Cliff metaphors abound these days, thanks to our members of Congress. In my travels, I've run across the deportation cliff, the human cliff, and yes, the transportation cliff. (Thank you, Rep. John Mica, R-Fla.). To be clear, there are two cliffs in the transportation world. There is the "fiscal cliff," which would result in an overall cut of about 8 percent in federal funds. That impact on transportation isn't clear, although it would certainly be a blow. The National Air Traffic Controllers Association says that could result in a furlough of 2,000 to 2,200 air traffic controllers, which could ultimately result in fewer flights.
Then there is the approaching 2014 sunset of the surface transportation law, which seems far away but is still of concern for state transportation officials trying to plan out their budgets for major projects. Don't expect action on that one anytime soon, although lawmakers say they're ready to get going next year.
Still, the economy for transportation is picking up slightly. Last week, the American Road & Transportation Builders Association released their 2013 forecast of the construction market, predicting modest growth from $126.5 billion to $130.3 billion. That's not bad, all things considered. Even more interesting is that ARTBA's economists say the "major wild card" of the fiscal cliff would only impact transportation investment indirectly. That's not to say the impact couldn't be dire, but at this point it can't be quantified. All we know is that state and local governments may be forced to pull back on some projects and that individual businesses may delay capital investments or hiring because of uncertainty.
President Obama has asked for $50 billion to invest in infrastructure as part of a cliff deal, although that request has been repeatedly shunned by lawmakers. It's easy to see them shunning it again. But if they wind up getting a fiscal cliff deal anyway, the DOT's TIFIA loan program will probably hum along smoothly, as will the regular federal funding mechanism. All will be well, right?
People in Washington D.C. are obsessed with the fiscal cliff, but let's move the discussion beyond that. What are other risk factors to infrastructure in 2013? What is the best prediction of how the fiscal cliff negotiations could impact transportation? How important is it for the construction industry to watch Congress next year? Where will the infrastructure economy grow? Where will it shrink?