Federal Construction Budget Tradeoffs

No matter where you may believe the federal Highway Trust Fund spending level will ultimately rest on the spectrum between the House measure’s $34.6 billion annually and the Obama administration’s $79.2 billion annually, the sad fact is that these appropriations are offset by dramatic cuts to other federal construction spending programs, to the ultimate long term continuing injury to this important sector of the American economy. Obama’s own budget proposal cuts $450 million a year from transit construction funding in Illinois alone.

HR 7 takes us “back to the dark ages,” according to Transportation Secretary Ray LaHood, eliminating all funding for building bike paths, bike lanes and pedestrian safety projects. With the current Highway appropriations expiring March 31, 2012, the industry is undoubtedly looking at another series of short term extensions, making government and industry planning impossible until a long term funding measure is ultimately passed through both houses.

Meanwhile, even the comparatively generous Obama budget slashes Defense Department construction spending by 20%, Corps of Engineers civil construction projects by 13%, clean water state revolving funds by 20%, drinking water state revolving funds by 8%, Veterans Administration construction by 10%, and airport improvement grants by 28%. While the heavy civil sector of the US construction economy will feel these cuts most severely, resultant price increases in construction materials and equipment, due to the loss in sales volume, will impact all construction businesses across the country. Our national elected leadership continues to fail our industry.

West Point Public Works Privatization Plans Stifled

Army plans announced last March to contract with Ginn Group of Peachtree City, Georgia, to take over plumbing, carpentry and grounds maintenance services at the United States Military Academy at West Point, New York, have fallen victim to a GAO report contending the plan would be a waste of tax dollars, and political opposition from New York Congressman Maurice Hinchey. Senator Charles Schumer announced Monday that Secretary of the Army John McHugh proposes to scrap the privatization plans, though the Army has taken no formal action yet.

Defense Contract Audit Agency Head Reassigned

Defense Contract Audit Agency Director April Stephenson, under criticism for creating “a work environment not conducive to performing quality audits,” has been reassigned to the staff of Undersecretary of Defense Robert Hale, and will be replaced by Army Auditor General Patrick Fitzgerald, effective November 9. Stephenson was roasted in a GAO report last month for emphasizing the churning out of reports over independence in auditing defense contracts.