Inflation is shrinking Arizona’s infrastructure dollars



(The Center Square) — A recent S&P Global report indicates that inflation has made the overall costs of infrastructure projects nationwide more expensive. With some of the nation’s highest inflation rates, Arizona governments are forced to make up the difference.

The report, which focuses on “tax-supported debt levels” in state governments, showed that the price tag estimates of infrastructure projects have skyrocketed “upwards by more than 30%.” In order to make up for these costs, the report noted that some states are using funding from both the American Rescue Plan and the Infrastructure Investment and Jobs Act in order to avoid further debt.

Pima County – home to Tucson – is one of the governments impacted by inflation when it comes to infrastructure projects, and its Board of Supervisors agreed to “absorb inflation” to avoid increasing the burden on county taxpayers, according to the county communications office.

“I can’t speak for all of Arizona. But to answer your question about Pima County, yes, County construction projects have been affected by inflation,” Pima County Project, Design and Construction Department Director Sheila Holben told The Center Square.

For Arizona in particular, it’s unclear how it has impacted infrastructure project costs at the state and county level everywhere, but the report had positive news for the state in its ranking of debt service as part of “general spending” compared to other states. As Arizona only has 0.82% of debt service overall, it ranks forty-fifth in the nation.

When The Center Square reached out to the Arizona Department of Transportation for impacts on costs for them, they said they were unable to provide a more recent figure but mentioned how costs have risen for some products like concrete and steel rebar in the recent past, which are measured in an index, but does not account for everything that goes into developing infrastructure.

“Our own construction cost index for Fiscal Year 2022 was up 30 percent over the previous year. Time will still tell if we’re seeing some stabilization,” ADOT spokesman Doug Nintzel told The Center Square.

“As with many states, a key issue here in Arizona has been the volatility associated with costs that affect infrastructure construction. ADOT is currently operating under a $9.5 billion Five-Year State Highway Construction Program, which is updated each July 1,” he added.

Outside of inflation impacting the public sector, the impacts on consumers have also been noted, especially since it has been slowing down compared to 2022.

While the inflation rate in the Phoenix metropolitan area was periodically the highest in the country, it has continued to trend downward. The Consumer Price Index determined that prices are up 4.4 percent since a year ago as of June, with only a 0.2 percent increase in the two months prior. Inflation had a steady incline in the area until August 2022 at 13% over the year, then began to tick down.



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