Inflation Bites Off More Of Stagnant Road Program Funds

Inflation Bites Off More Of Stagnant Road Program Funds

351 Cities, Towns Still Sharing From $200 Mil Pot

Chris Lisinski (State House News Service) 3/9/22 6:31 PM

MARCH 9, 2022.....Cities and towns have for years argued that they need at least $100 million more in annual state aid for road and bridge maintenance to address crumbling infrastructure, and on Wednesday they added another argument to their so far unsuccessful pitch: raging inflation.

In just the past year, prices for highway work have grown by about one-quarter, according to one industry expert, exacerbating a steady trend of cities and towns being able to afford less road maintenance every year with the same amount of state financial support.

And with economy-wide inflation poised to keep soaring, Massachusetts municipalities are feeling the strain.

"The purchasing power of Chapter 90 has decreased by well over 40 percent since the first time Chapter 90 was funded at $200 million per year," Geoff Beckwith, executive director of the Massachusetts Municipal Association, told the Transportation Committee. "Construction inflation has essentially taken away over $80 million of value in the program, and cities and towns are struggling mightily to maintain their local roads."

Years of level-funding the program, albeit with occasional one-time supplemental funding, has forced the state's 351 municipalities to steer more of their own local tax dollars to road maintenance or scale back the amount of work they can complete, Beckwith said.

On top of the shrinking purchasing power, Beckwith told lawmakers the $200 million allotment only covers about a third of the $600 million his group said is needed every year to keep local roads and bridges in a state of good repair.

For close to a decade, the Legislature and administration have level-funded Chapter 90 at about $200 million per year with occasional mid-year boosts layered on top. The most recent version that Gov. Charlie Baker signed in July steered the traditional $200 million to local road and bridge repairs plus an additional $150 million spread across six grant programs.

Now in his final year in office, Baker again proposed keeping the program at $200 million in his annual standalone bill (H 4358), though he also sought to add another $100 million toward reimbursing cities and towns for road repairs, plus $100 million more to repair potholes and other winter damage as part of a $2.4 billion supplemental budget bill (H 4479).

"This total of $400 million for municipalities between these two pieces of legislation continues to be a lifeline for municipalities across the state," Highway Administrator Jonathan Gulliver told the Transportation Committee. "Due to the seasonality of roadway repairs and construction, it is crucial that this legislation be passed promptly so our communities may begin to plan and implement the investments for the year."

The House on Wednesday approved a $1.6 billion version of the mid-year spending bill (H 4532) that features $100 million to address winter roadway damage but not the other $100 million boost.

Construction Industries of Massachusetts Executive Director John Pourbaix said prices for construction are up across the board, particularly lumber and steel, which have "skyrocketed." The past year has brought an inflation rate of about 25 percent for highway construction and maintenance, he told the News Service.

The impact on local communities ripples out across the entire industry, according to Pourbaix. With cities and towns able to afford less roadwork, they hire fewer workers to perform regular maintenance.

"The municipalities and the state's buying power has been substantially diminished," Pourbaix said. "Instead of doing four miles, you might only be doing three miles of resurfacing. Obviously, that would factor into the amount of labor that would be needed."

"Prices have increased by about 25 percent over just the past year, and compound that for the last several years especially if you look at Chapter 90 that's been level-funded at $200 million, you're definitely paving less than you were," he added.

Inflation has been potent in recent months, with the January consumer price index annual increase of 7.5 percent representing a 40-year high. Russia's invasion of Ukraine has sent gas prices in particular skyrocketing.

The rampant trend appears unlikely to change course

in the near future. Bloomberg reported Wednesday that the latest Consumer Price Index update set for release Thursday is forecast to grow 7.8 percent, adding that economists now expect the rising action could peak at 8 percent to 9 percent.

Bill Gross, a high-profile bond investor, also told Bloomberg he expects inflation to continue at a 4 percent to 5 percent clip "for the next several years."

In what has become an annual tradition on Beacon Hill, a string of municipal officials urged lawmakers to expand Baker's proposal for the yearly injection of Chapter 90 money both by bulking up its amount and by authorizing several years of funding at once.

Auburn Town Manager Julie Jacobson said her community received about $609,000 in Chapter 90 funding for the current fiscal year, about a quarter of the $2.4 million the town needs per year to keep up with its roadway reconstruction plan.

"We're putting a lot of local dollars in on top of it, and we're still not keeping up," she said. "The gap has just continued to widen, and the appropriations just aren't keeping pace with annual increases in construction costs. As we all know, with further rising construction costs and materials this year, we're not going to be able to fund anywhere near what we could fund last year."

Rep. William Straus, a Mattapoisett Democrat who serves as co-chair of the Transportation Committee, noted during Wednesday's hearing that a bill approved by the House later that day featured additional money to address potholes and other wear and tear inflicted during the past few cold, snowy months.

"It's never enough, and we understand that and always hope we can do more," he said.

Gulliver said Wednesday that the Department of Transportation has rolled out several behind-the-scenes changes in recent years to improve management of the Chapter 90 program, including new guidance issued to cities and towns in August that replaced a 20-year-old predecessor.

MassDOT will also publish a new cost-estimate tool this month geared toward cities and towns seeking to use Chapter 90 funds on projects, Gulliver said.

"While previously it was a complicated task for a city or town to go through and project what the cost and spending is going to be for a project, this new tool -- which is the first of its kind in the nation as far as we can tell -- provides a very easy way to use the weighted average bid prices that MassDOT provides along with what, in real-time, towns experience in their bid prices to give them a much more accurate cost estimate when they put this project together," Gulliver said.

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03/09/2022

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