PORTLAND — The private sector has increased spending on construction projects in most states, making up for the decline in government spending as federal stimulus money dries up, the chief economist for the Associated General Contractors of America told contractors Thursday.
Nationally, the industry is coming back from the recession, but the gains have been “fragile and fragmentary,” said Kenneth Simonson.
“In Maine, the picture is a little bleaker,” he said.
Simonson spoke at the trade group’s monthly leadership lunch at DiMillo’s Restaurant.
He said private investment is now focused on energy projects, port-related infrastructure, warehouses, hospitals and some manufacturing facilities.
Developers are building apartment buildings because vacancy rates are low and demand is high. He said many people want to live in multifamily housing in cities and nearby suburbs that are close to work and services.
He said the single-family house in a far-off suburb has lost its appeal with the public.
Construction of single-family houses, offices and stores remains stagnant, he said. The federal government is cutting back on spending, he said. In the current federal budget, appropriations for construction are down 6 percent ($7 billion) from last year’s levels, he said.
Also, he said, state and local governments are cutting back on spending for public projects such as roads, bridges and schools.
He said conservative governors in other states have cut back on spending for public infrastructure projects, but Gov. Paul LePage is the only governor he knows about who has declined to issue voter-approved bonds.
LePage’s decision earlier this week to refuse to sign off on $40 million in voter-authorized bonds will hurt the construction industry in Maine, Simonson said.
His statement about LePage resonated with several of the contractors in the crowd who are unhappy with the decision.
Tim Ouellete, chief financial officer and part-owner of CPM Constructors, a bridge contractor, said this is a good time to invest in public projects because interests rates are low and costs are low because contractors are hungry for work.
Delaying work on a project such as road and bridge repair doesn’t save the public money because the work still must be done.
“Deferring investment for the future is like taking on more debt anyway, because it has to be fixed at some point and you have to pay for it in the future,” he said.
Nationally, employment in the construction industry has increased 0.9 percent in the past year,. It has declined by 2.4 percent in Maine. Only 16 states have experienced a bigger decline on construction jobs, according to the U.S. Bureau of Labor.
The construction industry in Maine was hit hard by the recession, The number of workers associated with the industry declined from 36,000 in 2006 to about 24,000 today, said Matt Marks, chief operations officer for the Associated Contractors of Maine.