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ICYMI: Inflation Is Gutting Infrastructure Plans Across the U.S.

Washington, D.C., June 27, 2022 | Justin Harclerode (202) 225-9446 | comments
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In Case You Missed It, what we knew all along would likely happen is in fact happening.  Historic inflation – significantly worsened by the Biden Administration’s out-of-control spending, overly burdensome regulatory actions, and relentless push for a Green New Deal type of agenda over core infrastructure needs – is having a harmful impact on America’s infrastructure.

This inflation is eroding the value of funding under the Infrastructure Investment and Jobs Act (IIJA), causing massive increases in project costs, and forcing states and local authorities nationwide to cut back on many needed infrastructure improvements.

From recent news coverage of inflation’s impact on infrastructure:

AP: Inflation Taking Bite Out of New Infrastructure Projects

“They are borrowing more money so they can spend more money, (which) is driving inflation, which is cutting down on the projects that they’re actually wanting to do,” said [Rep. Sam] Graves….

“Those dollars are essentially evaporating,” said Jim Tymon, executive director of the American Association of State Highway and Transportation Officials. “The cost of those projects is going up by 20%, by 30%, and just wiping out that increase from the federal government that they were so excited about earlier in the year.”…

“If this inflation keeps the way it is, we will have to roll projects from one year into the next, into the next, into the next,” said Mark Gillett, chief engineer of the Wyoming Department of Transportation….

“If inflation continues, it may be a decade before the project gets completely done,” airport Executive Director Kevin Foley said….

“To sum it up, we’re doing less work for the same amount of money,” said Tucson’s chief water engineer, Scott Schladweiler.

Politico: Biden’s Incredible Shrinking Infrastructure Plan

But inflation — which reached a 40-year high of 8.6 percent last month — has already slashed billions from its value, forcing states to cancel or delay projects as costs balloon….

“If [inflation] doesn't slow down, we're just going to end up eating into the capacity of getting more infrastructure done,” said Robert Scaer, CEO of the global engineering firm Gannett Fleming. “We're going to spend a lot more money for fewer projects. … The buying power of [the infrastructure law] is absolutely being diluted.”…

But the Congressional Budget Office predicted last month that inflation will stay high into next year, and diesel prices are expected to stay high through the end of 2022….

“That is a significant effect on our clients — I mean, they have an operating budget,” Scaer said. “It puts the project in jeopardy, period. These towns only have so much capacity to be able to take on projects.”

Bloomberg Government: Inflation Strains Value of Biden’s Signature Infrastructure Law

States across the country are seeing project bids come in as much as 30% above their original expectations, as contractors complain about supply problems, spiking material costs, and a dearth of workers….

“In all likelihood, the number of projects that we’re going to put out this calendar year will be reduced,” Mike Keiser, acting deputy secretary for highway administration at the Pennsylvania Department of Transportation, said….

Construction input prices jumped 21% from a year ago, according to an analysis by the Associated Builders and Contractors of US Bureau of Labor Statistics producer price index data released last week. Iron and steel prices are up 103% from 2020, while concrete is up 17% from two years ago….

Kari Karst, president of BX Civil & Construction, said contractors like her are seeing increased lead times for materials and having a hard time finding workers — creating a “devastating” situation for many construction companies. She told lawmakers that flexibility and removing regulatory hurdles, such as streamlining environmental and permitting review, could help as they deal with the mounting issues.