Donald Fry: Job-creation impact of transportation gets lawmakers’ attention

By Donald C. Fry

The recently announced willingness on the part of Governor Martin O’Malley’s administration and state legislative leaders to consider a gas tax increase to create jobs while addressing the massive backlog of unfunded transportation projects raises hope in the business community that, finally, our elected leaders may address Maryland’s escalating crisis in funding transportation infrastructure.

Most business leaders understand that mobility and a superior, reliably-funded transportation infrastructure is a core pillar for a competitive business climate.

They also understand what our state’s lawmakers are beginning to realize: that as far as state investments go, spending on capital projects – roads, bridges, transit and other transportation infrastructure – is one the most direct government investments in job creation available to lawmakers.

At an October 18 joint hearing in Annapolis of three House of Delegates committees, Lt. Governor Anthony Brown signaled strong administration support for increasing capital spending on transportation as a way to put people back to work and to begin moving long-dormant highway, transit, port and airport projects into the construction phase.

“We need to expand our investment in Maryland’s aging and overburdened infrastructure,” Brown told members of the House Appropriations, Economic Matters, and Ways and Means Committees.

Increasing revenue to the state’s stagnant transportation fund “has several undeniable benefits,” said Brown. “One, it creates private jobs. Two, it injects dollars into our economy. Three, it establishes the groundwork for long-term recovery.”

Experts estimate that 18,000 and 30,000 jobs are created by a $1 billion investment in transportation infrastructure construction, according to Brown.

Some lawmakers question the proposed focus on transportation projects, when so many of their small business constituents are hurting in this economy.

The fact is, increasing funding for transportation infrastructure would have an immediate job-creation effect in the Maryland industry sector that includes many small businesses, and impacts many more, and that has been, by far, the hardest hit due to the recession – the construction industry.

Since July 2007, six of seven major Maryland private-sector employment categories have lost jobs, but no sector’s employment decline comes close to the 58,000 jobs the construction industry has lost during the last four years, according to the federal Bureau of Labor Statistics. The second hardest-hit industry sector is the trade, transportation and utilities sector, which has lost 35,000 jobs.

The recession’s home building downturn is partly to blame, but it’s worth noting that the construction sector has borne the brunt of our state lawmakers’ reluctance during the last decade to strengthen funding for Maryland’s neglected transportation infrastructure.

There is no question that the job-creating capital spending on Maryland’s infrastructure proposed by the O’Malley administration is appropriately focused.
Few speakers at the October 18 briefing in Annapolis on transportation funding drove this point home more emphatically than James Russ, president of the Maryland Transportation Builders and Materials Association.

Since 2006, Russ has regularly polled his organization’s membership to gauge the business climate in his industry. In 2009, his polls showed that “things were getting very desperate within our industry,” he told lawmakers. “A lot of companies were in trouble. A lot of companies were already facing 40 percent unemployment.”

By 2011, Russ’ surveys showed overall 38 percent unemployment in his industry and that payroll taxes generated by the industry were down by 42 percent from 2006. “Very little work is in the pipeline, and almost none in the counties” as a result of lawmakers’ reduction of highway user revenue allocated to counties from the state’s transportation trust fund, he said.

Primary sources of business for transportation builders during the last three years have been limited to work on the Inter-County Connector and on toll roads being built by the Maryland Transportation Authority, Russ said. When major ICC construction projects wrap up later this year, “you’re going to see massive additional layoffs within our industry,” he warned.

“And those layoffs pyramid out big-time. It’s not just the general contractors,” Russ said. “It’s the subcontractors that work with them, the MBE and WBE subcontractors, the trucking folks, the material suppliers and just about every area of support and backup.”

Russ read a roster of five transportation building industry companies that have recently closed their doors, causing another 500 jobs to vanish. And results from his most recent industry survey are beginning to come in.

Remarks from company owners are “dismal,” Russ said. “They’re very concerned about saving their companies.”

This is a brutal, ground-level report about the effect of our state’s recent transportation funding policies that have resulted in more than $2 billion being cut from the Maryland’s six-year transportation capital budget.

These massive employment declines in a core Maryland industry are accompanied by record levels of congestion on our state’s highways and continuing deterioration of our transportation infrastructure.

The question is, are Maryland lawmakers poised to change those policies to begin the essential work of strengthening our transportation infrastructure and to get our state moving again?

The Governor and lawmakers appear to have begun seriously considering ways to increase transportation funding – an issue that only months ago couldn’t even make it out of committee in the General Assembly.

That’s a start.

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