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THE STATES AND LOCALITIES
Falling Bridges
As aging infrastructure becomes harder to ignore, state and local leaders search for new ways to finance solutions
You need not look far to be reminded of the nation's ongoing infrastructure problem.
A sinkhole large enough to swallow a car opened in the middle of Interstate 70 in Maryland this month; if an alert state trooper hadn't discovered the problem as it was developing, that's very well what would have happened. In March, two miles of I-95 in Philadelphia had to be closed for two days to repair a corroded support pillar. The commuter backup was a nightmare, but at least no one was killed. Thirteen people weren't so lucky when an I-35 bridge collapsed in Minneapolis last August.
It isn't just roads. In New York's borough of Queens, 100,000 people went without electricity for nine days in the summer of 2006 in an outage reminiscent of the record blackout three years earlier that affected 50 million people. A two-foot steam pipe installed more than 80 years ago exploded a year later under a sidewalk in midtown Manhattan, killing one person and injuring a score more.
It goes on: failing levees, record airline flight delays, deteriorating rail lines, water and sewage treatment facilities that cannot keep up. It's clear to most everyone that we are in trouble, but as with so many pressing issues, the problems persist and serve as a metaphor for our paralyzed politics. And as with so many issues, states, counties and cities are being forced to shoulder more of the load.
A nonpartisan coalition of 15 governors, plus New York Mayor Mike Bloomberg, has found federal infrastructure spending declining as a share of non-defense expenditures, from around 10 percent before 1966 to 4 percent or less since the 1990s. Now threequarters of all infrastructure spending is by states and localities. The group's co-chairman, Gov. Ed Rendell, said that while his state of Pennsylvania has increased spending significantly in the past five years, the "country can't do it without federal leadership."
Assuming no significant increase in federal aid, state and local leaders face four main options: raise taxes and fees, borrow in the bond market, raise tolls significantly or look to the business community for capital and know-how. To some extent, political leaders are trying all of them.
California is the champion borrower, since voters in 2006 approved a plan to take on nearly $40 billion in new debt for roads and levees. This spring, the Virginia Assembly voted to borrow $1.5 billion to fund construction projects and will return in June to consider various tax increases to pay for more work. But borrowing heavily in the municipal bond market has become more problematic in the wake of the credit crisis. And the faltering gasoline tax is almost impossible to increase at a time of soaring prices.
Taking a Heavy Toll
Increased tolling seems to be the solution of choice for many states. At peak times, crossing the nation's busiest toll bridge, the George Washington connecting New Jersey and New York, costs cars $8, up from $5, and trucks $35, up from $25. New tolls are being planned on interstates across the country, particularly in the Northeast and Mid-Atlantic.
Some governors have turned to this option after being frustrated in attempts to try the fourth alternative: leasing public assets to private sector entities. But Rendell is about to announce the highest bidder for operating the Pennsylvania Turnpike and wants the legislature to approve the plan by next month. Gov. Rick Perry recently pledged to keep pushing a recalcitrant Texas Legislature to approve his proposal for private toll roads. And it's the solution of choice at the U.S. Transportation Department, at least through this year.
Addressing the problem isn't only a question of money; it's also a matter of how effectively it can be done. In a widely publicized report on global infrastructure, released just weeks before the Manhattan steam pipe explosion, the consulting firm of Booz Allen Hamilton fixed the price in the next 25 years for modernizing and expanding the interrelated water, electrical and transportation systems of cities in the United States and Canada at $6.5 trillion — and $40 trillion for the cities of the world. The key word here is "interrelated," the report said, because of "a controversial truth: transportation, energy and water infrastructures are so interdependent that they cannot be effectively addressed separately from one another."
The public-vs.-private debate on who can best build and operate infrastructure of any kind is a false choice, the report said, since both sectors can mess it up. What's needed is a public-private relationship, in the report's words, where government exerts its influence in the conceptualization and design of projects, "with a firm but lighthanded oversight role that emphasizes goals instead of means." The planning process needs to be inclusive and transparent. Business should lead in "pricing, financing and ownership" in part because government, for various reasons involving financing and incentives, "makes a poor owner over the long term."
Clearly, we will be moving to some alternative form of financing infrastructure, perhaps sooner than later, because old methods are no longer adequate. Ideas are bouncing around in Congress, but in the end it may be experimentation out in the country that leads the way.