SOUTHERN CALIFORNIA INFRASTRUCTURE MARKET FEDERAL-STATE-LOCAL OVERVIEW ACEC Orange County February 22, 2012.

SOUTHERN CALIFORNIA INFRASTRUCTURE MARKET

FEDERAL-STATE-LOCAL OVERVIEW

ACEC Orange County

February 22, 2012

Southern California Contractors Association

Volunteer-led and governed association founded in 1974

300 union contractors, crane operators, suppliers and planning & design firms

Heavy civil construction in southern California Contractors signatory with Operating

Engineers, Laborers, Cement Masons, Ironworkers, Carpenters and Construction Teamsters

Full service association

What Keeps Contractors Up At Night?

Market down Razor thin margins Increase number of bidders (private vs.

public) Competitors bidding below cost to cash-flow Owners shifting risk Owners’ self-performance vs. private

outsourcing (Caltrans vs. UDOT) Vacuum of leadership in DC & Sacramento

CA Construction Market

CA Construction Employment

CA Trans Expenditures 2005-2012

Caltrans Profile

Spending projected to decline with ARRA & Prop 1B spend-out

State & federal funds projected to remain constant

$10B project delivery budget 2012 $3.4B unsold Prop 1B funds in STIP over

next 5 years (need to ensure these are sold on track)

Transportation CA – Vehicle Reg. Fee Proposal

How is the Money Used?Revenue Source for All State Highway-Related Expenditures, Capital & Non-Capital (U.S. Ave)8

Federal22%

State51%

Local28%

Source: FHWA Highway Statistics, 2008, Table HF-10, Includes all revenues used for highways for all spending purposes

Caltrans Funding Sources 2011-12

37%

33%

30%

Caltrans Funding Sources 2011-12

Federal

State

Bonds

Typical State surface transportation program revenue sources

10

Motor Fuel Tax26%

Motor Vehicle Fees/Taxes

15%

Tolls5%

General Funds4%

Other Imposts4%

Misc.4%

Bonds14%

Federal Payments26%

Local Govt. 2%

Source: FHWA Highway Statistics, Table SF-1, Average for 1999 to 2008 data.

Typical State Highway User Fee Revenue Use

11

Highway - Capital Outlays, Operations,

etc.68%

Rev. Collection Expenses

13%

Mass Transit10%

General Purposes/ Fund9%

Percent of Total Highway User Revenues By Purpose

Source: FHWA Highway Statistics 2008, Table SDM, Highway user revenues are motor fuel taxes, motor vehicle related fees/taxes and tolls.

Typical State Highway Capital Program Allocations

12

ROW7%

Engineering13%

New Const13%

4R - Reconstruction, Rehabilitation, Restora-

tion, Resurfacing45%

New Bridge2%

Bridge Replace6%

Bridge Rehabilita-tion7%

Safety3%

Traffic Operations2%

Environment2%

Source: FHWA Highway Statistics Table SF-12A, Average 1999 to 2008.

Source: SCAG RTP/SCS 2012

Where the money is at…SCAG RTP Revenue estimates

Source: SCAG RTP/SCS 2012

Where the money is at…SCAG RTP Revenue Needs

Typical Local surface transportation program revenue sources

15

Highway User Revenues4%

Tolls2%

General Fund29%

Property Taxes13%Misc

16%

Bonds10%

Federal Payments2%

State Revenues 25%

Source: FHWA Highway Statistics, Table LGF-1, Average for 1999 to 2008 data.

Typical Local Government Highway Capital Program Allocations

16

ROW2% PE

3%

Preservation/Cap Outlays

26%

Maintenance30%

Snow Removal3%

Other Traffic Services

4%

Admin & Misc7%

Hgwy Law En-forcement

11%

Transfer to St.Govt.3%

Other 8%

Bonds2%

Source: FHWA Highway Statistics Table SF-2, Average 1999 to 2008.

Federal ReauthorizationHouse Bill

House T&I passed 5-year highway/transit bill Keeps fed funding levels at current levels,

without earmarks. (CA loses funding without earmarks)

House Ways & Means has introduced a proposal to eliminate the Mass Transit Account and move the gas tax revenue to the Highway Trust Fund

Creates new Alternative Transportation Account (ATA) to fund transit, Congestion Mitigation and research. Revenue source not identified

Federal ReauthorizationHouse Bill

House proposal is being tied to increased domestic and off-shore oil development, the trans-Canadian oil pipeline and opening ANWR to oil development

Very controversial – “non-starter” in Senate

Federal ReauthorizationSenate Bill

The Senate EPW Committee has passed a 2-year reauthorization that maintains current funding levels

$12B funding shortfall Senate Finance Committee passed a measure to fill

$10.5B of that funding shortfall. The bill was passed mostly along party lines, with only a couple of Rs crossing over.

Interestingly enough, 3-4 Rs on the committee indicated during debate that they supported indexing the federal gas tax, although that amendment was not introduced.

How Can SCCA & ACEC Work Together?

Grow & protect the market Help pass the Vehicle Fee Increase Help pass federal highway/transit bill Support Caltrans’ management in

expanding Design-Build program Protect & expand Prop 35 – more design

work should be outsourced

Questions?

Larry C. Russell

Executive Vice President

Southern California Contractors Association, Inc.

6055 E. Washington Boulevard, Suite 200

Los Angeles, CA 90040

(323) 726-3511 phone

[email protected]