Inflation may limit what city of Dayton can accomplish on projects

Dayton may have to scale back some of its planned investments due to severe inflation and soaring costs, likely including some projects that leverage the city’s $138 million in federal rescue funds, city officials said.

“The inflationary costs are significant: We have double-digit cost (increases) happening with supplies and materials and construction projects,” said Dayton City Manager Shelley Dickstein. “In fact, there are some communities in the area who have delayed all capital projects because it is just crazy.”

Dayton, like most cities across the country, is seeing significant price increases for goods and materials that are needed for public service delivery, city budget officials say.

The city has proposed spending nearly $16 million of its rescue funds on tearing down more than 1,000 blighted and rundown properties on its nuisance list.

But due to higher costs, Dickstein said the city probably will need to use money from another funding source to reach that demolition goal.

U.S. inflation increased 8.3% in April, compared to a year earlier, and though the rate of inflation slowed from March (+8.5%), it remains near a 40-year high, according to data from the U.S. Bureau of Labor Statistics.

Year-over-year inflation was 8.1% in April and 8.5% in March for the Midwestern states of Ohio, Illinois, Indiana, Michigan and Wisconsin, according to the bureau.

Dayton’s spending on contracts and materials has increased more than 12% through the end of April, said Jeanette Ghand, senior management analyst with Dayton’s department of procurement and management.

The city has spent about $12.3 million in these areas, $1.3 million more than during the same time frame last year.

“These trends in the contracts and materials are kind of volatile year to year, but we’ve really been seeing increases due to the inflationary increases in the market, especially gas and diesel fuel,” she said.

Road reconstruction and resurfacing project costs are up 15% to 30%, chemical costs have doubled and electric costs have risen 21%, while natural gas costs have jumped 46%, said Monica Jones, Dayton’s manager of management and budget.

Some projects the city recently bid out are coming in at twice the original anticipated estimate, officials said, and the city, like many communities across the nation, is dealing with supply-chain challenges, project delays and labor capacity issues.

Increased costs mean the city’s $138 million in federal rescue funds may not stretch as far as officials hoped.

“We know it’s probably going to — or it is definitely going to — impact some of the Dayton Recovery Plan projects,” Jones said. “We’re asking the departments and the project leads to really go back and refine and sharpen their pencils on those estimates and get updated numbers for our planning purposes.”

The rescue funds represent the largest federal grant in the city’s history, some officials say, and the city’s plans for the money include investments to improve neighborhoods, city services and facilities, as well as support for “catalytic” economic development projects, the small business community and minority businesses.

“We have certain goals and aspirations with the Dayton Recovery Plan, and we are trying to assess, can we do all we thought we were going to do,” she said.

Dickstein said the city’s elected leaders will be called on to help determine spending priorities in light of current and ongoing economic challenges.