Inflation is taking its toll on Georgia road projects

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Highway projects across Georgia are being squeezed by the increasing cost of construction materials brought on by the war in Ukraine and other inflationary pressures, a state Department of Transportation engineer said Wednesday.

The war has destroyed the Ukrainian city of Mariupol’s ability to continue functioning as a major steel center, Mark Mastronardi, a deputy chief engineer with the DOT, told members of the State Transportation Board.

The U.S. imports 66% of its pig iron from Ukraine and Russia, which is now under economic sanctions imposed by the West as punishment for its attack on Ukraine, Mastronardi said.

“Ukraine is offline immediately,” he said. “With the sanctions, Russia is also offline.”

With strong state tax collections coming out of the pandemic, Georgia’s budget has been good to state agencies, including the DOT.

The fiscal 2023 budget that takes effect July 1 earmarks $2.2 billion for the DOT, up from $1.7 billion in the original fiscal 2022 spending plan. About 48% of the agency’s budget – just over $1 billion – will go toward capital projects in the coming year.

Rising construction costs, however, are a growing concern, and not just for steel.

Mastronardi said the costs of other construction materials including asphalt and concrete also are soaring, which is driving up highway contractors’ bids for road resurfacing and other projects.

“That’s having a real impact on us as an agency,” he said.

Georgia Commissioner of Transportation Russell McMurry said while it’s important to keep needed transportation projects moving forward, the DOT has a responsibility to taxpayers.

“Safety we can’t delay,” he said. “[But] we have shifted some of the resurfacing from this summer to the fall, hoping … we’ll have more favorable prices.”

Mastronardi said the agency also is considering extending the length of contracts on existing projects to spread out the costs and in some cases may be forced to reject some project proposals altogether as unaffordable.

“We do have things we think we can adjust,” he said.

This story is available through a news partnership with Capitol Beat News Service, a project of the Georgia Press Educational Foundation.

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