Nothing stresses budgets like building and maintaining the roads, bridges, pipes and wires we all depend on -- and yet take for granted -- in going about our daily lives.
Everyone has a personal pothole -- that annoying cavity in the road you invariably hit each morning, coffee in hand, as you try to get to work. And if it’s not a pothole, it’s something similar -- the crumbling bridge that is slightly disconcerting as you pass over or the burst water pipe that floods the street.
As a long-term public servant, I can attest that nothing inspires phone calls and mail overflow like problems with public infrastructure. I would often hear frustrated citizens say, “This is what my taxes pay for; just fix it!” However, at the same time, nothing stresses budgets like building and maintaining the roads, bridges, pipes and wires we all depend on -- and yet take for granted -- in going about our daily lives.
It’s necessary to point out that these prohibitive costs have already spurred dramatic innovation in public infrastructure. It’s truly a time of infrastructure transformation. Governments are employing new methods of building and repairing roads and bridges. Plastic pipes are replacing crumbling underground iron pipes, street lights and traffic signals are more energy efficient with the help of long-lasting LEDs, and many miles of ancient copper wires are giving way to glass fiber and microwaves.
However, while new methods and materials have lowered costs, infrastructure is still enormously expensive -- and every dollar that goes to design, finance, build and maintain transportation, water and other systems is one less dollar to address critical and recurring needs such as hunger and homelessness.
The cost and resulting budgetary deficit in paying for infrastructure is a worldwide problem. A March 2014 article in The Economist, "Infrastructure Financing - A Long and Winding Road," quotes a McKinsey study estimating the global cost to build and maintain necessary infrastructure through the year 2030 at $57 trillion. The report further states that current expenditures for such purposes are estimated at $2.7 trillion annually -- but $3.7 trillion is needed.
There are various mathematical exercises and estimates that attempt to distribute that worldwide cost figure among nations and localities, but in every case of which I am aware there is no denying there is a major unmet need for improvements in infrastructure at every level of government and in practically every jurisdiction.
Just last week, 60 Minutes aired a special report: "Falling Apart: America's neglected infrastructure.” Veteran journalist Steve Kroft quotes former Secretary of Transportation Ray LaHood, who currently heads Building America's Future -- an advocacy group comprising current and former public officials. Says LaHood, "You could go to any major city in America and see roads and bridges and infrastructure that need to be fixed today. … Our infrastructure is on life support right now."
An October 2011 Brookings paper pointedly addresses problems in how states, counties and municipalities budget and plan for this most basic public responsibility:
"The decision making process is perverted by an excessive focus on efforts to obtain free federal funding of infrastructure projects whose benefits are largely local. Citizens and their representatives often favor expansion of the infrastructure, but they resist paying for their use of it and fail to undertake the required maintenance in a timely fashion."
In other words, we want it but we don't want to pay for it. More specifically, if it must be paid for, then let the federal government pay for it. (i.e., "That's what my taxes pay for. Just fix it!") As local governments, how do we respond to this issue?
The price tag of roads and highways represents a significant part of national costs for adequate infrastructure. Earlier this year, a bipartisan measure sought to shore up and stabilize the Highway Trust Fund by raising the fuel tax and then indexing it based on inflation so that, as the cost of living rises, the tax would automatically increase with it -- thereby relieving us of the theatrical anti-tax posturing and pontificating that occurs every time we must make hard financial decisions. Even though a few fearless and responsible senators and representatives supported it, the effort preceded the most recent elections, and, accordingly, proponents could not gather the necessary Congressional majorities to push it through.
In an effort to reduce costs, we have also employed a variety of creative financing measures: Tax increment financing, tolls and public/private partnerships are three examples, but the recent Great Recession has put a damper on the broad-scale use of some of the more exotic types of new or non-traditional means of finance.
A presidential memorandum in July 2014, “Expanding Public-Private Collaboration on Infrastructure Development and Financing,” established a working group composed of representatives from various federal departments and agencies. The working group was instructed to act within 120 days to establish a center of innovative transportation finance within the Department of Transportation. The memo charges the officials to develop and make available case studies and best practices to aid those wrestling with the chronic and debilitating need for improved infrastructure.
More recently, in September 2014, the U.S. Treasury issued a report entitled, "Expanding Our Nation's Infrastructure through Innovative Financing,” which stated that, on Nov. 14, 2014, the working group would deliver recommendations to the president on how to promote awareness and understanding of innovative financing at the state and local level, and increase effective public/private collaboration in infrastructure development. The working group was also to provide an action plan for the coming two years.
Sources within the Treasury Department and Department of Transportation confirm the report from the working group has been received and indicate the recommendations will be studied internally and used to fashion policies or programs to be announced later.
While it is absolutely true that the "trickle down" theory works in terms of federal funds trickling down to states and localities, it is also true that ideas and instructions regarding what is permissible and recommended also trickle down to those closest to the problem who must make hard decisions on budgetary matters. As we wait for these ideas to be developed, we must also continue to employ our own innovation at the local level.
This blog was originally published by Governing.
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