Thursday, August 11, 2011

Road Building Hits a Speed Bump

By Alex Pearlstein, Director of Projects. 

Along with a handful of Market Street co-workers and a whole gaggle of chamber professionals from across the country, I attended the American Chamber of Commerce Executives (ACCE) annual conference in Los Angeles last week. LA is my home town, so I got to see family as well; an added benefit and a pleasure to have some more relaxing moments after a couple days of information filled workshops and forums.

One of the sessions that caught my eye was a panel on the future of infrastructure spending and development – principally of the road, highway and transit variety. The panelists included an expert from the Brookings Institution and public policy staff from the Greater Des Moines Partnership and Business Council of Fairfield County (Connecticut). The session was a sobering reminder that we can barely afford to maintain our transportation infrastructure, not to mention build new capacity.

The problem is that the U.S. Congress eliminated so-called “earmarks” from future budgets. Considered a dirty word by many experts opposed to profligate federal spending, earmarks nevertheless were a critical and effective way for communities to fund local infrastructure projects. Hence the annual pilgrimage of local and regional stakeholders to Washington, D.C. to lobby their members of Congress for infrastructure appropriations. With earmarks eliminated, some economic development organizations may not even need to take their D.C. “fly-ins” anymore. The new funding paradigm is entirely formula-based and “de-politicized.” The key takeaways from panelists were that localities and regions will need to be much more creative, aggressive, and self-sustaining in order to maintain, enhance, and construct roads, highways, and transit.

The “new normal” in D.C. means that cities, counties, and regions must:

  • Change their approaches to funding new projects.
  • Identify and aggressively pursue federal grant opportunities.
  • Perhaps change their focus from lobbying U.S. congressmen to working more closely with state and regional officials at DOTs and MPOs.
  • Capture opportunities to leverage special purpose local option sales taxes to fill transportation-funding coffers. Georgia’s version (the tongue-twisting acronym” SPLOST”) has funded billions in regional transportation infrastructure. The panelist from Connecticut lamented that his state doesn’t even have enabling legislation to hold a local transportation tax vote!
  • Consider public-private partnerships and lease-back agreements with for-profit developers.
  • And many more!

The tightening of the federal transportation spigot is the latest sign that communities cannot look solely to their statehouse or the U.S. government to slake their thirst for growth-supportive infrastructure financing. Like so many other projects that boost local competitiveness – new arenas, bike paths, riverwalks, arts and culture projects, new parks, etc., etc. – local governments will have to rely on the philanthropy of their private sectors, foundations, philanthropists, institutions, and the willingness of voters to tax themselves to increase their supply of new, cool stuff. Some places have been very successful at this tactic, even before state and federal budget meltdowns. Others will have to get with the program or else risk getting passed on the (ALERT: cheesy metaphor approaching!) “superhighway to success.”