Sources: American Road & Transportation Builders Association (ARTBA), Washington, D.C.; CP staff
Total transportation construction and related market activity is expected to grow 1.3 percent in 2017, driven largely by increases in highway and bridge work supporting residential and commercial developments. ARTBA Chief Economist Dr. Alison Premo Black projects spending to reach $248 billion, up from an estimated $245 billion in 2016.
Her forecast covers public and private investment for highways, bridges, public transit, rail, ports and waterways, airport runways and terminals; private investment for roads, streets, driveways and parking lots in residential and commercial developments; plus, state department of transportation and local government support work for highway & bridge planning and design, routine maintenance and right of way acquisition. While the December 2015 enactment of the federal Fixing America’s Surface Transportation (FAST) Act provided stability for public highway investment, Dr. Black notes, increases realized in federal program funding levels are just above anticipated growth in inflation and project costs.
Where the 2016 construction season is concerned, many state DOTs did not obligate their federal funds in time for projects to commence. Nearly half of the FAST Act funds were obligated in the last quarter of the federal fiscal year, between July and September. Twenty percent of the available federal funds were not obligated until the final month. Another factor impacting the ARTBA forecast: Congress is expected to pass a “continuing resolution” that would hold all FY 2017 federal discretionary spending, including the transportation programs, at the current level until March 31.
Under this approach, the $900 million increase in highway investment authorized by the FAST Act and included in the House and Senate FY 2017 transportation funding bills would be delayed at least until spring. Similarly, the $510 million to $670 million public transportation funding increases in the House and Senate transportation measures would also be delayed. Among other notables Dr. Black includes in the 2017 ARTBA forecast:
Public and private highway, street and related construction. After two years of real growth, the value of public highway, street and related work by state DOTs and local governments fell nearly 2 percent in 2016 and is on track to decline another 1 percent in 2017. Recent increases in state gas taxes and user fees, plus local funding initiatives approved on the November 8, 2016, ballot, should help support some markets over the next few years. Voters in 24 states approved 267 ballot measures supporting $200 billion-plus in highway, bridge, port and transit spending over the next 40 years.
Public-private partnerships will continue to be important to state and local markets that have revenue streams backing such projects. Major jobs in Arizona, Washington, Georgia, Texas and Virginia came to financial close in 2016, totaling over $3.3 billion in investment. Based on historical data, the private highway, bridge, parking lot and driveway markets will increase from $59 billion in 2016 to $63 billion in 2017, and continue to grow over the next five years as overall construction activity increases in those sectors.
Bridges and tunnels. The public bridge and tunnel construction market is expected to be down slightly in 2017, to $32.9 billion from a record $33.3 billion in 2016, before resuming real growth in 2018. The national outlook is being driven by activity in nine states accounting for 53 percent of the market: California, Florida, Illinois, New Jersey, New York, Pennsylvania, Texas, North Carolina and Ohio.
Railroad, subway and light rail. Public transit and rail construction is expected to grow from $19.3 billion in 2016 to $20.3 billion in 2017, a 5 percent increase. Subway and light rail investment is expected to grow 3.7 percent to $7.7 billion, just below the record level of $7.8 billion in work that was set in 2015. The FAST Act provided a boost for public transportation investment. In addition to a dozen major subway and light rail projects underway, 2016 saw new projects commence in California, District of Columbia, Texas and Washington State.
Airport terminals and runways. The value of airport construction will grow slightly, increasing from $13.1 billion in 2016 to $13.2 billion in 2017, according to the ARTBA forecast model. Airport terminal and related work is expected to climb from $8.3 billion in 2016 to $8.4 billion, an increase of 1.5 percent. Runway work is projected to remain flat at $4.8 billion.
Ports and waterways. Investment next year is projected at $2.1 billion, matching this year’s level but down from $2.3 billion in 2015. The sector could see a boost pending Congressional action on the Water Resources Development Act, which identifies nearly $9 billion in navigation, flood control and environmental restoration projects.