MO CT CT OH IN RI RI WV VA KY DE DE NJ NJ NC AZ OK NM TN AR MD MD SC MS AL DC DC GA TX LA AK FL HI HI Source: TIAC State Funding Initiatives Report: July 2018 One State Implemented or Adjusted Variable-Rate Gas Taxes Approved/Adjusted Approved/Adjusted Introduced Introduced WA

NH NH MT ME ND MN OR VT VT ID WI SD NY MI WY PA IA NE UT NV CA MA MA IL CO KS MO CT CT OH IN RI RI WV VA KY DE DE NJ NJ NC AZ OK NM TN AR MD MD

SC MS AL DC DC GA TX LA AK FL HI HI Source: TIAC State Funding Initiatives Report July 2018 Seven States Approved One-Time Revenues Approved Approved Ballot Ballot Introduced Introduced WA NH NH MT ME ND MN OR VT VT ID WI SD NY MI WY PA IA NE UT NV CA MA MA IL CO KS MO CT

CT OH IN RI RI WV VA KY DE DE NJ NJ NC AZ OK NM TN AR MD MD SC MS AL DC DC GA TX LA AK FL HI HI Source: TIAC State Funding Initiatives Report July 2018 Two States Approved Alternative Fuel & Electric Vehicle Taxes/Fees Approved Approved Introduced Introduced WA NH NH MT ME ND MN OR VT VT ID

WI SD NY MI WY PA IA NE UT NV CA MA MA IL CO KS MO CT CT OH IN RI RI WV VA KY DE DE NJ NJ NC AZ OK NM TN AR MD MD SC MS AL DC DC GA TX LA AK FL HI

HI Source: TIAC State Funding Initiatives Report, July 2018 Five States Approved Other Recurring Funding Measures Approved Approved Introduced Introduced WA NH NH MT ME ND MN OR VT VT ID WI SD NY MI WY PA IA NE UT NV CA MA MA IL CO KS MO CT CT OH IN RI RI WV VA KY DE DE NJ NJ NC

AZ OK NM TN AR MD MD SC MS AL DC DC GA TX LA AK FL HI HI Source: TIAC State Funding Initiatives Report July 2018 11 States Approved Other Funding Measures Approved Approved Pending Pending Introduced Introduced WA NH NH MT ME ND MN OR VT VT ID WI SD NY MI WY PA IA NE UT NV CA

MA MA IL CO KS MO CT CT OH IN RI RI WV VA KY DE DE NJ NJ NC AZ OK NM TN AR MD MD SC MS AL DC DC GA TX LA AK FL HI HI Source: TIAC State Funding Initiatives Report July 2018 Voters Approve $30B+ in Transportation Funding Nov. 6 2018 WA $955K ND $17M MT OR $10M $274M ME MN

VT VT ID WI $110M SD WY CA $1.9B NV UT $87M AZ $529M CO $128M KS $12M OK NM $13M IL $3M MO $50M AK HI HI Source: ARTBA TIACTM Research, Updated November 7, 2018. LA $75M MA MA CT CT $90M $90M WV TN MS TX $1.2B IN PA $42M OH $17M KY AR NY MI $101

M IA NE NH NH VA $227M NC $226M SC GA$120M AL $107 $183M M FL $24. 9B RI RI $13M $13M DE DE NJ NJ MD MD $217 $217 M M DC DC Percent of Ballot Measures Approved 2009-2018 100% 90% 80% 85% 80% 82% 79% 77% 81% 76% 74% 70% 65% 60% 69% 68% 50% 40% 30% 20% 10% 0% 2009

2010 2011 2012 2013 2014 2015 2016 2017 2018 Average Political Party of Legislature and Governor where State Gas Tax Increases were passed 2013-2017 Democrat Democrat Leg Leg & & Gov Gov Republican Republican Leg Leg & & Gov Gov Different Different Parties Parties WA NH NH MT ME ND MN OR VT VT ID WI SD NY MI WY MA MA PA IA NE UT NV CA IL

CO KS MO CT CT OH IN RI RI WV VA KY DE DE NJ NJ NC AZ OK NM TN AR MD MD SC MS AL DC DC GA TX LA AK FL HI HI 93% of State Legislators Voting for a Gas Tax Increase Were Reelected in 2018 States States Tracked Tracked WA NH NH MT ME ND MN OR VT VT ID

WI SD NY MI WY PA IA NE UT NV CA MA MA IL CO KS MO CT CT OH IN RI RI WV VA KY DE DE NJ NJ NC AZ OK NM TN AR MD MD SC MS AL DC DC GA TX LA AK FL

HI HI 22 Source: TIAC State Outlook for Highway & Bridge Investment State Financial Outlook Has Improved FY 2018 General Fund Revenue Collections on target or higher than planned for all states 9 states made FY 2018 mid-year budget cuts 22 states made mid-year budget cuts in FY 2017; 13 states planning to cut general fund transportation spending in FY 2018 Ten states used transportation related fees or user fees to manage their FY 2017 budget Source: National Association of State Budget Officers, The Fiscal Survey of States Spring 2018 States Making Mid-Year Budget Cuts 45 41 40 39 Number of States 35 30 25 22 19 20 15 19 14 13 10 11 8 8 9 5 0 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Source: National Association of State Budget Officers Real Value of State & Local Government Highway & Bridge Contract Awards $60 $56.4 $53.5 $52.6 Billions of 2018$ $50 $49.0

$46.6$46.1 $43.5$42.9 $40 $30 $24.1 $20 $21.6$20.5 $19.7 $16.7 $16.4 $16.8$16.4 $10 $0 b Fe 11 n -Ja 12 b Fe 12 n -Ja 13 b Fe 13 n -Ja 14 b Fe 14 n -Ja 15 b Fe 15 n -Ja 16 b Fe 16 n -Ja 17 b Fe 17 n

-Ja 18 b Fe n -Ja 8 1 19 Highways b Fe 11 n -Ja 12 b Fe 12 n -Ja 13 b Fe Bridges 13 n -Ja 14 b Fe 14 n -Ja Source: ARTBA analysis of data from Dodge Data Analytics, adjusted with ARTBA Price Index. 15 b Fe 15 n -Ja 16 b Fe 16 n -Ja 17 b Fe 17

n -Ja 18 b Fe 18 n -Ja 19 Real Value of State & Local Government Highway & Bridge Contract Awards Ohio $3,000 $2,500 $2,500 Millions of 2018$ $2,000 $2,045 $1,956 $1,848 $1,948 $1,909 $1,764 $1,615 $1,500 $1,000 $804.8 $744.2 $560.0 $831.1 $789.3 $616.1 $557.2 $556.1 $500 $0 b Fe 11 n -Ja 12 b Fe 12 n -Ja 13 b Fe 13

n -Ja 14 b Fe 14 n -Ja 15 b Fe 15 n -Ja 16 b Fe 16 n -Ja 17 b Fe 17 n -Ja 18 b Fe 18 n -Ja Highways 19 b Fe 11 n -Ja 12 b Fe 12 n -Ja Bridges 13 b Fe 13 n -Ja

14 b Fe 14 Source: ARTBA analysis of data from Dodge Data Analytics, adjusted with ARTBA Price Index for Ohio. n -Ja 15 b Fe 15 n -Ja 16 b Fe 16 n -Ja 17 b Fe 17 n -Ja 18 b Fe 18 n -Ja 19 Alison Premo Black Senior Vice President & Chief Economist [email protected] @APremoBlack 202-289-4434

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