Federal infrastructure bill gave NCDOT $2 billion. Inflation has already taken a bite.
The N.C. Department of Transportation expects to receive about $2 billion in new federal money over the next five years as a result of the big infrastructure bill Congress passed last fall.
But it won’t be enough to prevent NCDOT from having to delay numerous construction projects in the coming decade.
That’s largely because higher costs for fuel, labor, materials and land have pushed up construction costs. Rather than allowing NCDOT to take on new work, the federal windfall is merely helping it cover a projected deficit made worse by inflation, said Joey Hopkins, chief deputy engineer for planning.
“The big thing this money is helping us with is our hole’s not going to be as deep,” Hopkins said in an interview. “So we won’t have to move schedules on as many projects as we thought previously.”
Every two years, the department updates the State Transportation Improvement Program or STIP, which sets a schedule for hundreds of projects it hopes to complete in the coming decade. The latest STIP covers the decade ending in 2029, and the first draft of the new version is due out in about a month.
Money from the federal infrastructure law will allow NCDOT to keep more projects on schedule, Hopkins said, but it isn’t enough for the department to add anything new in the coming decade.
“We’re happy about it, and glad to get the additional funds, but we’ve got a projected deficit that we’re trying to cover,” Hopkins said. “So even with these additional funds, we’re still going to see project delays.”
Some of the higher costs are simply due to NCDOT revising outdated cost estimates, Hopkins said.
But the inflation that is driving up prices across the economy is hitting the construction industry particular hard, according to the Associated General Contractors of America. The AGC of America began posting regular Construction Inflation Alerts a year ago with charts and data showing the rising costs facing the industry.
“For more than two years the U.S. construction industry has been buffeted by unprecedented increases in materials costs, supply-chain bottlenecks, and a tight labor market,” the latest alert begins. “Russia’s attack on Ukraine, swiftly countered by sanctions against Russian production and finances, have led to another round of even steeper and more sudden price increases and supply-chain disruptions. As of now, there is no sign of when costs and availability will improve.”
New transportation money mixed with old
The infrastructure law is considered the signature achievement of Joe Biden’s presidency so far, passed with bipartisan support by a deeply divided Congress.
Politicians from both parties who helped produce the bill are eager to take credit. Hopkins said their staffs have been calling NCDOT to ask for examples of projects they can show constituents were made possible by the additional spending.
But that’s not easy to do, Hopkins said.
That’s because the $1 trillion spending bill making headlines included about $477 billion that states would have received from the federal government under existing formulas. About 25% of NCDOT’s $5 billion annual budget comes from the federal government, mostly to reimburse the state for highway construction after the work is completed.
State Sen. Tom McInnis summed up the situation at a meeting of the Joint Legislative Oversight Committee for Transportation on Thursday.
“We’ve got money that we’re going to get anyhow, and they rolled that all into the same barrel with the new money,” said McInnis, a Republican from Richmond County. “There’s some confusion in the marketplace to think that we’re going to get all this fresh new money when in fact a lot of the money — a significant amount of the money — was already coming to us in the first place.”
The infrastructure law does include more than $100 billion in mostly new money for rail, mass transit, electric charging stations and other non-highway projects. But much of that money will be distributed through competitive grants, and local governments and organizations are going to have to work for it, notes U.S. Rep. David Price.
“There are a lot of possibilities here,” Price, a Democrat from Durham, told a gathering of mayors and other local officials in Raleigh late last month. “But there’s also going to be a premium on initiative, on sound planning and cooperation.”
Price told the local officials that winning federal funding for projects such as the Triangle’s proposed commuter rail line would take a strong state, regional and local effort that includes chambers of commerce and other interest groups.
“I really welcome this gathering this morning,” Price said, “because we have a lot of people in the room who are going to need to figure out how to respond to these opportunities.”
This story was originally published April 8, 2022 at 1:00 PM with the headline "Federal infrastructure bill gave NCDOT $2 billion. Inflation has already taken a bite.."
CORRECTION: A previous version of this story misspelled state Sen. Tom McInnis’s name.
