The latest article from the Comptroller’s recover page the “On The Money” column, Grasping a lifeline, details how the federal stimulus is putting people back to work.
From 2004 through 2006, according to the Associated General Contractors of Texas, the state was awarding from $4.3 billion to $4.8 billion in new business each year.
Tolls, bonds and gasoline taxes fueled the work. When the money began to run out, new contracts dropped to $2.7 billion in 2007 and $2.4 billion last year.
“It was pathetic,” said Tom Johnson with the Associated General Contractors.
Over the long-term, Johnson said highway construction would continue to dwindle in Texas until state officials settle on a sustainable method of paying for new projects.
Meanwhile, the economy stalled. Last fall, highway contractors in Texas began laying off workers at a rate of 5,000 a month, Johnson said.
Then Congress passed the recovery act.
“The stimulus is a real lifeline,” Johnson said. “We’re back on the path of putting people to work.”
The $2.25 billion in stimulus money earmarked for Texas highways is a reprieve — for now.
John Barton, assistant executive director for engineering operations at the Texas Department of Transportation, likens it to an employee facing a 50 percent pay cut getting a one-time bonus.
It buys the industry time, however, and is allowing the transportation department to whittle down its waiting list of projects.
“It’s certainly giving us an opportunity to do a lot of work,” Barton said.
The work is also costing less because of cheaper supplies than when the projects were first proposed.
Bids for new construction are running about 20 percent cheaper than the state’s estimates.
One reason is that state engineers use a 12-month rolling average of costs in their estimates. The projects being bid today were designed months ago.
The pre-recession estimates don’t fully reflect the cheaper prices for gasoline, asphalt and labor that appear in the latest bids.
Still, Barton said, “It’s a buyer’s market.”
Working as designed.