The Corporation's aggregates products (i.e., crushed stone, sand and gravel) are used primarily for construction of highways and other infrastructure projects, and in the nonresidential and residential construction industries. Aggregates product line shipments to the infrastructure end-use market account for approximately 50% of total aggregates volumes.
Moving Ahead for Progress in the 21st Century Act (MAP–21)
The federal highway bill provides annual highway funding for public-sector construction projects. On July 6, 2012, the President signed into law the Moving Ahead for Progress in the 21st Century Act, MAP-21, which maintains highway expenditures at current levels, approximately $40 billion per year through September 30, 2014, with modest increases to reflect projected inflation. MAP-21 succeeds the Safe, Accountable, Flexible and Efficient Transportation Equity Act – A Legacy for Users which expired on its own terms on September 30, 2009. During the reauthorization process, the federal highway program operated under a series of nine short-term continuing resolutions.
MAP-21 includes significant reform provisions. Specifically, MAP-21 accelerates the transportation project review and approval process; reduces the total number of categories within the highway program by two-thirds and focuses remaining activities on national priorities; expands and enhances the ability of states to use tolling; and eliminates earmarks.
MAP-21 also significantly expands the Transportation Infrastructure Finance and Innovation Act (TIFIA) funding. TIFIA, a U.S. Department of Transportation alternative funding mechanism, provides three types of federal credit assistance for nationally or regionally significant surface transportation projects. TIFIA is designed to fill market gaps and leverage substantial private co-investment by providing projects with supplemental or subordinate debt which is not subject to national debt ceiling challenges or sequestration. Since its inception in 1998, TIFIA has provided credit assistance to 27 projects representing approximately $36 billion in infrastructure investment. Under MAP-21, TIFIA funding increases from $122 million per year to $750 million for fiscal year 2013 and $1.0 billion in fiscal year 2014. TIFIA does not require the 20% matching funds from state departments of transportation found under MAP-21. Consequently, states can advance construction projects immediately with potentially zero outlay of current department of transportation budget dollars. TIFIA requires projects to have a revenue source to pay back the credit assistance within a 30-40 year period. Moreover, TIFIA funds may now represent up to 49% of total project costs (up from 33%). Furthermore, the TIFIA program has the ability to significantly leverage construction dollars. Each dollar of federal funds can provide up to $10 in TIFIA credit assistance, leveraging an estimated $30 billion to $50 billion in new transportation infrastructure investment after consideration of the increased proportion of TIFIA dollars to total project costs and private investment. Private investment in transportation projects funded through the TIFIA program is particularly attractive, in part due to the subordination of public investment to private. Management believes that TIFIA could provide a substantial boost for state department of transportation construction programs well above what states have currently budgeted. Additionally, TIFIA's incremental construction dollars exceed the total stimulus dollars awarded by the U.S. Department of Transportation from the American Recovery and Reinvestment Act, which expired on December 31, 2012.
Federal highway bills provide spending authorizations that represent maximum amounts. Each year, an appropriation act is passed establishing the amount that can actually be used for particular programs. The annual funding level is generally tied to receipts of highway user taxes placed in the Highway Trust Fund. Once the annual appropriation is passed, funds are distributed to each state based on formulas (apportionments) or other procedures (allocations). Apportioned and allocated funds generally must be spent on specific programs as outlined in the federal legislation. MAP-21 funding comes from the following sources: extension of the federal motor fuel taxes through September 30, 2016 and the truck excise taxes through September 30, 2017; transfer of $2.4 billion from the Liquid Underground Storage Tank Fund into the Highway Trust Fund; and shift of $18.8 billion from the General Fund to the Highway Trust Fund, including $16.6 billion to the Highway Account and $2.2 billion to the Mass Transit Account.
Further detail and up-to-date information federal highway funding programs can be found at the American Road and Transportation Builders Web site and the U.S. Department of Transportation Federal Highway Administration Web site.
For a more detailed overview of Materials and background regarding other information, please see the Corporation's filings with the Securities and Exchange Commission.