The Road Ahead: 2024 Federal Legislative, Regulatory and Political Outlook

by Beth McGinn, vice president of communications, ARTBA

Baseball legend Yogi Berra once said, “It’s tough to make predictions, especially about the future.” Prognostication is a fool’s errand— particularly in Washington, D.C., where inter-party fighting, and a narrowly divided Congress makes for an unpredictable climate.

What is certain, however, is that decisions made—or in some cases not made—in the Nation’s Capital can significantly impact the transportation construction industry. So, what lies ahead for surface transportation funding programs? Which new regulations can we expect to see from government agencies? How will the transportation construction market perform? What, if anything, are states doing to meet their federal matching requirements and boost their own investment?

Of course, ARTBA does not have a crystal ball, but we do have some of the transportation construction industry’s best legal and regulatory minds, lobbyists, and economists. With a great deal at stake this year, we asked them for their insights.

Politics & Policy

The year ahead will be dominated by the presidential and congressional elections, and as such, are not typically known in Washington for transformative legislative achievements. Political ads will blanket air waves and news outlets will provide wall-to-wall coverage of the races. ARTBA Senior Vice President of Congressional Relations Dean Franks cautions industry professionals not to lose sight of the big picture.

“Let’s not forget that 34 Senate seats—and all 435 House seats—are on the ballot this year,” Franks said. “The outcome of this year’s election will determine who’s responsible for the next surface transportation reauthorization bill.”

ARTBA Vice President of Legislative Affairs Lauren Schapker said ARTBA will be working closely with its state chapter affiliates to boost candidates who are champions for infrastructure investment.

With all the intense political noise, we wondered if Congress could legislate.

“We anticipate this congressional session being bookended by a flurry of activity,” Schapker said. “We expect Congress will try to wrap up the appropriations bills before the spring, and then a quiet period before a potentially busy lame duck session.”

Because House and Senate leaders were unable to agree on Fiscal Year (FY) 2024 appropriations bills, federal surface transportation programs have been operating under a series of stop gap spending measures since October. Current funding runs out March 1, and ARTBA will be pushing for completion of the FY 2024 appropriations process to help ensure that year-three of Infrastructure Investment and Jobs Act (IIJA) funding is achieved.

The association and its allies will then pivot to the FY 2025 appropriations cycle. If past is prologue, we might be in for more last-minute funding drama and threats of government shutdowns. The last time Congress completed work on all 12 spending bills before the end of the fiscal year (Sept. 30) was in 1997.

With Congress chronically unable to finish its work on time, and members worried about their re-election campaigns— the heavy lifting for FY 2025 spending bills may shift until after the Nov. 5 elections.

Rules & Regulations

Based on the regulatory agenda released last fall by the White House, ARTBA Vice President and Counsel for Regulatory Affairs Prianka Sharma expects a very
busy year.

“We are preparing for several rules to be finalized before the end of the year—some significant safety and labor rules as well as environmental policies,” she warns.

Among the environmental regulations Sharma is tracking are the Council for Environmental Quality’s “Phase Two” rules for implementing the National Environnmental Protection Act and new air emissions reporting requirements out of the Environmental Protection Agency.

In the safety arena, the Mine Safety and Health Administration is expected to finalize its respirable silica safety standards, while the Occupational Safety and Health Administration plans to propose heat safety standards and finalize its worker walk around rule.

On the contracting side, the Federal Highway Administration has signaled potential changes to the longstanding Buy America waiver for manufactured products.

In each case, ARTBA is working closely with the relevant agency to ensure the industry’s perspectives are heard. Sharma said the association’s state chapter affiliates and member firms will be providing input and real-world examples of regulatory impact on the jobsite.

New regulations from federal agencies are also possible, Sharma said. She points out that it is not uncommon for presidential administrations to want to finish implementing their policy agendas as their terms wind down.

“If we do see new proposals—they will likely be fast tracked by the administration with very little, if any, time to comment.”

Market Conditions

A possible regulatory blizzard notwithstanding, the 2024 transportation construction market outlook appears strong, thanks to continued federal and state investment. ARTBA Chief Economist Dr. Alison Premo Black estimates public highway, pavement, and street construction—the largest market sector—will grow by double digits for the second consecutive year—reaching $126 billion in 2024 compared to $108.6 billion in 2023, an increase of 16 percent.

“The increase in construction activity is supported by two main factors,” Black noted. “First is the number of projects supported by the federal Infrastructure Investment and Jobs Act that are now in the construction phase.”

Since the start of FY 2022, federal investment has supported states initiating more than 60,000 new transportation improvements across all 50 states and in nearly every county. This includes spending on new construction projects, right of way purchases, planning and design work and other eligible activities.

“Second is the fact many states are increasing their own revenues to match federal funds and make additional transportation investments,” Black added. “State officials are using a combination of General Fund transfers, bond issues, business taxes, and other user-fee increases.”

This investment, including work on major projects valued at $100 million or more, contributed to double-digit growth in highway and bridge construction activity in 2023 and accounted for over 70 percent of the growth in state department of transportation (DOT) budgets.

Looking ahead, Black says federal funds will continue to support additional market activity. Recent increases in state transportation revenues are also driving DOT FY 2024 budget growth, which for many states began on July 1.

According to ARTBA’s state level budget tracking service, state DOTs plan to increase highway and bridge capital spending by 13 percent in FY 2024. Over half of this growth is driven by significant budget increases in Florida, Texas, Tennessee, Minnesota, and Ohio.

Transportation construction market activity is expected to increase or be steady in 38 states. Based on recent state and local government contract awards, some of
the largest markets expected to show growth are Texas, Florida, Georgia, Connecticut, California, Kansas, Illinois, Colorado, Pennsylvania, and New York.

Workforce

One key market challenge continues to be industry workforce availability. “Finding workers remains a concern,” Black said.

The number of workers employed by highway, street, and bridge contractors reached record levels over the 2023 summer construction season, with employment up by over 30,000, or eight percent, compared to 2022.

The number of hours worked by employees on jobsites was down slightly compared to 2022, averaging just over 45 hours per week, as more workers were hired. Average hourly wages are up four percent, compared to eight percent in 2022.

The construction unemployment rate was in the range of 3.5 percent to four percent for the 2023 summer construction season, in line with 2019 levels. However, the number of job openings in the construction industry continues to be high, indicating a demand for workers that is not being filled.

State & Local Levels

The year ahead also promises to be a busy one for transportation funding advocates at the state and local level. The bulk of new funding will come not from legislation, but at the ballot box, according to ARTBA’s Transportation Investment Advocacy Center (TIAC) Senior Director Carolyn Simons.

“In state legislatures, we unsurprisingly are not expecting it to be a very big year,” said Simons. “Last year, we saw about $23 billion in new revenue approved. In 2024, I would not expect half of that because many legislatures are not in session or have short budgetary sessions, and most local lawmakers are focused on reelection campaigns.”

However, TIAC does anticipate an increase in ballot measures compared to last year, particularly in large metropolitical areas with lots of voters. Simons says in a presidential election year, when voter turnout is expected to be higher than normal, funding advocates across the country are working hard to get their initiatives included on the ballot.

Simons points to several states that are “feeling the heat” to find new money for their transportation programs. Among them: Maryland, Nebraska, Wyoming, Arizona, California, Georgia, Washington State and Oregon, where state officials have expressed the need to increase transportation revenue.

As for trends in funding models at the state level, Simons points to fees on Electric Vehicles (EVs).

“Of the state legislation tracked in the first month of 2024– half are related to some sort of EV fee,” she explained. “Half of those are fees on public charging stations. This is a trend that has picked up pace in recent years.”

Ready for Anything

With states focused on increasing revenues at the ballot box and lawmakers at all levels focused on keeping their jobs, any new policies affecting transportation construction will be decided by voters and regulatory agencies.

One thing remains certain: with three years of infrastructure funding still to come, the transportation construction market will continue to grow.

While we do not know what curve balls 2024 will throw our way, ARTBA and its team of experts—like the great catcher and philosopher Yogi Berra—will step up to the plate. In other words: “It ain’t over until it’s over.”