Safe you Finance

In his victory speech on Tuesday night, President-elect Barack Obama told supporters there would be a long road ahead in fixing the nation’s problems. The construction industry hopes the first steps involve building and repairing that road.

With the economy contracting, new infrastructure construction was an underlying issue in the election campaigns, which touted it as a way to create jobs.

The topic is key for construction companies already hurt by shrinking state and federal budgets for infrastructure projects.

Obama’s platform included creating what his campaign dubbed the national infrastructure reinvestment bank — a system intended to attract public and private investment for economic development projects with an initial $60 billion infusion of federal money for construction over the next 10 years. Infrastructure could include projects such as housing.

That money could bring much-needed aid for public projects in Missouri. In June, the state’s Department of Transportation said its current transportation funds would cover just 40 percent of funding needs for the next 20 years — leaving a $938 million annual shortfall.

The situation is being made worse by rising materials and labor costs for highway and road projects. Nationally, materials costs for such projects were up 22 percent in September from the previous year, according to the American Road and Transportation Builders Association, or ARTBA, the industry advocacy group which has already begun clamoring for attention.

"We’re going to work with new administration to make sure they know transportation investment is not just a political priority but a national priority," said Jeffrey Solsby, the association’s director of public affairs.

The association also advocates increasing the federal fuel tax that drivers pay to fund road construction. Obama opposes that idea.

While Obama’s idea of stimulating job creation is popular in the construction industry, some are guarded in their optimism payday advance loans.

The $60 billion investment Obama proposed, when divided among states and spread over a decade, would need a significant contribution from state and local investors in order to have much impact, said Len Toenjes, president of Associated General Contractors of St. Louis. The group represents about 450 construction firms and suppliers that stand to gain from a slate of new projects.

"I’d hate to see people oversimplify this and think that a check is going to show up from the beltway and we’re going to have all these new projects going," he said.

One example of the challenges was the defeat of the local proposition that could have built a new MetroLink line into western St. Louis County, Toenjes said.

In addition to public opposition and funding shortfalls, projects also face regulatory barriers and extensive planning needed before an infrastructure project begins.

The Obama plan to use both public and private money also presents its own set of challenges.

Forming public-private funding partnerships is a painstaking process, said Susan Stauder, vice president of infrastructure and public policy for the St. Louis Regional Chamber & Growth Association.

And finding private money may be arduous given the current credit crisis, she added.

It may be better if the new president and congressional leaders launch a stimulus package that focused on public projects, such as roads and highways.

"That would be a really positive thing that most legislators in Congress could agree on," Stauder said. "As long as we’re going to be stimulating the economy, we might as well create jobs and put in infrastructure that can be used for the next 40 to 100 years."

The Associated Press contributed to this report.

cboyce@post-dispatch.com | 314-340-8345

Source