How inflation hurts even at the municipal level

(The Center Square) — Inflation and higher construction costs are affecting municipal projects statewide.

Case in point: A typical parking lot project in downtown Smyrna. Like many cities, officials in the Atlanta suburb say they need more parking in the downtown area.

"We had originally planned for a parking deck that would have gone on the surface lot between the community center and the police station, but the costs since that was planned have soared to over $40,000 per space," Mayor Derek Norton said during his recent State of the City address. "You heard that right: $40,000 per space, almost double the original cost. And we as a council just could not justify that expense of taxpayer dollars."

The parking deck would have been 173 spaces, meaning it could have cost roughly $7 million using the city's $40,000 per space projection. A city spokeswoman told The Center Square that since the "deck plan was not finalized," she was "unable to confirm what a total cost would have been as there is no final contract," nor did she clarify how the city estimated the "over $40,000" price per space.

Instead, city officials moved forward with a smaller surface lot with 44 spaces. At $7,295.45 per space — less than one-fifth the estimated cost-per-space of the deck — the lot is slated to cost roughly $321,000.

"So, we pivoted," Norton added, noting that the city will have other opportunities to explore parking, especially as it advances a multi-million-dollar project that includes buying a historic church to expand its downtown.

The Jonquil City isn't alone. Costs at every level, including for state road projects, are driving up taxpayers' costs.

According to a recent analysis of the U.S. Bureau of Labor Statistics Producer Price Index by Associated Builders and Contractors, construction inputs have increased by 1.1% over the past year and 39.9% since February 2020. The analysis revealed that commodity prices have increased since February 2020, including the prices of concrete products by 38.2% and iron and steel by 44.8%.

How cities respond to those higher costs varies from one jurisdiction to another.

Consider Atlanta, where voters in May 2022 signed off on three ballot measures — two bonds and a special sales tax renewal. The measures are expected to bring in $750 million for arts, public safety, recreation and transportation projects.

Of the projected $460 million for transportation, $31.5 million is an inflation reserve fund .

It's not just cities. In announcing an additional $1.5 billion for transportation, Republican Gov. Brian Kemp said an additional $593 million for capital construction would, at least in part, help manage rising cost increases due to inflation.

"In dealing with budget concerns, some jurisdictions are scaling back projects, opting for cheaper materials, or extending timelines to spread out costs," Jess Ward, senior director of state affairs at the National Taxpayers Union, told The Center Square via email. "Others are raising taxes or issuing bonds to cover the shortfall — a mistake that will certainly haunt them and the local taxpayers who are already feeling the pinch in their own wallets."