By Dr. Alison Premo Black, chief economist, ARTBA
The FY 2018 transportation appropriations package approved by Congress March 21 provided $1.98 billion in new General Fund money for federal highway and bridge obligations by the state transportation departments. The money will be distributed to the states via the 2015 FAST Act’s Surface Transportation Block Grant Program. These resources are in addition to the $900 million FAST Act authorized increase for the core federal highway program, which was part of our previous forecast.
While the states could choose to commit this new money to project starts this year, they are not required to do so. They have until Sept. 30, 2021, to put their share of the new money under contract. This fact makes estimating the 2018 impact on the highway/bridge market difficult.
The ARTBA econometric model projects the best-case scenario—the obligation of the entire $1.98 billion by the states before Dec. 31—would result in a $600 million—or roughly half-of-one percent—market boost this year. Under this scenario, the remaining $1.4 billion of the obligations would spend out over 2019-21.
This scenario hinges, however, on three factors: (1) all 50 states and the District of Columbia are able to program the unanticipated new money this year; (2) they all are able to provide the required state matching funds; and (3) all the projects to be funded can be put out to bid and awarded before the end of this year.
The appropriations bill also included $1.55 billion in new funding for the Federal Lands and TIGER Grant programs and bridge projects in rural areas. Some of this money will be available in 2018, but most will begin entering the project pipeline in 2019. Also expected to come on stream beginning next year is an additional $1 billion for federal Airport Improvement Program projects and an additional $150 million for transit capital projects.