In testimony before the National Surface Transportation Policy and Revenue Study Commission, Steve Massie, senior vp for the Associated General Contractors of America (AGC) & CEO of Jack Massie Contractor said the highway trust fund has lost buying power as trust fund dollars are eroded by skyrocketing material prices.
“Since early 2004, the financial viability of all types of construction projects has been jeopardized by sudden, steep, and generally unanticipated price spikes affecting numerous key materials—and no construction segment has been affected as much as highways,” he said.
Massie pointed to Bureau of Labor Statistics (BLS) showing that while the consumer price index has risen only moderately (9.6%) over the past three years, highway construction materials costs have risen three to four times as fast (35.9%) each year.
“We have material price inflation eating more than 30 cents of every dollar in just the last four years and, the growing threat that the cost of labor, which has been relatively stagnant over the same four-year period, will begin to rise,” warned Massie. “We also have the danger that the highway trust fund could run a significant deficit in the near future. This convergence will exacerbate the funding gap and our ability to meet the needs of our already congested and deteriorating highway system.”
Massie called for the creation of a revenue commission, similar to that of the postal rate commission, to fund surface transportation investment and suggested creating dedicated state trust funds to be used for highway improvements. He also said those funds should be “fire-walled” like the federal highway trust fund so that revenues are only used for transportation purposes.