“If it ain’t broke, don’t fix it.” That old saying may apply in some situations, but sometimes such sentiments get in the way of progress and improvement. When considering maintenance on big structures such as buildings, highways, and bridges, we need to recall another well-worn proverb: “A stitch in time saves nine.”
When we look at the state of our local, state, and federal governments, we find that we have not only missed an early stitch or two, but have also ignored the need for billions more. We have deferred maintenance until the roofs leak and the bridges are near collapse. That is the current state of the recovery, not just for the U.S. economy, but for the infrastructure that bolsters it. We all realize we need to address infrastructure, but immediate problems always take precedence.
Adding to this problem is the idea that we must spend less for government programs, no matter the effect. That includes cutting the budget of the Department of Defense, one of the biggest construction spenders since the recession began. State budgets also are in jeopardy; no longer buoyed by federal ARRA funding, state capital-improvement budgets have taken a beating and won’t improve until tax receipts turn around.
Although the federal government budget gets the most press when it comes to spending for construction projects, it represents only about 3 percent of annual construction put in place. But state construction spending has averaged around 25.4 percent of total construction put in place for the last decade, and more than 30 percent in the last three years, thanks in large part to stimulus spending.
Back in January, Secretary of Defense Leon Panetta announced that the DoD would request $525 billion for its base 2013 budget compared to $531 billion in 2012. These budget cuts reflect the DoD’s new strategic direction and compliance with the 2011 Budget Control Act, which requires the department to reduce spending by about $259 billion by 2016.
The Department of Veterans Affairs (VA) and the General Services Administration are also bracing for significant construction program decreases. Having just completed its largest expansion since World War II, the VA is decreasing its construction budget by 45 percent. The GSA expects a similar decline and predicts fewer construction projects will come online this year. A spending bill enacted in April reduced the GSA’s 2012 construction account by 94 percent to $50 million. The House of Representatives chopped the agency’s $869 million request for repairs and renovations by 61 percent to $280 million. (See FMI’s 2012 special report, “The Federal Construction Sector: Understanding a Transforming Market.”)
At the same time, the defense Base Closure and Realignment Commission (BRAC) program, which started in 2005, is winding down. During the past six years, the U.S. Army Corps of Engineers has executed $16 billion of military construction and is on track to meet all of its BRAC program milestones on time. As the program nears completion, the DoD fiscal year 2012 budget for base realignment and closure will be reduced by more than 80 percent from 2011 levels.
As an example of the current trend in government construction, the GSA recently announced the closing and consolidation of 60 courthouses, out of 674 currently in use. Likewise, the U.S. Postal Service continues to downsize with an announcement that it will cut its mail-processing facilities in half. While government construction is not a large percentage of total construction, it often sets the tone, and the tone it is setting now is to downsize, consolidate, renovate, and be greener, rather than to build new facilities.