TRG | The Bottom Line – 7/29

TRG had the opportunity to speak with Georgia Department of Transportation (DOT) officials last week who echoed similar concerns we heard from other state DOTs on inflation and the potential impact on work programs funded by the Infrastructure Investment and Jobs Act (IIJA). As our contact noted, “[We] had heard a lot about inflation in other sectors, but it has finally hit us.” Conversations with DOT officials continue to raise concerns the impact of inflation is having on construction work programs – not to mention labor and material shortages. GDOT’s decision to postpone lettings due to “extreme pricing” is disappointing for the DOT and our coverage universe alike. Further, DOTs are growing more concerned funding from IIJA may not even be enough to cover the cost of existing work programs, potentially eliminating incremental projects hoped for upon passage of the bill just last fall. Fortunately, state revenue collections continue to far surpass expectations, allowing states to find additional ways to commit funding to transportation programs.