Public Works Construction Stimulates Economic Growth

Public works construction can apply to any type of publicly funded construction project. Typically it’s used to differentiate between projects that are governmentally funded rather than those that are privately owned. A public construction project can be federal, state, county or municipal, depending on who owns the job.

In all instances, the funding is tax based. At some point in time, money had to be collected in order to fund or pay for the project.

As you know there are a variety of taxes and we as taxpayers pour a considerable percentage of our income into them. One of the few taxes that is specific both in collection and application is the fuel tax. In principle it is more of a user fee than an actual tax in that it is collected only from people or companies that buy and use fuel to power their vehicles over our roads, highways and interstate systems.

We could spend a lot of time discussing this example but that’s not the point. The reason I point this out … well, actually there are two reasons. First, because the gas tax funds public road and transportation construction projects on all levels and these are all public works projects; and second, the current bill SAFETEA-LU (Safe Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users) expired on September 30, 2009, but has been extended through December of this year.

Hold that thought for a second …

Public works construction projects are critical to making sure that the economy continues its growth now that it has restarted. Stimulus money has been allocated for our transportation infrastructure, and all of this work is public works construction. We desperately need it and we need it now. Typically for every construction job that’s created four other jobs are created in other industries supplying materials, equipment, supplies and services in support. In good times the construction industry has 700,000 to 800,000 plus contracting firms employing over 7 million workers. According to the latest Labor Bureau statistics, more than 1,590,000 or 17.1 percent are currently unemployed.

We are a consumption-based economy; i.e., we use up and replace everything on a regular basis – cars, televisions, computers, phones, refrigerators, washers, dryers, tools, clothing, lawn mowers, tools, houses, office buildings, and list goes on endlessly. If we don’t consume we don’t produce; if we don’t produce we have no capability to consume.

The economy started slowing a couple of years ago and the slowing went unnoticed by most until it could no longer be ignored. Earlier this summer there were indications that things had started to pick up. All the money that had been allocated was trickling down to levels where it was starting to generate activity. In our industry there were jobs that were being posted for bid and other previously shut-down jobs that had been restarted. No, it wasn’t everywhere and still isn’t everywhere but it – the “it” in this case being upward economic movement – has started and is continuing.

Back to SAFETEA-LU …

To keep the construction effort growing it is essential – actually critical – that we enact a new transportation bill replacing the expired SAFETEA-LU. James Oberstar, D–MN, chairman House Committee on Transportation and Infrastructure, proposed a new bill some months ago. The new bill had been studied, researched and developed over several years and was based on an in-depth analysis of our transportation needs today and into the future.

What we don’t need is an endless series of extensions.

One of the main reasons we need a new bill is so that the economy can continue to grow and improve. The extensions will only delay the much-needed updates and improvements of our transportation infrastructure. Until there is a bill, contractors can’t commit to buying new equipment or hiring and training more people. In other words, don’t expect a lot of change.

Transportation infrastructure construction represents the single largest segment of our public works market. In addition to the actual road construction and/or reconstruction, there are other public works projects that follow or need to be done concurrently.

There are public work projects that have been maintaining the industry. There will be more, especially if you send a letter, e-mail or phone call to your senators and representatives in Washington and urge them to get a new highway bill on the books this year. You can find more information regarding contacting your representatives by going to www.congressmerge.com/onlinedb/ for any state or territory.

Recently, Associated Equipment Manufacturers (AEM) and Associated Equipment Distributors (AED) along with other associations, unions and supporters sponsored Start Us Up USA! rallies in Las Vegas, Chicago and Washington, D.C. to get Congress’ attention to this need.

If you are interested in reading more about these critical-to-you topics, visit our website, www.site-kconstructionzone.com and type in Start Us Up USA!, SAFETEA-LU, James Oberstar or whatever you want to read about in the search box located in the upper right-hand corner of the home page.

Greg Sitek

Note: This editorial appeared in the December 2009 issues of the ACP magazines.

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