The Coronavirus Impact on Infrastructure

Some might think being quarantined at home due to the COVID19 global pandemic would have a positive effect on our infrastructure. Fewer vehicles on roadways would increase the lifespan of our nation’s streets and highways due to less wear and tear, right? Similar to how the quarantine inadvertently cleaned up air pollution, this positive spin would be just the news we need. But while all this might be true in part, unfortunately, there have also been some negative economic ripples that could prove worrisome down the road.

According to a recent report published by the American Society of Civil Engineers, fewer vehicles on the road also means less user-generated revenue flowing in from sources like transit receipts, other transportation fees, and gas taxes. The federal Highway Trust Fund, in fact, posted a 49% decline in receipts in May 2020 compared to the same period a year ago. Additionally, the Departments of Transportation are projecting a 30% revenue decline in the next 18 months, which represents a major setback to what is already a funding shortfall in efforts to improve the nation’s infrastructure.

The lack of user-generated revenue is just part of a ripple effect that more clearly defines a bigger picture. According to a recent survey polled by the National League of Cities (NLC), municipalities across the U.S. are currently experiencing significant budget cuts due to the effects of the coronavirus. Cities expect to face a loss of approximately $360 billion over the next three years, which will likely hamper their financial ability to maintain and upgrade already aging infrastructures. In fact, 65% of municipalities are being forced to delay or cancel capital expenditure and infrastructure projects, so the impact is already being felt.

Also according to the NLC survey, 24 states have yet to announce if they plan to distribute federal Coronavirus Relief Funds to help out their cities and the cities are calling for additional aid from Congress. To answer the call, the House Rules Committee has unveiled a $1.5 trillion Moving Forward Act infrastructure bill that includes a $494 billion INVEST in America Act surface transportation reauthorization bill. The intent of the legislation is to support replacing outdated systems within the current infrastructure to keep the country competitive in an evolving global economy. The bill does account for the economic downturn caused by the coronavirus outbreak and will ensure money is available at both the state and local level. At the time of this publication, the bill has moved onto the U.S. House of Representatives. Stay tuned to see how Congress decides on the proposed action.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2020 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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