Can highway segment lift economy? – Commodities – federal, state governments cut funding for highway projects – Brief Article
Throughout the economic slump of the past two years, road building contractors remained busy with lucrative road and bridge building contracts. Unfortunately, this sector may not have enough steam to continue to outpace the overall economy.
In a recent report, management consulting firm Farkas Berkowitz & Co., Washington, notes that there will likely be fewer federally-funded highway projects in 2003, and state governments are unlikely to pick up the slack. “For federal fiscal year 2003, it appears that federal grants will be cut by 13 percent from the FY2002 level,” says Alan Farkas. “More importantly, state and local transportation departments face significant cuts in funding as a result of reduced tax receipts.”
State governments in several parts of the country have shifted from managing surpluses to coping with budget cuts as sales tax and income tax revenues have declined with the cooled-down economy. In Tennessee in early July, fully half of the state’s workforce was kept home on unpaid leave as lawmakers groped to find a solution to the Volunteer State’s budget deficit.
But another Congressional re-authorization is due for what was originally called ISTEA (Intermodal Surface Transportation Equity Act) and the TEA-21 (Transportation Equity Act for the 21st Century). The re-authorization process typically results in senators and congressional representatives vying to have big-ticket construction projects approved in their respective states and districts. “The Act should be re-authorized in a timely way and at higher funding levels,” predicts Farkas.
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