Highway & Bridge Construction Market Update Southern Region

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Highway & Bridge Construction Market Update Southern Region Alison Premo Black, PhD ARTBA Senior VP & Chief Economist November 26, 2016 2016 ARTBA.

1 Highway & Bridge Construction Market Update Southern Region Alison Premo Black, PhD ARTBA Senior VP & Chief Economist November 26, ARTBA. All rights reserved. No part of this document may be reproduced or transmitted in any form or by any means, without prior written permission of ARTBA.

2 Real Value of U.S. Highway & Street Construction Work Rolling 12-month Totals $75 Decreases in 2017: -2% from Aug 2016, -14% from 2009 peak $67.7 (Dec 2009) $70 Billions of 2017$ $65 Real Market Decline: -23% peak to trough $60 $58.4 (Aug 2017) $55 $50 $51.8 (Sep 2013) $45 $ Source: ARTBA analysis of Census Bureau s U.S. Value of Construction Put in Place, adjusted for project costs ARTBA. All rights reserved. No part of this document may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of ARTBA

3 Real Value of U.S. Bridge Construction Work Rolling 12-month Totals $36 $34 $32 Billions of 2017$ $30 Contraction in 2017: -6% from Aug 2016 $28 $31.2 $26 $24 $22 $ Source: ARTBA analysis of Census Bureau s U.S. Value of Construction Put in Place, adjusted for project costs ARTBA. All rights reserved. No part of this document may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of ARTBA

4 Monthly highway & bridge construction work below 2016 levels $12 Billions of 2017 dollars $10 $8 $6 $4 $2 $0 Feb Mar Average May Jun y Aug 2016 ARTBA analysis of data from U.S. Census Bureau, adjusted with ARTBA Price Index to account for project costs. Sep 2017 Nov Dec

5 Real Value of Transit Construction Work, Rolling 12-month Totals Real Value of Railroad Construction Work, Rolling 12-month Totals $6 $6.8 $4 $2 Aug Mar May Dec Feb Sep Nov Jun Aug Mar May $0 $16 $14 $12 $10 $8 $6 $4 $2 $0 $10.7 Aug Mar May Dec Feb Sep Nov Jun Aug Mar May $8 Billions of 2017$ Real Value of Airport Construction Work, Rolling 12-month Totals Real Value of Port & Waterway Construction Work, Rolling 12-month Totals $15.0 $10 $5 $ $3.0 Billions of 2017$ $15 $3.5 Aug Mar May Dec Feb Sep Nov Jun Aug Mar May Billions of 2017$ $20 $2.5 $2.0 $1.8 $1.5 $1.0 $0.5 $0.0 Aug Mar May Dec Feb Sep Nov Jun Aug Mar May Billions of 2017$ $ Source: ARTBA analysis of Census Bureau s U.S. Value of Construction Put in Place, adjusted for project costs. Data through June ARTBA. All rights reserved. No part of this document may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of ARTBA.

6 12-Month Rolling Totals State & Local Contract Awards $60 $51.5 $50 Billions of 2017$ $40 $47.8 $44.2 $40.5 $42.5 $43.4 $45.7 $43.8 $30 $18.6 $20 $15.1 $16.3 $18.8 $20.1 $19.8 $15.5 $16.7 $10 $0 Sep 09 - Sep 10 - Sep 11 - Sep 12 - Sep 13 - Sep 14 - Sep 15 - Sep 16 Aug 10 Aug 11 Aug 12 Aug 13 Aug 14 Aug 15 Aug 16 Aug 17 Highways Sep 09 - Sep 10 - Sep 11 - Sep 12 - Sep 13 - Sep 14 - Sep 15 - Sep 16 Aug 10 Aug 11 Aug 12 Aug 13 Aug 14 Aug 15 Aug 16 Aug 17 Bridges Source: ARTBA analysis of McGraw Hill Data, adjusted with the ARTBA Price Index for project costs ARTBA. All rights reserved. No part of this document may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of ARTBA.

7 Monthly state & local govt. highway & bridge awards $8 $7 $6.6 Billions of 2016 dollars $6 $5 $5.2 $4 $3 $2 $1 $0 Feb Mar May Jun y Aug Average State and local government highway and bridge contract awards, Dodge Data Analytics, adjusted with ARTBA Price Index to account for project costs. Sep 2017 Nov Dec

8 12-Month Rolling Totals Western Region State & Local Contract Awards $16 $15.1 $13.4 $14 Billions of 2017$ $12 $12.9 $10.6 $10 $8 $6 $4.4 $4 $4.0 $4.4 $3.0 $2 $0 Sep 13 - Aug 14 Sep 14 - Aug 15 Sep 15 - Aug 16 Sep 16 - Aug 17 Highways Sep 13 - Aug 14 Sep 14 - Aug 15 Sep 15 - Aug 16 Sep 16 - Aug 17 Bridges Source: ARTBA analysis of McGraw Hill Data, adjusted with the ARTBA Price Index for project costs ARTBA. All rights reserved. No part of this document may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of ARTBA.

9 Monthly State & Local Government Highway & Bridge Awards Southern Region $2.5 $2.4 Billions of 2017 dollars $2.0 $1.5 $1.4 $1.0 $0.5 $0.0 Feb Mar May Jun y Aug Average State and local government highway and bridge contract awards, Dodge Data Analytics, adjusted with ARTBA Price Index to account for project costs. Sep 2017 Nov Dec

10 State by state highway & bridge outlook increase in trailing 12-month (TTM) total contract award NH WA MT ME VT ND OR MA MN ID NY WI SD IL UT CO CA AZ AK PA IA NE NV RI MI WY KS OK NM OH MD WV MO KY SC AR AL GA LA Source: ARTBA analysis of McGraw Hill Data, adjusted for inflation. YTD values through September. DE DC TTM awards up over 49% vs. previous TTM TTM awards up 25-49% vs. previous TTM FL HI CT VA NC TN MS TX IN NJ TTM awards up 1-24% vs. previous TTM

11 State by state highway & bridge outlook decrease in trailing 12-month (TTM) total contract award NH WA MT ME VT ND OR MA MN ID NY WI SD IL UT CO CA AZ AK PA IA NE NV RI MI WY KS OK NM OH MD WV MO KY SC AR AL Source: ARTBA analysis of McGraw Hill Data, adjusted for inflation. YTD values through September. DE DC TTM awards down over 49% vs. previous TTM TTM awards down 25-49% vs. previous TTM GA LA TTM awards down 1-24% FL HI CT VA NC TN MS TX IN NJ vs. previous TTM

12 Developments in Federal, State & Local Funding

13 Federal funds, on average, provide 51% of annual state DOT capital outlays for highway & bridge projects Over 69% of state highway & 50 to 69% of state highway & 29 to 49% of state highway & bridge capital outlays bridge capital outlays bridge capital outlays NH 56%* 35% 88%* 66% 50% 68%* 72% 56% 51% 69% 45% 61%* 52% * 65%* 59%* 84%* 44% 58% 42% 70%* 39% 50% 59%* 52% 41% 71% 62% 60%* 61%* 42%* 67% 61%* 68% 48%* 80% VT 80% MA 41% CT 68% RI 98%* DE 45%* NJ 29%* MD 43%* DC 52%* 65%* 69%* 68%* 38% 86%* 50% 37% HI 81% Source: ARTBA analysis of FHWA Highway Statistics data, total ten year average from tables SF-1 and SF-2. The percent is the ratio of federal aid reimbursements to the state and total state capital outlays and is indicative of the importance of the federal aid program to state capital spending for highways and bridges. Does not include local capital spending. Federal highway reimbursements are primarily used for capital outlays, including construction, right of way and engineering, but are also used for debt service for GARVEE bonds. * States that have issued GARVEE bonds before ARTBA. All rights reserved. No part of this document may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of ARTBA.

14 FAST Act Highway Investment Impact $47 $46.4 $46 Billions of dollars $45 $44 $43 $42.0 $42 $41 $40 $41.3 $40.3 $39 $38 $ Nominal Obligations Adjusted for Project Costs Source: ARTBA analysis of FAST Act. Inflation forecast from CBO's August 2015 report "An Update to the Budget and Economic Outlook: 2015 to 2025." Adjusted for Inflation

15 Percent of Federal Aid Highway Funds Obligated in first nine months of FFY 80% % of Annual Federal Ad Funds Obligated 70% TEA-21 Reauthorization Delays SAFETEA-LU Reauthorization Delays MAP-21 Reauthorization Delays 60% 50% 40% 30% 20% 10% 0% Source: ARTBA analysis of FHWA data ARTBA. All rights reserved. No part of this document may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of ARTBA.

16 The Highway Trust Fund Revenue Crisis Will Return $70 Billions of dollars $60 $50 $40 $52.0 $61.0 $62.0 $59.0 $59.0 $58.0 $55.0 $55.0 $55.0 $56.0 $57.0 $41.0 $41.0 $41.0 $41.0 $41.0 $40.0 $40.0 $40.0 $40.0 $40.0 $39.0 $30 $24.0 $22.0 $22.0 $19.0 $20.0 $20 $8.0 $10 $ Total HTF outlays Proj. HTF revenues Shortfall after FAST Act transfers spent Source: Congressional Budget Office Highway Trust Fund baseline, uary 2017 Total may not add up due to rounding

18 States Introduced 137 Transportation Funding Bills in 2017 WA Legislation Introduced NH MT ND ME OR ID WY SD MN WI MI NY VT MA CA NV AZ UT CO NM NE KS OK IA MO AR IL MS IN KY TN AL PA OH WV VA NC SC GA CT DE MD RI NJ DC AK TX LA FL HI Source: TIAC State Funding Initiatives Report, June 2017

19 States Introduced 137 Transportation Funding Bills in 2017 Legislation Approved Legislation Introduced WA NH MT ND ME OR ID WY SD MN WI MI NY VT MA CA NV AZ UT CO NM NE KS OK IA MO AR IL MS IN KY TN AL PA OH WV VA NC SC GA CT DE MD RI NJ DC AK TX LA FL HI Source: TIAC State Funding Initiatives Report, June 2017

20 States Approving Transportation Funding Legislation Two or More Approved One Bill Approved WA NH MT ND ME OR ID WY SD MN WI MI NY VT MA CA NV AZ UT CO NM NE KS OK IA MO AR IL MS IN KY TN AL PA OH WV VA NC SC GA CT DE MD RI NJ DC AK TX LA FL HI Source: TIAC State Funding Initiatives Report, June 2017

21 Six States Approved State Fuel Tax Increases in 2017 Approved Proposed WA NH MT ND ME OR ID WY SD MN WI MI NY VT MA CA NV AZ UT CO NM NE KS OK IA MO AR IL MS IN KY TN AL PA OH WV VA NC SC GA CT DE MD RI NJ DC AK TX LA FL HI Source: TIAC State Funding Initiatives Report June 2017

22 Four States Implemented or Adjusted Variable-Rate Gas Taxes Approved/Adjusted Introduced WA NH MT ND ME OR ID WY SD MN WI MI NY VT MA CA NV AZ UT CO NM NE KS OK IA MO AR IL MS IN KY TN AL PA OH WV VA NC SC GA CT DE MD RI NJ DC AK TX LA FL HI Source: TIAC State Funding Initiatives Report, June 2017

23 Six States Approved Other Recurring Revenues WA Approved Introduced NH MT ND ME OR ID WY SD MN WI MI NY VT MA CA NV AZ UT CO NM NE KS OK IA MO AR IL MS IN KY TN AL PA OH WV VA NC SC GA CT DE MD RI NJ DC AK TX LA FL HI Source: TIAC State Funding Initiatives Report, June 2017

24 Nine States Approved Alternative Fuel & Electric Vehicle Taxes/Fees WA Approved Introduced NH MT ND ME OR ID WY SD MN WI MI NY VT MA CA NV AZ UT CO NM NE KS OK IA MO AR IL MS IN KY TN AL PA OH WV VA NC SC GA CT DE MD RI NJ DC AK TX LA FL HI Source: TIAC State Funding Initiatives Report, June 2017

25 One State Approved Transportation Lockboxes WA Approved Introduced Pending NH MT ND ME OR ID WY SD MN WI MI NY VT MA CA NV AZ UT CO NM NE KS OK IA MO AR IL MS IN KY TN AL PA OH WV VA NC SC GA CT DE MD RI NJ DC AK TX LA FL HI Source: TIAC State Funding Initiatives Report June 2017

26 Five States Approved One-Time Funding Measures WA Approved Introduced NH MT ND ME OR ID WY SD MN WI MI NY VT MA CA NV AZ UT CO NM NE KS OK IA MO AR IL MS IN KY TN AL PA OH WV VA NC SC GA CT DE MD RI NJ DC AK TX LA FL HI Source: TIAC State Funding Initiatives Report, June 2017

27 30 States & DC Have Increased Motor Fuel Related Taxes 50 Times Since 1997 Approved Approved Prior to 2013 WA NH MT ND ME OR ID WY SD MN WI MI NY VT MA CA NV AZ UT CO NM NE KS OK IA MO AR IL MS IN KY TN AL PA OH WV VA NC SC GA CT DE MD RI NJ DC AK TX LA FL HI

28 19 States Have an Electric Vehicle Fee WA* NH MT ND ME OR MN VT ID WY SD WI* MI* NY MA CA NV AZ UT NM CO NE KS OK* IA MO* AR IL MS IN* KY TN AL PA OH WV* VA NC SC* GA CT DE MD RI NJ DC AK TX LA Electric Vehicle Fee HI FL *Hybrid vehicle fee Source: TIAC, State Transportation Related Taxes and Fees on Alternative-Fuel & Electric Vehicles, Sept

29 Political Party of Legislature and Governor where State Gas Tax Increases were passed since 1997 Democrat Leg & Gov Republican Leg & Gov Different Parties WA NH MT ND ME OR ID WY SD MN WI MI NY VT MA CA NV AZ UT CO NM NE KS OK IA MO AR IL MS IN KY TN AL PA OH WV VA NC SC GA CT DE MD RI NJ DC AK TX LA FL HI

30 Analysis Shows Gas Tax Supporters Not Hurt at the Ballot 91% of all state legislators who voted in favor of a state gas tax increase in and ran for reelection were re-elected. Source: ARTBA-TIAC, State Analysis Shows Gas Tax Supporters Not Hurt at Ballot Box

Transportation Investment Advocates Council A national network of business professionals and public officials who share a common interest in building support for transportation infrastructure

31 Transportation Investment Advocates Council A national network of business professionals and public officials who share a common interest in building support for transportation infrastructure investments in their state or local community roads, bridges, public transit, pedestrian walkways and cycling paths, airports, waterways, ports and rail facilities. To join for free, contact: Carolyn Kramer Manager, Transportation Investment Advocacy Center ckramer@artba.org

32 State Highway Program Funding How $1 in State Highway Program Funding is Spent Administration, Research Highway Law Enforcement Local Govt. Grants Maintenance Bond Interest & Repayments Capital Outlays $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $1 of State Highway Spending State Revenues Federal Funds & State Match Source: ARTBA analysis of FHWA Highway Statistics data, 2015.

33 Status of State Enabling Statutory Authority to use Public-Private Investment Partnerships for Transportation Infrastructure Projects WA NH MT ND ME OR ID WY SD MN WI MI NY VT MA CA NV AZ UT NM CO NE KS OK IA MO AR IL MS IN KY TN AL PA OH WV VA NC SC GA CT DE MD RI NJ DC AK HI TX LA FL Broad enabling legislation Limited or projectspecific legislation No legislation Source: National Conference of State Legislatures, Public-Private Partnerships for Transportation: A Toolkit for Legislators

34 Alison PremoBlack Senior Vice President, Policy & Chief Economist American Road & Transportation Builders

Your Questions & Comments. States to Watch in 2017: Transportation Funding

Your Questions & Comments. States to Watch in 2017: Transportation Funding Agenda National Outlook: Alison Premo Black, American Road & Transportation Builders Association Indiana: Kaitlin Lange, Evansville Courier & Press New Mexico: Andy Lyman, New Mexico Political Report Oregon: