WASHINGTON — Spending on transportation infrastructure construction is likely to grow a modest 3% next year to a total of $130.3 billion, according to the American Road and Transportation Builders Association's annual forecast.
Federal, state, and local spending are all unlikely to ramp up investment, said Alison Premo Black, ARTBA's chief economist. The two-year transportation funding law passed earlier this year provides no new money through its expiration in September 2014. But Black lauded the potential of that legislation's expansion of the Transportation Infrastructure Finance and Innovation Act loan program to help drive new investment in some areas.
While state and local tax revenues have continued to recover in recent months and ARTBA projects combined tax revenues to increase by $800 million during 2013, state investment in transportation infrastructure, including bonds, is unlikely to improve much over a relatively sluggish 2012.
"There is a lag between when we see this recovery and when we start to see additional capital expenditures," Black said.
Transportation bonds issued by state and local governments typically account for about 14% of state and local infrastructure investment, Black said. September was a big month for transportation bonds, with $3.2 billion of issues helping to push the total to $13.1 so far this year. That level represents a decline from $16.7 billion of transportation bonds issued in 2011.
"We're not expecting a huge jump in the market in 2013," Black concluded.
A complicating factor for state and local spending is the fast-approaching fiscal cliff. Federal transportation programs are mostly protected from the automatic cuts slated to occur if Congress fails to pass a compromise to avoid falling off the cliff. But the overall recession many economists expect would strike under a cliff scenario could restrict what money would be available for transportation funding.
"That definitely is a concern," Black said.
However, Black said she expects a robust public-private partnership market in 2013, with ARTBA projecting $23.5 billion of infrastructure work to be offered to private partners through 2014.
"This is going to remain a key part of the market," she said.
Ports and waterways may also see more investment.
"Driven by expanded sea trade expected with completion of the Panama Canal expansion project in 2015, U.S. ports and waterway construction is expected to skyrocket nearly 25% to $2.65 billion," ARTBA said in its forecast.
Black added that ports on both coasts are making investments to deepen their channels and add critical infrastructure to support the larger "post Panamax" ships that will be enabled by the expanded canal.
Dave Bauer, senior vice president of government relations for ARTBA, said November's election results will likely spell a status quo for work on a new transportation bill during the coming year. The passage of the current law was highly contentious and came only after nine short-term extensions. Transportation and financial groups said those extensions created a difficult aura of economic uncertainty.
"We're going to be right back into the same dynamic that led to multiple extensions," Bauer said.