Transportation Outlook for Contractors 2019-2020

Transportation Outlook for Contractors 2019-2020

The construction outlook in transportation has three separate components to look at; each part has opportunities and challenges as we move forward. Let’s review the evolving picture at the State, Federal and local levels.

State

The perception of some contractors is that we paid handsomely by fighting off Proposition 6 last fall to protect the SB1 funding increases for transportation. But, perception-wise, the promises of SB 1 and the “no on Proposition 6 campaign” have yet to be met. Remember the promises were not only a massive increase in funding for transportation projects, but also reforms and efficiencies at Caltrans to address what some industry observers, fairly or unfairly, consider to be a bloated overstaffed bureaucracy. So let’s look at what the facts are.

The first place to look to see if promises are being kept is this year’s state budget. The budget proposes total expenditures of $14.6 billion for Caltrans in the present fiscal year. This is $5.1 billion, or about 53 percent, higher than the expenditures in the 2017/2018 fiscal year, which reflects the pre-SB1 funding levels for Caltrans.

The budget includes a total of about $2 billion in SB 1 funding for state highway maintenance and repair, bridge and culvert repairs, enhancements to the state’s trade corridors, and various other activities. This is consistent with the continued implementation of SB 1. We would rate it as “a promise kept”.

The Caltrans construction program has not grown as was expected due to SB 1, which is driving the perception that the promises are not being kept. The reality is that Caltrans is playing catch up and is in the process of developing projects for future delivery and that is reflected in this year’s budget. We generally think promises are being kept, and we will be evaluating the efficiency piece of the promises as we get additional information.

San Diego

According to the League of California Cities, there will be an influx of State gas tax dollars for cities and counties across the state. For the San Diego region, we estimate that to be an additional $1.5 billion for road repairs across the cities in San Diego County, including our county roads. All public works staff we have spoken to confirm there is a significant new funding level to maintain roads, which is badly needed.

SB 1 also had some significant annual funding for congestion relief, transit projects and active transportation projects among other small programs. SANDAG has done well in competing for those funds, and we expect that to continue as new opportunities to compete come up.

What we can expect here in this region is two initiatives moving forward.

The first is an anticipated MTS proposal to hike the county sales tax to increase funding for transit. This is still being fleshed out as to what parts of the county it will apply to, how much the tax hike will be, and what it will fund. We are tracking, this but it is too early to know the specifics.

The second initiative is the SANDAG “5 Big Moves” – unveiled at an April joint meeting of the SANDAG Board of Directors, Policy Advisory Committees, and Independent Taxpayer Oversight Committee. Conceptually it includes: • Road Pricing • High-speed Transit • Mobility Hubs • Shared Vehicles • New Technology

AGC has consistently promoted the idea of a balanced approach in transportation, between highways, roads, and transit; which this plan is not consistent with. The next steps for the SANDAG board will to deliberate on the future of transportation in San Diego which will be outlined in the 2021 Regional Transportation Plan. Then they need to figure out the cost of the new vision and how we are going to pay for it. We will be tracking that.

Federal

On July 30, the Senate Environment and Public Works (EPW) Committee unanimously voted to approve America's Transportation Infrastructure Act (ATIA). ATIA covers the highway portion of the reauthorization legislation and provides $287 billion in contract authority for the federal-aid highway program over five years beginning at the expiration of the FAST Act on September 30,

2020. Although the legislation does not provide a permanent funding fix for the Highway Trust Fund, bipartisan leaders in the Senate are committed to paying for the bill through user fees.

AGC urges its members to contact their U.S. Representatives and U.S. Senators to encourage them to pass a robust highway and transit bill. Visit agcsd.org and select Government Relations on the homepage, then choose Take Action to send an email.

If you want to get the latest in Transportation issues, attend AGC's 2019 Highway and Utility Contractors Conference, as it is the place to get ahead of your competition on all the issues impacting the highway, bridge, transit and utility construction markets. Find out the latest information about next year's elections, Federal legislation, funding, regulations, technology, safety, workforce and other developing industry trends from top industry experts. This year's conference is scheduled for November 6-8, 2019, at the Lowes Ventana Canyon Desert Resort in Tucson, Arizona.

To register for the conference, visit https:// meetings.agc.org/JCC/highway/