Approved CIPs show sustained growth in sector



By Rebekah Morris for Arizona Builder’s Exchange

The final tally is coming in for this year’s budget season, namely, the Capital Improvement Plans for major municipalities. The next five years appear rosy for publicly funded infrastructure and public works projects, a boost of 7.28 percent in the five-year totals from last year. That is notable in percentage increase Y-o-Y and in the strength of recovery: The Top 10 programs have rocketed up 39 percent off the low set in FY15.

Construction in the public sector depends on tax revenue, especially property taxes, revenue bonds and – in some cases – sales tax revenue. The strength of the overall economy typically leads to increased tax coffers, which ultimately leads to investment in infrastructure systems like roads, water and wastewater systems, parks, et cetera.

The protracted length of the economic recovery was desperately needed to replenish municipalities’ reserves and capital funds depleted by the Recession. Local agencies CIPs stayed depressed for a long time. From the low point in FY2012 through 2016, the sum of the top capital programs hovered around $13B. Only in FY2017 did the aggregate total jump up 5.2 percent. Then FY2018 had a massive 24.9 percent increase, and in 2019 we see a 7.28 percent increase again. That sustained Year-over-Year growth in the five-year total, combined with broadly projected economic growth for the next three years, bodes well for a continued positive outlook in this and all construction market sectors.


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