DESPITE budget problems in many states, the domestic highway construction market should still grow 2% to 3% in 2003, says an economist for the Washington DC-based American Road & Transportation Builders Association (ARTBA).
ARTBA Vice-President of Economics & Research Dr William Buechner says record federal investment levels resulting from the Transportation Equity Act for the 21st Century (TEA-21) during the past two years will drive 2003 market growth after a modest performance in 2002.
Through October 2002, the value of construction work performed on highway and bridge projects was $46.5 billion, up only one-tenth percent compared to the first 10 months of 2001, according to ARTBA.
Buechner says that many states operating on a July to June fiscal year and experiencing revenue shortfalls may have temporarily delayed road projects for cash management reasons last spring. Congress delaying the FY 2002 federal transportation appropriations until December 2001 may have also contributed to the 2002 highway construction weakness.
During the late summer, however, the pace of highway construction accelerated and set new monthly records in September and October. That trend, Buechner says, was expected to continue through the end of 2002 resulting in modest growth for highway construction over 2001.
Buechner, a Harvard-trained economist who served on the Congressional Joint Economic Committee for nearly two decades before joining ARTBA, cautions that the forecasted growth for 2003 is dependent on state budget and contract letting decisions. An ARTBA survey of state transportation departments found most expecting no disruptions or cuts in their highway construction programs during 2003.
Subway and light rail construction has been a particularly bright spot during the past two years, with the value of construction work at $3.9 billion in 2002, a 62% increase over 2001. Congress is expected to provide the TEA-21 guarantee of $7.2 billion for mass transit programs in FY 2003, a 7% increase over the FY 2002 level. Increases in federal funding for transit under TEA-21 should sustain construction of subway and light rail systems in 2003.
The value of construction work on airport runways and related projects has grown two percent in 2002, following an impressive 30% increase in 2001. Airport construction is now a $4-billion market. The good news for 2003 is that Congress is expected to provide the full $3.4 billion for the Airport Improvement Program (AIP) promised in the Aviation Investment and Reform Act for the 21st Century (AIR-21) for FY 2003, up slightly from $3.3 billion in FY 2002. This should continue to support growth in the airport construction market.