We Need to Act Now to Fund Infrastructure Spending
Infrastructure rose to the top as the most important issue in the Greater North Dakota Chamber April 2018 membership survey, and it’s no surprise. Infrastructure serves communities across the country with systems that provide transportation, communication, water, sanitation and energy services. It is the life blood of our economy and it is the one issue both political parties support as a high priority for funding.
But the current assessment of our national and state infrastructure points out significant deficiencies. According to the American Society of Civil Engineers’ 2017 Infrastructure Report Card, our nation’s infrastructure earned a “D+”. North Dakota alone faces significant infrastructure challenges. Driving on deficient North Dakota roads cost each driver an estimated $400 per year, while drinking-water needs are approximately $449.7 million. Even our schools are suffering with an estimated capital expenditure gap of $162 million. Other key facts regarding North Dakota’s infrastructure according to the Report Card include:
- 661 (15.00 percent) of the 4,400 bridges are structurally deficient
- 9 percent of the 87,128 miles of public roads are in poor condition
- 85 percent of the state regulated dams have an Emergency Action Plan
- 48 dams are deemed high-hazard
- $219 million in wastewater infrastructure maintenance and upgrades is needed over the next 20 years
The importance of infrastructure is evident in our great state of North Dakota. We have a large geography and numerous products we need to transport into, within and out of our state. TrueNorth Steel alone averages more than 5,000 loads of inbound and outbound truck freight across our footprint per year and our products play an important role in our infrastructure. We transport raw steel from steel mills and service centers into our facilities. We then fabricate the steel into structures for commercial and industrial buildings, bridges and storage tanks, as well as corrugated metal pipe for drainage products.
North Dakota’s deteriorating infrastructure negatively impacts manufacturers’ and our state’s ability to compete in an increasingly global marketplace. Success in the current economic environment requires serious, sustained infrastructure investment leadership at all levels of government. Delaying these investments only escalates the costs and risks of an aging infrastructure system, an option that the country, North Dakota, and citizens can no longer afford.
Lack of Funding
Since the 1990s, highway infrastructure funding has remained stagnant. According to Transportation for America, gasoline and diesel fuel excise tax are the main sources of funding for highway infrastructure and they have not been raised since 1993 or indexed to inflation. Since, the inflation adjustment increased by 69.4 percent as of 2017.
With the fuel efficiency of cars increasing, the fixed-rate fuel taxes have declined. To offset this loss of purchasing power, the National Surface Transportation Infrastructure Financing Commission issued a report in February 2009 recommending a 10 cent increase in the gasoline tax, a 15 cent increase in diesel tax, and a reform tying both tax rates to inflation. None of these efforts have resulted in increased funding.
Budget Formula Changes
According to Brian Raff, American Institute of Steel Construction, the funding formula has put 80 percent of the funding responsibility on state and local governments and private investors, a 60 percent increase and a share that was once the federal government’s. Where will local governments and investors these extra funds? That question is even harder to answer when considering the Department of Transportation’s 20 percent reduction in funding and the removal of federal requirements such as Buy American.
The Impact of Adequate Funding
Investment in infrastructure has a tremendous impact on our economy and improves our ability to compete in the global marketplace. Statistics representing the economic impact of infrastructure investment, based on a 2014 study produced by IHS Global for the Transportation Construction Coalition, include:
- Every billion dollars in federal investment spent on infrastructure supports 13,000 American jobs.
- 11 percent of highway bridges in the U.S. are classified as structurally deficient.
- For every $1 communities invest in public transportation, approximately $4 is generated in economic returns.
- Infrastructure spending has an amplified impact on the economy. It leads to overall productivity enhancements and creates jobs.
- Every $1 in federal highway and mass transit investment returns between $1.80 – $2.00 in goods and services produced.
- Current federal transportation spending contributes on average $410 to real income per household each year.
- Current federal transportation spending supports an average of 614,000 employees each year in all sectors of the economy. It catalyzes dynamic effects of greater productivity, more efficient delivery of goods and services, and higher wages and salaries.
- For every 3 construction jobs created, 5 jobs are created in other sectors of the economy.
- Current federal transportation spending generates $31 billion in federal personal tax receipts per year and $6 billion in federal corporate tax receipts per year on average.
- Current federal spending also generates higher revenue for state and local budgets, which are, on average, $21.7 billion higher each year than they would be without the Federal Highway Program.
- 5 percent annual increases in federal spending would create:
- Between 78,000 and 122,000 new jobs by 2019 (includes direct, indirect, and induced jobs).
- An additional $40 in real household income each year.
- An additional $9.6 billion in real value to the US economy by 2019.
- On average an additional $4.9 billion per year in federal, state and local government revenue, which covers more than 50 percent of the annual spending needed to cover the backlog in highway and bridge capital expenditures.
These examples illustrate the economic impacts infrastructure investments have on our economy. History proves that investment in infrastructure not only improves the quality of life for the general public, it has a positive impact on driving our economy and allows us to compete in a global marketplace.
Together, we need to develop solutions to fund infrastructure, including investing in resources from American companies. The risk to our economy and quality of life is too great to ignore and is why the issue has been elevated as a top priority by the North Dakota Greater Chamber.