October 1, 2007
The Tough Road to Financing Transportation
This week’s Indiana Logistics Summit held in Indianapolis framed a number of issues that matter to Hoosiers young and old. I’ve done a fair amount of transportation and economic development research, but this conference was a chance for me to listen and learn. Here’s my take on some of the issues.
Nationally, a significant piece of the public transportation infrastructure (roads, bridges, locks and dams) has already outlived its anticipated lifespan. Solid engineering and construction coupled with continual maintenance means that catastrophic failures are few and far between (but as recent events tell us, not unheard of). However, replacing or updating this infrastructure is important to the overall health of the domestic economy and the viability of many communities nationwide. Indiana certainly is not one of the major truants in infrastructure repair, replacement and maintenance, but there is work to be done.
A bigger problem in Indiana is coping with the growing demand for transportation services – primarily freight, but also people. The old license plate phrase “Crossroads of America” was not just a marketing slogan. Indiana’s rail, road and waterborne transport system provide one of the most important links to economic efficiency and environmental health in the nation. Making prudent infrastructure investments and establishing clear thinking policies about transport matters not only to Hoosiers but to residents of surrounding states. But here too, our approach to transportation planning in Indiana is a source of pride, not a lament.
Financing transportation infrastructure is tough business. We have a lot more drivers on our roads, who demand more goods and services each year. Our rail lines look much as they did when my grandparents were children, and the Ohio River and Lake Michigan – two underappreciated transport routes, are of finite size. We need to squeeze more productivity from all of these assets. Some service improvement comes from technology – the gee whiz intelligent transportation systems our university scientists create – some from better logistics planning, some from simply more construction. All these need money. However, the real value of the gasoline tax has been just about halved in thirty years. A combination of rising construction costs and dramatic fuel efficiency improvements have made that old reliable revenue source inadequate to the task.
Perhaps the biggest problem facing the state is the belief that government alone – no matter how efficiently and effectively run – can solve the problems of transportation infrastructure and the movement of goods and people. This realization runs counter to many of our experiences with the way the world works. But, that’s only because our memories are so short. Any student of economic history would know that private road ownership, toll road and bridges, and private construction and operation of roads have a long history in our nation. Don’t believe me? Just ask yourself when was the last time you passed a turnpike or pike? These were once private roads, as were a number of bridges, just a little over a century ago. And, all those covered bridges that grace Parke County? Most of these were financed by private subscription. From this perspective, our current trend towards public-private partnerships looks like a bit of good old fashioned Hoosier wisdom.
I don’t usually like to make long run forecasts, but this I do know -- Without growing private sector involvement in building and operating transportation infrastructure, Indiana’s economy will face its share of potholes and traffic jams.
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