Highway construction becoming more costly due to rampant inflation

SALT LAKE CITY — It’s beginning to be that time of year where road construction projects start up around the state. One expert says inflation will likely prevent federal money from going as far on such projects as it probably did in the past.

Christian Britschgi, associate editor for reason.com, who covers transportation, joined Inside Sources with Boyd Matheson to discuss how states can reduce cost. 

Matheson starts the conversation out by saying that potholes and orange cones are going to take bit of a bite as a result of inflation.

“It’ll probably take a huge bite,” Britschgi said.

Britschgi adds the cost of building and maintaining highways has gone up 50% over the last few years. 

“And largely as a result of higher material costs, higher steel costs, asphalt, higher diesel costs and oil costs,” he said. “Which both you need to power the vehicles that build the highways.”

Infrastructure bill, construction and inflation

Matheson said, “President Biden has pushed through in terms of focusing on infrastructure in particular roads, bridges and highways. And so as you look at how that’s actually playing out state to state, what is that actually looking like?”

“The part of the increase of the cost in building highways is the fact that we’re spending a lot more money on them now,” Brtischgi said. “Because of this infrastructure bill that (President) Biden signed into law in November 2021.”

Britschgi says funding from the infrastructure bill has been sent to the states. Who in turn, are competing over a fixed amount, in the short term, of concrete, steel and other materials.

“So, that’s kind of helped increase inflation a lot in the transportation sector,” he said. 

Federal strings attached

Matheson asked for perspective on some of the regulatory costs and strings attached to the federal funding that slows down some of the construction projects.

“There’s all sorts of things that make federally funded infrastructure projects more expensive than they would be,” Britschgi said.

He says there are union work rule requirements, which can increase labor costs. There is also a Buy American provision that requires steel and other materials be bought within the United States. 

Britschgi also says there are federal environmental review standards. Anytime, the federal government decides to provide funding for a new road or highway, the National Environmental Policy Act requires that an environmental analysis be performed. He says those can often times take decades to complete.

How can states deal with inflation in construction projects?

Matheson asked, “Give us one thing that maybe states ought to be looking at in terms of (spending those highway dollars a little more effective)?”

“The states that do things the best keep costs under control,” Britschgi said. “They do a couple of things. So, one is they have quantitative cost benefit selection processes.”

Another way states keep costs under control, according to Britschgi is through a private-public partnership.

“Shift the risk of inflating costs onto a private party who can figure out how to fund it as opposed to on the taxpayers,” he said. 

Listen to the entire segment.

 

Inside Sources with Boyd Matheson can be heard weekdays from 1 p.m. to 3 p.m. on KSL NewsRadio. Users can find the show on the KSL NewsRadio website and app. 

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