By Donald C. Fry
Maryland isn’t the only state struggling with an infrastructure funding crisis, but some states are opting to address infrastructure issues more aggressively than others, according to a May 9 report issued by the Urban Land Institute and Ernst & Young LLP.
The report, “Infrastructure 2012,” notes that stalled federal funding – the traditional driver of state programs for transportation facilities and other capital projects – has caused many states across the nation to seek their own infrastructure funding approaches and solutions.
The two-year federal transportation funding authorization passed by Congress last week provides states with a measure of stabilized federal funding. That’s a good thing. But it’s not the bold, visionary transportation funding measure that many advocates had hoped for – one that would catapult states toward accomplishing major capital projects that are essential foundations for future economic growth.
Meanwhile, Maryland has dabbled, but not addressed its crisis in transportation infrastructure in a substantial way.
Maryland is among states that have turned to public-private partnerships – an increasingly popular strategy in the nation’s state capitals. For example, Maryland’s public-private partnership with Ports America Chesapeake has enabled the Port of Baltimore to develop a 50-foot berth at Seagirt Marine Terminal and to make almost $500 million in other capital improvements there to position the port to handle substantial new container business.
Maryland is also among states that have increased user fees and tolls to fund transportation needs. But Maryland has not moved to increase revenue to its transportation fund by anywhere near the $500 million to $800 million annually that would enable it to begin adequately addressing its backlog of billions in road and transit projects that now await construction funding.
A number of other states have increased sales taxes or gas taxes, enacted bond-issues and ballot measures taking projects directly to public referendum, and deployed other capital-raising strategies to generate funding needed to advance major infrastructure projects.
More than a dozen states have raised fuel taxes over the past year, and in many localities people are voting to raise taxes for infrastructure investment. From 2008-11, local ballots allocating funds to transit capital or operations had a 73 percent success rate, according to the Urban Land Institute report.
Local case studies highlighted in the report include:
• North Carolina’s Research Triangle, which is raising local funds for a planned regional transit system spanning three counties. One of the counties – Durham – passed a ballot referendum to fund its portion of the system. The other two must also pass similar ballot questions.
• Oklahoma City, where civic projects have been bundled into packages put before voters.
• Los Angeles County, where two-thirds of voters in 2008 approved Measure R, committing $40 billion over 30 years to traffic relief and transportation upgrades throughout the county.
The Urban Land Institute report also notes that the global recession has resulted in a decline in government infrastructure funding for major projects in Europe and Asia, as well as the United States.
After “leapfrogging” the United States on high-speed rail and other signature transportation projects, Europe is retreating on major capital improvements.
Governments here and abroad will find some success by doing more with less, but “the overall state of the nation’s infrastructure will deteriorate unless the political will and funding to make the needed investments materializes,” the report concludes.
Closer to home, there is a significant development not mentioned by the Urban Land Institute. Virginia lawmakers last year passed a legislative package to spend nearly $4 billion on transportation infrastructure over three years on more than 900 projects without raising taxes.
The plan will be funded by $1.8 billion in state bonds, $1.1 billion in GARVEE bonds – which are paid back with future federal revenue the state will receive – and a newly-created state transportation infrastructure bank that was initially funded with state surplus money.
Among other things, the infrastructure bank is intended as a vehicle to engage private investment participation in transportation projects. It will make low-interest loans to local jurisdictions, transportation authorities and private-sector partners for transportation projects. The state’s goal is to put $1 billion in the infrastructure bank by 2014.
Virginia’s plan is not perfect, nor is it immune to criticism as potentially “too good to be true” or, as some detractors have argued, that such creative state transportation funding initiatives by definition infringe on local rights.
But at least Virginia has a plan. Maryland doesn’t. And the prospect of Maryland lawmakers agreeing on an adequate plan for funding transportation infrastructure anytime soon appears slim at best.
The broad challenge faced by government at the national and state levels is basic, according to Urban Land Institute CEO Patrick Phillips and Ernst and Young Global Real Estate Leader Howard Roth. No one in government “seems to be willing to have the hard conversation” about where funding to refurbish and expand infrastructure will come from, they note.
“In the new global economy, challenges abound,” they write. “But the choices we make about infrastructure today will reverberate far into the future. This is why leadership is such an integral part of the infrastructure story.”