DALLAS - Delays to state road and bridge projects resulting from the on-going series of short-term extensions of federal transportation funding is crippling construction companies and small businesses, members of the House Committee on Small Business were told on Wednesday.
"With federal funding in a continual state of limbo, states are unable to adequately plan for long-term infrastructure repair and maintenance," said William Schmitz, vice president of Gernatt Asphalt Products of Collins, N.Y. "With this uncertainty, small businesses like ours struggle to plan our futures."
Funding predictability is impossible. State transportation departments are unable to plan ahead because Congress has failed to pass a multiyear surface transportation bill, he said.
"In the absence of a long-term plan, my customers are telling me that they are not sure what the next years are going to bring to them, causing me to withhold investments in plant and machinery for the foreseeable future," Schmitz said.
The two-month extension to the Highway Trust Fund that will keep federal reimbursements to states for road and transit projects through July is not good enough, he said.
"No more short-term extensions," Schmitz said. "Reauthorization is critical to small aggregate producers like us."
Heavy equipment suppliers have increased their rental fleet to 26% of operations because contractors are reluctant to purchase expensive machinery as the pipeline of plan projects dwindle, said Don Shilling, president of a North Dakota equipment dealer who represented the Associated Equipment Dealers at the hearing.
"Even in North Dakota, the state is reluctant to bid long-term, equipment intensive jobs, and recently pulled 30 contracts due to lack of confidence in the HTF," Shilling said.
A recent survey of association members found that 91% would add employees if Congress passed a long-term highway bill, with 78% saying they would purchase new equipment, he said.
"What's needed is bold, decisive action to restore long-term certainty to the federal highway program," Schilling said.
"Further delay is inexcusable," he said. "Congress can't keep kicking the can down the proverbial road because the road is deteriorating and full of potholes."
More private investment in public projects could be part of the transportation funding solution, according to Jonathon Gifford, director of George Mason University's Center for Transportation Public-Private Transportation Policy.
P3s are good for small businesses because the concessions last for decades, but uncertainty over federal transportation funding hampers state transportation departments and harms smaller companies, he said.
"Without long-term reauthorization, agencies are experiencing difficulty in letting and continuing meaningful projects because they do not have the requisite budget approval," Gifford told the committee members. "Large firms may be able to absorb this uncertainty, but small businesses are not well equipped to deal with the on/off nature of the current federal process."
Congress could create more opportunities for states to participate in P3s by increasing the cap on private activity bonds for transportation projects to $19 billion from the current $15 billion limit and creating the Qualified Public Infrastructure Bond program advocated by President Obama.
