CBO: Feds spent $96B on infrastructure in 2014

CBO: Feds spent $96B on infrastructure in 2014
© Mario Ortiz

The federal government spent $96 billion on infrastructure projects, according to a Congressional Budget Office report that was released on Monday. 

The figure, which includes water projects, is dwarfed by a total of $320 billion that was spent on infrastructure by state and local governments, according to the report. 

The CBO said 57 percent of the money that was spent by governmental agencies was used for operating expenses and maintenance of existing infrastructure, while 43 percent was spent on new construction. 

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The impact of the infrastructure spending was weakened by rising construction costs, according to the report. 

“Nominal public spending on that infrastructure increased by 44 percent between 2003 and 2014, but because prices of materials and other inputs rose more quickly than nominal spending, real (inflation-adjusted) public purchases decreased, falling by 9 percent from their peak in 2003 to their level in 2014,” the agency wrote. 

New construction, or capital, projects were the hardest hit by the decline in the government’s purchasing power, according to the report. 

“The decline in real public spending (adjusted using infrastructure-specific price indexes) on transportation and water infrastructure between 2003 and 2014 occurred almost exclusively within the category of capital purchases, which fell by 23 percent during those years,” the CBO said. “The construction and rehabilitation of highways, in particular, declined over the period. By contrast, real public spending for the operation and maintenance of infrastructure continued its historical tendency to grow, rising by about 6 percent over that period, primarily because of increases at the state and local level.” 

The finding about federal infrastructure spending comes as lawmakers are debating a new transportation funding bill with the current highway bill set to expire this spring. 

The federal government typically spends approximately $50 billion per year in infrastructure spending, not including water-related projects. The funding was set to run out last September before Congress passed the temporary patch that is now scheduled to expire on May 31 of this year. 

Lawmakers have struggled to come up with a way to pay for a transportation funding extension beyond the revenue that is collected by the 18.4 cents-per-gallon federal gas tax. 

The gas tax has been the traditional source of transportation funding since the 1930's, but it has not been increased since 1993. It has struggled to keep pace with construction costs, as cars have become more fuel efficient. 

The gas tax only brings around $34 billion annually at its current level, leaving lawmakers with a $16 billion per year infrastructure funding hole to fill. 

The shortfall has been blamed for the failure of Congress to pass a transportation funding bill that last longer than two years since 2005. 

The CBO said Monday that federal transportation spending has fallen at a must faster clip than state funding during that time period. 

“Although all levels of government have spent less, in real terms, on transportation and water infrastructure in recent years than in the past, the greatest reduction has occurred at the federal level,” the agency said.  “Adjusted for inflation, federal purchases have fallen by about 19 percent since 2003, while purchases by states and localities have fallen by about 5 percent. The significant difference between those declines reflects the facts that a much larger portion of federal infrastructure spending than of state and local spending is for capital and that capital has become much more expensive to purchase over the period relative to operation and maintenance services.” 

The full CBO report can be read here