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Transportation Money Not Invested is Money Lost

April 11, 2011 By Conrad deFiebre, Transportation Fellow

As the Minnesota Legislature and Gov. Mark Dayton wrestle with a $5 billion projected budget shortfall for state government over the next two years, it’s time to emphasize why building and maintaining basic public infrastructure, mainly for transportation, shouldn’t be on the chopping block.

It’s pretty simple, really: Unlike some other forms of government spending, infrastructure work produces broad economic gains in the short and (very) long runs while directly supporting private sector businesses. But don’t take my word for it. Here’s No. 7 on the St. Paul Area Chamber of Commerce’s guiding principles adopted in 2009:

Infrastructure. State of the art infrastructure is essential to the conduct of business. Business depends upon well-maintained roads, transit facilities, sewers, water supplies, airports and waterways. High quality air, road and rail transportation and energy, information and telecommunication services are also essential to the conduct of business.

Putting their muscle where their mouth is, St. Paul Chamber leaders strongly support a wide menu of Twin Cities transit initiatives as well as faster, more convenient passenger rail service to Chicago.

“For our employers, transit does not represent a liberal agenda of social engineering,” Matt Kramer, the former Pawlenty economic development commissioner who now heads the St. Paul Chamber, told the Star Tribune. “It represents how employees go to work, and your ability to hire and retain talent … It’s an extraordinarily simple argument for the business community to get their heads around.”

The same goes for roads and bridges, although Kramer noted that “there’s this notion that transit does not fund itself, and this enormous fallacy that somehow roads do ... When you take transit out of the mix, you impact profitability, you impact hiring, you impact delivery, you impact competing against other markets.”

Kramer and Todd Klingel of the Minneapolis Regional Chamber of Commerce sounded these themes in response to conservative moves to slash state transit funding. But their arguments are equally applicable to all the basic infrastructure that fuels business and prosperity and stands to be short-changed in this fiscal and political environment.

Case in point: The divide between progressives and conservatives over whether to borrow more to build and maintain infrastructure in this period of historically low interest rates, surprisingly low labor and materials costs, plus high unemployment in the construction sector.

Conservatives say we can’t afford any more debt. Progressives know that we incur debt whether or not we borrow to keep infrastructure fueling the economy for years to come.

“You run a deficit both when you borrow money and when you defer maintenance that needs to be done,” Larry Summers, former chairman of the National Economic Council, told the Washington Post. “Either way, you’re imposing costs on future generations.”

Minnesota took the maintenance-deferral route for much of the past decade—while also borrowing hundreds of millions of dollars for new freeway lanes—bringing official projections of tripling highway miles in poor condition in the near future. The state has backed away now from that dead-end approach, notably with a nation-leading program of bridge repair and replacement enacted over former Gov. Tim Pawlenty’s veto.

Despite budget pressures, this is no time for backsliding. According to the latest U.S. Census figures, transportation design, construction and maintenance employ more than 30,000 Minnesotans directly (and 30,000 more indirectly) while nearly 1.6 million jobs in tourism, retail, farming and manufacturing depend on the state’s transportation infrastructure.

Minnesota has ample borrowing capacity to respond to spring floods and keep up recent good work on all modes of transportation. It’s an opportunity our leaders shouldn’t let pass us by.

Photo credit: Enrico Fuente, creative commons
 

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