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Conservatives for Transit

December 29, 2010 By Conrad deFiebre, Transportation Fellow

“There has not been a time in history where we would be getting a better deal” on transportation improvements, the governor said. “It’s important to get projects built now – not in three or four or ten years.”

Low interest rates, the state’s AAA bond rating and money available from public-private partnerships and the American Recovery and Reinvestment Act mean the state should commit money now to major highway and transit projects, he added.

“It will make a big difference,” he said. “This will have a positive effect on [our] infrastructure and economy. For every $100 million spent on highway maintenance, it is estimated 3,000 jobs are created or supported.”

At Minnesota 2020, we concur. But who is this mystery governor? It’s not Minnesota’s Mark Dayton, who would be well advised to propose a similar initiative, but won’t take office until next week. The quotes are from Gov. Bob McDonnell, Republican of Virginia. So far, at least, he hasn’t been drummed out of the GOP for advocating more than $3 billion in public infrastructure spending.

Once upon a time, raising revenue for transportation work wasn’t a partisan issue. Both sides of the aisle understood that these investments boost access to jobs and general prosperity. Even Ronald Reagan hiked the federal fuel tax to keep our infrastructure world class in the 1980s.

How times change! Now we have a lame-duck governor who has claimed – despite all evidence to the contrary – that increased highway user fees to maintain and improve the system would hurt the Minnesota economy. And just next door, the Wisconsin governor-elect said no thanks to an $810 million federal grant for a fast passenger train project.

What was he thinking? Rail projects typically generate more jobs than road work, so Republican Gov.-elect Scott Walker just kissed at least 24,000 jobs good-bye in a state where unemployment is running 7.6 percent. In response, train-car manufacturer Talgo Inc. announced that it will close its Milwaukee plant, idling at least 65 more workers.

“We can’t stay and manufacture in Milwaukee without the high-speed rail to Madison,” Talgo’s spokeswoman said, adding that canceling the project sends a terrible message to businesses considering locating in Wisconsin. “We were encouraged by the business community. We are really discouraged by what has happened.”

Walker called his decision a “victory” for Wisconsin over “runaway government spending.”

But folks in Madison aren’t cheering. They’re losing out on planned private investments in hospitality and retail to serve a half-million passengers a year at the downtown train station, as well as quadrupled speed for freight trains from Milwaukee that can’t top 10 m.p.h. on decrepit old tracks. And now they’re worried that a fast rail connection from the Midwest’s Chicago hub to Minnesota will bypass Wisconsin completely, routed instead through Iowa and Illinois.

“Imagine not being on the interstate,” Madison Mayor Dave Cieslewicz told the Capital Times. “Imagine it was 1950 and connecting Milwaukee and Madison and Eau Claire and saying ‘We don’t want to be part of that.’ Imagine how we would have been left out.”

On the subject of highways, Wisconsin officials just recommended scratching $300 million in road projects over two years because of declining user fee collections from motorists. The state ended inflation indexing of its gasoline tax in 2005 while also draining $1.3 billion of highway revenues to patch overall budget deficits. (Thanks to the Minnesota Constitution, which reserves gas taxes for “highway purposes,” that can’t happen here.)

Back in Virginia, Gov. McDonnell has authorized billions in bonding and reserve spending to install congestion toll lanes near Washington, widen Interstate Hwy. 66 and complete the Metrorail to Dulles International Airport. In just the first half of 2011, Virginia plans $1.1 billion in transportation construction and maintenance. McDonnell also hopes to raise transportation revenue from commercial concessions at roadside rest stops and toll booths on I-95 near the North Carolina border. Both those proposals require federal approval. We think it should be granted.

McDonnell’s rationale for investing now in infrastructure mirrors arguments made recently by President Obama as well as Minnesota 2020. In addition to low bond rates, contractor bids have been coming in far below engineers’ estimates, no surprise given that 18.8 percent national construction unemployment has cost 2.1 million workers their jobs since 2006.

The latest proof of contractors’ sharp pencils: The Central Corridor light rail project in the Twin Cities has rung up $34 million in cost underruns so far. Minnesota also has saved tens of millions on road and bridge bids. Expect more bargains like that as the American Road & Transportation Builders Association projects a $3.7 billion drop in highway and bridge work nationwide next year from 2010.

Like Virginia, Minnesota boasts a AAA bond rating that draws the lowest possible interest rates – 3 percent or less on the latest state issues. And the administration of Gov. Tim Pawlenty reports that the state’s capacity for prudent new capital investment borrowing is at least $1.1 billion.

Our new state leaders will try to balance a $6 billion-plus projected general fund budget deficit for 2012-13, most likely by slashing state employment, contracts and aid to education and local governments. That almost surely will put more people out of work.

But much-needed investments at historically favorable terms can counterbalance operational cuts with good jobs and 21st century infrastructure that will bolster our economy for years to come.

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  • Bernice Vetsch says:

    January 5, 2011 at 5:03 am

    I find it incredible that, in the 21st Century, a person can be elected governor of Wisconsin (or any state) who thinks being part of a federally-supported interstate/multistate project is an “earmark” to be avoided lest equally uninformed voters be upset.