Building Costs Pinch Budgets

Rising interest rates, falling tax revenues, and construction costs that have skyrocketed are causing local and state governments to rethink projects as diverse as building new schools, repairing bridges, and roads, even constructing new levees in the Everglades, reports the New York Times. Experts say fast-growing global economies are also competing for building materials, inflating prices further.

“You don’t know what you’re going to find when you go out to bid,” said a city official in San Leandro, Calif. "Everybody's scared." Many of the projects were drawn up in rosier financial times, before the housing slump and its resultant drop in tax revenues. Soaring costs have dampened state and local economies, with at least 25 states predicting budget deficits in 2009. (More tax revenue stories.)