AGC Eyes Thwarting Federal Construction Spending Cuts

Wed November 16, 2005 - National Edition

The Associated General Contractors of America (AGC) has expressed concern about the proposed across-the-board discretionary spending cut being considered in Congress that would include reductions in the federal investment in infrastructure programs.

In a letter to members of the U.S. House of Representatives, AGC’s Senior Executive Director, Government and Public Affairs Jeff Shoaf said, “While we recognize the need to provide disaster relief funding, and support accomplishing this goal in a fiscally responsible way, AGC is concerned that spending reductions to federal construction accounts will diminish our ability to meet the nation’s critical infrastructure needs, including those resulting from the impacts of Hurricanes Katrina and Rita.

“In the wake of the recent natural disasters, it has become apparent that additional infrastructure investment in the regions impacted by hurricanes Katrina and Rita could have lessened damage to property and loss of life. In addition, reducing spending in these infrastructure programs that protect human life, improve the environment, stimulate economic growth, and provide jobs will be detrimental to the nation’s overall quality of life.”

AGC noted that reducing investment in the nation’s infrastructure is short sighted. Deferring critical infrastructure investment today will require additional federal spending in the future not only to respond to higher construction costs, but also to address compounding capital and maintenance needs.

For example, in the past 24 months, the producer price indexes for highway and street construction and other heavy construction have both risen more than 22 percent, while the consumer price index climbed less than 7 percent.

Tight supplies of cement and strong worldwide demand for petroleum, natural gas, steel, and other materials used in construction make it likely that infrastructure costs will continue to rise faster than inflation in general.

“Now is not the time to propose spending cuts to programs that protect against the impacts of natural disasters. A two percent reduction in federal construction programs would result in more than $1 billion cut to critical infrastructure spending,” Shoaf added.

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