Forging the links between transportation and economic development
By Douglas Rooks
From the perspective of transportation and infrastructure support, there are at least two ways to view the 2007 legislative session. On a positive note, lawmakers approved and voters resoundingly ratified on June 12 the largest transportation bond issue ever considered in Maine. The $112.9 million bond was favored by nearly 72 percent of the voters, continuing an historic pattern where highway and transportation bonds are regularly approved by at least 2-to-1 margins. Voters will consider another, smaller transportation bond issue next year.
The lion’s share of this year’s bond – $100 million – went to the depleted capital budget for highways and bridges. MaineDOT cancelled over $200 million worth of projects in the past two years, and while the department intends to spend $840 million over the next biennium, it has also identified another $375 million in unmet needs that will not be funded. The regular Highway Fund budget, however, showed a disturbing trend. As approved by the legislature, revenues from fuel taxes and other sources are expected to decline, leaving the fiscal year 2008-09 budget with 1.5 percent less, in unadjusted dollars, than is projected to be spent in the current biennium.
The reduction continues a long-term drop in the proportion of state spending going to transportation. From 26 percent of state spending as recently as the 1970s, transportation would account for less than 11 percent in the next biennium, another one percent drop from the current budget. MaineDOT projects even steeper cuts in its own budget, 2.7 percent, and a precipitous drop in highway and bridge capital improvements – down $28.5 million, or nearly 30 percent, from the last biennium. Lauren Corey, MBTA’s newly elected president, is acutely aware of the challenges provided by the deferred work on the state’s transportation networks, and the need to catch up to current needs. Only then, she said, can the state truly start planning the necessary investments to connect Maine’s transportation needs with its economic wellbeing.
“Transportation is the underpinning of the economy,” she said. “Without good roads, rail connections, and port facilities, the state can’t grow,” she said. Many experts believe that the state only has to look to the Maine Turnpike Authority’s long-term strategy of steady investment – through projects like ongoing maintenance, the Widening, new interchanges and modernization of its service plazas – to see the positive economic impacts transportation can have. MBTA’s Corey is pleased that LD 1790, “An Act to Secure Maine’s Transportation Future” received strong votes in the Maine House and- Senate, indicating that there is a move toward a long-term investment strategy on the state level. Still, she expressed strong concern that the lion’s share of the funding was removed from the bill. [See story on page 16].
Corey said that the dependence on transportation of such traditional industries as papermaking and wood products is well established, but newer industries like tourism are no less connected to the movement of goods and people. “We need to get more businesses involved in partnerships,” she said. “We have to make the case in an unmistakable way.”
Fortunately, the connection between good transportation and a strong economy is becoming increasingly well established. Laurie Lachance, president of the Maine Development Foundation and a former state economist, recently prepared for MBTA a white paper on “The Importance of Transportation Investment: 30 Key Economic Facts.”
Lachance’s paper reviews some startling deficits in Maine’s highway and bridge system, including the fact that 31 percent of all major roads are in “poor or mediocre” condition, and that 22 percent of the state system is seasonally posted, shutting down economic activity on 1,854 miles of highway.
By quantifying such apparently non-economic variables as safety (one-third of all crashes are related to poor road design), emergency response times (fire trucks must arrive within 20 minutes to save a building) and vehicle maintenance (immense wear and tear from frost heaves and potholes), the report makes a powerful case for the financial havoc caused by under-investment ($1.1 billion and 200 lives are lost every year in motor vehicle accidents).
Positive economic facts include the number of jobs provided by transportation in Maine (15,000, or eight percent of the workforce), 20 percent of household budgets spent on transportation ($10,500 per household), and a high dependence on roads and bridges for both freight (85 percent) and passengers (95 percent). Transportation is second only to housing as a proportion of household spending. Since writing the report, the Maine Economic Growth Council has integrated transportation into its annual Measures of Growth report as one of 26 indicators of economic health (pavement quality earned a “red flag” this year.)
Discussing the report recently in an interview, Lachance said she was surprised at how pervasive the economic effects of transportation really are. When the state makes a significant investment in transportation infrastructure – like the recent $7.1 million bypass constructed jointly by the Maine Turnpike Authority and MaineDOT in Gray – there are jobs and good salaries. Even beyond the economy, “It touches every aspect of life in Maine. At the level of business, family life, individual freedom and mobility and maintaining our environment, it’s a huge concern,” she said.
When businesses are considering expanding or relocating, access to adequate transportation runs second only to availability of skilled labor as a decision-making factor, she said – and well ahead of taxes, zoning, and energy costs. Despite the current challenge facing Maine’s transportation networks, she believes both the public and policymakers will respond. “Not doing it is just not a viable option,” she said. “When you wait too long to make improvements, there’s a huge economic toll.”
While transportation investment may not seem to be as glamorous as research and development bond issues, she said that it is equally important. She offers an analogy with the K-12 educational system and higher education to make the point: “Transportation is a foundational investment. If we don’t have it, the other investments aren’t going to work. Just as we wouldn’t abandon our schools to shift funding to higher education, we can’t neglect transportation. It’s way too important.”
Some of the business case studies MDF has done underline these points. Jackson Labs, a renowned leader of Maine’s high-tech sector, has been a major beneficiary of state R&D investment. But the Labs are equally dependent on quick, reliable transportation. “They have to truck and fly their mice around the world on a moment’s notice,” she said. “And they can’t get them there if they can’t get off the island.”
Powerful confirmation of the economic impact of transportation in Maine is being offered this summer through a combined study undertaken by the University of Southern Maine’s Center for Business and Economic Research and MaineDOT that is expected to be released later this year.
Professor Charles Colgan, like Lachance a former state economist, says the new study quantifies the interdependence of the Maine economy and transportation in a more precise way than ever before. The new report, “Changes in the Maine Economy from Strategic Investments in the Transportation System,” takes as its premise a planned infusion of $1.8 billion in new investment over a 23-year period to come up with some startling findings.
While the MaineDOT has yet to release the final report, Colgan says that they have found – not surprisingly – a notable connection between a steady, closely regulated, longterm transportation investment program and job creation in the construction sector. Colgan said the study combines three different sophisticated computer modeling systems to yield the overall return on investment from such transportation spending. The result is a “very favorable return on investment,” according to Colgan. Strictly speaking, “that’s not a cost-benefit analysis, weighing pros and cons,” Colgan said. But by focusing on the overall economic gain, it shows what could be accomplished over the next two decades. He said it was a particularly attractive when seen in terms of alternative investments. For policymakers trying to decide where to put public dollars, Colgan said the transportation sector offers the advantage of being “very predictable” in forecasting results. R&D investment, by its nature, is more hit or miss, and there’s “a long tail” between the initial investment and the eventual return. “Obviously, you need to do both,” Colgan said, but neglecting the up-front spending on transportation “doesn’t make any sense at all.” He agrees that the state has shown a pattern of up-and-down spending on transportation in recent budgets, and this makes it hard to sustain the gains from earlier investments.
Concerning MaineDOT’s strategic plan for $1.8 billion in new spending, he said, “You have to have a tightly disciplined plan. There’s a little room for moving up and down in a particular year, but not much.” And he emphasized that the new money must truly be on top of existing commitments. “If you don’t maintain what you have, new spending isn’t going to help,” he said.
Future revenue streams
Similar themes emerge from a conversation with Joseph Giglio, Ph.D., a Northeastern University professor and prolific author. Giglio, not one to mince words, said there is a $15-19 billion transportation infrastructure deficit in New England over the next 20 years. Having served on both regional and national transportation posts in several administrations, he said that the same concerns heard in Maine are shared throughout New England and the nation. No region is exempt from the challenges of limited funding and much more substantial needs.
Maine, with its vast geography, large transportation system and small population to pay for it, feels the pinch even more. While Giglio says that transportation groups talking to each other about investment is “like preaching to the choir,” there is evidence that the conversation is reaching a larger segment of the public. Scarce resources might suggest that greater cooperation among various states is worthwhile, but for the most part New England hasn’t exploited such opportunities, he said.
Yet there are exceptions. The I-95 Corridor Coalition is one example of interstate coordination. Some 22 separate agencies along the major East Coast highway from Florida to Maine have participated in regional initiatives. One result is the E-ZPass electronic toll system that has eased travel along toll roads, including the Maine Turnpike. While Maine does not yet have the highway-speed toll collection systems used in states like Florida and New Jersey, it’s coming everywhere, Giglio said.
And beyond the electronic systems used for tolling, there are much greater possibilities in the GPS systems now being installed in most new cars. The deficit between available funding and future transportation needs, in Giglio’s view, is a systemic one not necessarily dependent on individual political decisions in the states or Congress.
Under-investment is common in part because of the perception that “roads are free.” While the public understands that this isn’t really the case, individual decisions reflect the fact that most of the highway system is toll-free for users. “Faced with the tough decision to spend money now to improve something many years into the future, it’s easy to put it off,” he said.
Seen in this way, highways are one of the few public utilities that aren’t paid for directly by the user. Electricity, natural gas, water and sewer fees are all financed through regular billings, and while customers may grumble, they pay what’s needed to maintain the system, he said.
“Until now, we didn’t have the capacity to do this for roads,” he said. But the GPS technology makes it possible to charge for each mile driven, even down to separate lanes on a city street. While Giglio doubts we will ever take it to that level, he sees such financing as the ultimate answer for shortfalls in the existing system.
“The fuel tax, registration fees and federal funds worked fine for a long time,” he said. But he doesn’t see this traditional system lasting far into the future. Adequate revenues can be provided, though, he said, by assessing fees at the point roads are used, and not indirectly at the gas pump.
Prospects for change
In a less futuristic way, Laurie Lachance shares Giglio’s optimism about the transportation future. “I think people do get it,” she said. “I don’t think there’s really any lack of understanding.” While government may be relatively slow to respond to public demands, she doesn’t doubt that it will, ultimately. “We can’t afford to neglect transportation. No state can, and see much of a future for itself,” she said.
Lauren Corey also takes the long view. Her family connection to transportation goes back to her grandfather, Philip Corey, who was president of MBTA in 1953-54, back when it was known as the Maine Good Roads Association. “I was close to my grandfather. I like to keep the flag waving for him, and I’d like to pass that tradition along to my son, Owen,” she said. To truly meet the economic challenges, the state needs to invest not only in roads, but in freight and passenger rail, ports and intermodal connections that pay off at even higher rates. She cites Sears Island and a future container port there as one of the opportunities Maine can’t afford to miss, if it is to become better connected to national and international centers of prosperity.
“The St. Lawrence Seaway is gearing up to meet that demand, but we’ve been somewhat ambivalent about our own ports,” she said. Corey said there still may be a “disconnect” between the public that overwhelmingly supports transportation bond issues and the legislators who must vote on a broader range of investments. “Some legislators get it, and some need to have the issues raised again for them,” she said.
Echoing Charles Colgan’s points about the 20-year plan, she said, “What Maine needs is a steady stream of investment, sustained over time. It may seem like a lot of money, but what’s the alternative?”
Douglas Rooks is a freelance writer and editor who frequently contributes to Maine Trails