Inflation is causing a headache for infrastructure projects in Arizona, according to a recent report by S&P Global. The report reveals that the estimated costs of infrastructure projects have skyrocketed by more than 30% nationwide due to inflation. This means that Arizona governments are left scrambling to find the additional funds needed to complete these projects.
President Biden's cost-of-living crisis affects so much more than just the price of gas and groceries. It's putting the safety of our roads, bridges, and more at risk.https://t.co/ewy7Un1joq
— Congresswoman Debbie Lesko (@RepDLesko) July 19, 2023
To offset the rising costs, some states, including Arizona, are tapping into the funds provided by the American Rescue Plan and the Infrastructure Investment and Jobs Act. This allows them to avoid accumulating further debt. Pima County, which is home to Tucson, is one of the areas feeling the impact of inflation on infrastructure projects. The Board of Supervisors has decided to “absorb inflation” rather than burdening taxpayers with increased costs.
While it’s unclear how inflation has affected infrastructure costs at the state and county levels across Arizona, the report does offer a positive note. Arizona ranks forty-fifth in the nation when it comes to debt service as part of “general spending.” This means that the state has a relatively low debt service compared to other states.
The Arizona Department of Transportation has also felt the pinch of rising costs. Although they couldn’t provide a more recent figure, they mentioned that the costs of materials like concrete and steel rebar have increased. This poses challenges for infrastructure development. The department’s construction cost index for Fiscal Year 2022 was up 30% from the previous year, indicating the impact of inflation.
In addition to affecting the public sector, inflation is also impacting consumers. However, there is some relief in sight, as the inflation rate in the Phoenix metropolitan area has been trending downward. According to the Consumer Price Index, prices are up 4.4% since last year as of June, with only a 0.2% increase in the past two months. While inflation had been steadily climbing in the area until August 2022, it has since started to decrease.
It’s clear that inflation is a growing concern for infrastructure projects in Arizona. The rising costs place a burden on governments and taxpayers alike. While efforts are being made to mitigate the impact, such as utilizing federal funds, the volatility and unpredictability of inflation remain pressing issues. It’s crucial for policymakers to find long-term solutions to this problem in order to ensure the successful completion of infrastructure projects without crippling debt.