Education construction slows

There has been a surge in construction spending for school buildings in 2007, thanks to above-average growth in state and local government tax collections. In 2008, however, spending is expected to slow to a growth rate of 8% following a pronounced slowdown in the growth of tax receipts, which began earlier this year. Spending in 2007 is currently up 17%; in 2006, spending was up 8.4%.

The recent spending surge has been primarily for higher education, especially classroom space, with the balance accounted for by elementary schools where construction activity had been steady for several years. For 2007, spending for middle and high schools has been steady, and more growth is expected. Education construction starts are up 15% year-to-date after an 8% increase in 2006. June/July starts were 22% higher than in the same months in 2006.

There are regional differences in construction trends driven by differences in state and local government tax receipts. First quarter tax receipts declined slightly in California; tax receipts are up 10% in Massachusetts and New York; and tax receipts are up slightly in the economically troubled Midwest.