EP 02: The Municipal Infrastructure Quandary
It's no secret that infrastructure across the nation has gotten to ragged condition. What you maybe didn't know was that the burden of paying for it keeps sliding to local government. Why? And, more importantly, is there anything we can do? We dig in with guests national, state and local to talk about the infrastructure deficit and the tools municipalities can explore to trim it down. A recent report from the National League of Cities served as inspiration for this episode. Show notes: NLC report: http://www.nlc.org/Documents/Find%20City%20Solutions/City-Solutions-and-Applied-Research/NLC_2016_Infrastructure_Report.pdf
Top Keywords
- infrastructure 0.033
- local 0.015
- state 0.014
- cities 0.010
- infrastructure banks 0.008
- infrastructure deficit 0.008
- local option 0.008
- roads 0.008
- need 0.007
- tools 0.006
- crumbling 0.006
- private partnerships 0.006
Transcript
On this episode of Municipal Equation There's little support from the federal level. State budgets are constrained. So everyone kind of keeps passing the buck down to the local level, and local governments end up, carrying most of the burden for the infrastructure deficit.
The infrastructure deficit, how it's falling on local government, and what we can do about it. My name is Ben Brown, and this is Municipal Equation from the North Carolina League of Municipalities, episode two.
Roads and bridges need major repair. Pipes are in a bad state, some dating back to the year 1860. We've got crumbling roads and bridges. So let's talk about infrastructure tonight. A few years ago, America's infrastructure was given a failing grade with roads and bridges collapsing. States and and and localities can't plan future and bigger infrastructure projects because they don't know what the federal government will or won't be doing in a couple months. Just the latest example
of a crumbling system. It's crumbling infrastructure. Crumbling infrastructure. A 400 page report today on America's aging infrastructure. Usually, annually, around $270,000,000,000
is spent on infrastructure. 90% of that comes from state and local governments, municipalities. We've got to recognize that the infrastructure is what makes our economy calm. We're not honest if we don't tell the truth about where we are with our infrastructure in this country.
Our nation's infrastructure is in deplorable condition. That's a direct quote from the National League of Cities, which recently put out a study mapping out the challenges for local governments like municipalities to catch up on crumbling old pipes and outdated transportation systems that are in such rough shape because we've kicked the maintenance can down the road. But that didn't happen on its own. There are other factors at play here, and they put a big question mark on the future, and how we can handle growth. There are solutions. We can identify the tools we need, but in many cases, they often require a special permission slip from higher government. To learn more about that, I sat down with Nicole Dupuy, one of the authors of that National League of Cities report. Its title is paying for local infrastructure in a new era of federalism. Nicole, what's happening? What why are we in such rough shape on infrastructure, and who was responsible for dealing with that?
So there are several reasons we're experiencing what we'll we'll call an infrastructure deficit or this kind of looming need for investment in infrastructure. For one, we've seen, a steep decline in infrastructure investment generally over the last several decades in this country, at all levels of government. There's there's decreased, support from the federal level, and then we're seeing state and local budgets strained. So there's less money generally to go around at all levels for infrastructure.
Nicole says another reason is that a lot of the infrastructure that we have made meaningful investments in is reaching the end of its life. It's in bad shape. And when you've got budget challenges, you defer maintenance.
And then finally, many of the funding sources that we rely on to fund our infrastructure, such as the gas tax, for instance, have turned out not to be the most reliable or sustainable due to, you know, reductions in driving or fuel efficiencies. So we've seen the underlying system that we put in place to pay for this enormous need kind of fail to provide the revenue that we that's necessary to cover it.
So that's the history. It may not surprise all of us, but it does bring us to some questions. Like, how do we deal with it? Who takes the lead? I asked North Carolina state representative Stephen Ross because he's got a unique appreciation for it. Not only is he a state legislator, he used to be a mayor of the city of Burlington, and he thinks the answer is mixed.
Well, it's it's no one entity is gonna be able to to to do it by themselves. The state can't do it. Obviously, the local governments can't do it. I mean, it's gonna take a combined effort to to make it happen. And some municipalities and and some low local governments are beginning to take a bigger part or a bigger role,
recognizing that to get it done, you know, they're they're gonna have to do that. Nicole, to follow-up on that, the report points out, and you mentioned earlier that the financial burden with local infrastructure,
used to be more shared by different levels of government, but it's increasingly on local government. Why is that? Yeah. So there used to be a much more egalitarian relationship between the different levels of government in terms of paying the infrastructure bill. Federal investment was much more significant, and today, we sort of see this kind of domino effect. There's there's little support from the federal level. State budgets are constrained. So everyone kind of keeps passing the buck down to the local level, and local governments end up, carrying most of the burden for the infrastructure deficit.
She later told me that infrastructure, in a vocabulary sense, is often labeled local, like local roads or local water and sewer. So there may be a tendency to let that ride when it comes to responsibility.
But the reality, here is that, infrastructure is not something that's bounded by city or county lines. It really makes up the backbone of our economy, and and really, our nation. So its users, what we find is the users extend beyond residents of a particular jurisdiction. And so if you think about who uses roads or even freight movement or transit usage, you can really see that there are broader economic impacts, involved. And everyone, I think, at every level of government has a responsibility to pay for that.
State representative John Torbett is one of the chairman of the House Transportation Committee in the North Carolina General Assembly. We feel pretty much obligated for the roads part because that's something state does.
It would be really good for people that live in municipals to have their governing system focuses on their water sewer infrastructure. We've all seen what happens when when that crumbles. So
For Torbit's money, there's no discounting a good plan that prioritizes infrastructure high on the government spending list, especially for maintenance of existing infrastructure as opposed to new. And he sees putting that perhaps second only to public safety. The big term now in in cities and municipalities
across the state is that they're looking at revitalization, revitalization. Well, if we have allowed our infrastructure to crumble in those areas that now they're looking at revitalization, your cost skyrocket. So it's inherent that we have a good plan in place that addresses existing, surface, existing road surface, water and sewer. And then through growth, look at what are we gonna do to capture the needs of the future of transportation for our people.
Representative Ross agrees that planning hasn't been everything it should be. He added that municipalities have had a uniquely tough time because more and more people are moving to cities and because local revenue sources aren't what they used to be. There have been revenue sources taken away from cities
over the past few years. In fact, my contention is when you add it up, it's a substantial amount of money at a time when they need money to do exactly what we've been talking about. So let's talk about the possibilities.
Who does what? What tools can we use? First thing, let's quit being intimidated by the size of the infrastructure deficit. If you think of the dollar figure for how much we need to spend to catch up, it's pretty defeating. Except I know you're dying to know what it is, so here you go on a national scale.
So I'll I'll just start by saying, really, when we're talking about the infrastructure deficit, we're mostly talking about maintenance backlog. I think that the national conversation revolving around infrastructure, unfortunately, hasn't even made it to, new infrastructure investment. We're we're really talking about bringing our existing up infrastructure up to par. And so there are many different figures, but some estimate that we would need to spend, 2,200,000,000,000.0 over the next five years to get all of our infrastructure to a state of good repair. That's kind of lumping everything, altogether. Roads, the Federal Highway Administration estimates that we would need 170,000,000,000, in capital investment, annually to significantly improve, road conditions and performance. The Federal Transit Administration estimates that there's a maintenance backlog of nearly 78,000,000,000. We would need to spend that to bring all of our transit systems up to a state of good repair. And, the water, it we we think about water in terms of drinking water and wastewater. So, ASCE, the American Society for Civil Engineers, estimates that we would need 1,300,000,000,000.0, dollars in capital investment, to get our waste and stormwater systems up to par, And we there's a figure from the EPA. They've estimated that we'd need somewhere around, 300,000,000,000, to get our, drinking water systems, up to a a state of good repair or or up to par, so to speak. So it's a lot of money, and I think that those those big figures, tend to overwhelm the conversation. It it becomes kind of almost an out of reach, you know, thing to accomplish. So I I I think that that's one of the inherent challenges in all of this.
Okay. So forget the dollar figures. Let's talk about what we can do. DuPuy's research focuses on the sharing of responsibility and on enabling local governments to be able to keep up. So how are local governments dealing with this? What what tools do they have to raise revenue? I I mean, it it certainly varies from state to state in terms of what authorities are given to cities and towns. North Carolina, for example, allows, public private partnerships and the the recently authorized, limited, motor vehicle fee for cities. But what what other tools are out there?
Yeah. So the like you like you said, the tools available to cities to pay for their infrastructure very much depends on, in a lot of cases, the authority granted to them by the state. The different funding and financing tools that we looked at for this particular report include local option taxes and then some emerging tools that you mentioned, like public private partnerships and state infrastructure banks. So we we looked at, local option sales taxes, and found that 29 states authorized local option sales taxes. Low local option fuel taxes, which are special purpose taxes implemented and levied at the city or county level on on fuel, and we found that 16 states authorized local option fuel taxes. Local motor vehicle fees, 26 states authorized local option motor vehicle registration fees. And then, we mentioned those emerging tools, state infrastructure banks and and public private partnerships. We found that 27 states, have state infrastructure banks in place. 22 of those are actually active or capitalized. And then, public private partnerships, 32 states have passed some sort of, p three, legislation, meaning that the cities within those states can utilize public private partnerships to pay for their infrastructure. And so what we're what we're, really finding is that cities are put in the position to kind of do the best they can, sort of cobbling together all of these different tools, if you will, in their infrastructure funding and financing toolbox. And, you know, they're they're doing the best they can with whatever authority is granted to them by the state. Of these emerging tools, you mentioned the public private partnerships and infrastructure banks. What what are infrastructure banks? So infrastructure banks typically they look different in every state, but they're typically revolving funds, investment funds, that are established and administered by states. And, a state infrastructure bank is sort of like a private bank for the state. They offer, grants, low interest loans, and credit assistance, to cities, for their infrastructure projects. So they really are, they're they're gaining traction. We're seeing more and more states establishing them, and they really are, a low interest way for cities to pay for their infrastructure projects.
So the details vary state to state, but now we know what some of the tools are. Representative Ross says he hopes to see more talk at the legislative level about local relief, especially because dense communities and urban areas are economic engines.
So we're we're not treating the economic engine the way it needs to be treated. We need to fuel the economic engine so that it can produce more. But at the same time, you gotta recognize that in doing so, you've got to you've got to move some of the some of that revenue back into maintaining the very existence, you know, that creates these cities, and that's the infrastructure.
And if you're wondering, yes. There was a brass band playing outside of his office window on the day I interviewed him. Anyway, in the meantime, there's been a lot of creative thinking to bridge gaps at the local level. In Raleigh, North Carolina, a special public utilities program has led city government and private developers to work together to improve the situation. Our infrastructure
began being installed in the late eighteen hundreds and early nineteen hundreds.
Robert Massengill is director of the public utilities department. Some of those pipes, many of those pipes are still in service. And that basically meant a quandary for the city and private development.
Raleigh has made its mark as one of the fastest growing cities around. So we needed to come up with something so that we could both work together and let them stay on their schedules, let the market drive the schedule, and, try to come up with a reasonable reimbursement program so they could go in there and replace the pipes, give them the capacity they need, while at the same time, giving the rest of the customers,
reimbursement
for replacing infrastructure that helps their project along. The feedback we've gotten is that this this helps them a lot. That gives them that certainty that they can look when they're determining whether a project's viable or not. They can use our calculator to determine how much they'll get reimbursed
for certain replacements. Massengill said that's worked out better than a policy of forcing developers to foot the bill without assistance. That's a hard sale. And, especially when those are the folks who are
driving the economic development in the area. And we don't want to be the hold up of economic development. We wanna see economic development continue because it's good for the city and the merger towns. So we've gone through the problem. We've talked about some of the tools that can change the game and some of the creative thinking
happening at home. In the meantime, elected officials high and low are talking about how they can improve the picture with streets, utilities, transit, and so on. Anything else? Yeah.
As we speak, the direction of infrastructure is evolving. Internet is a growing grid of independent computer networks interlaced. Representative John Torvick. From a US Your infrastructure my generation was roads, water, and sewer.
Infrastructure of your generation should be roads, water, sewer, and connectivity via WiFi. And suddenly you're part of a new mesh of people programmed Fiber. Well, anything to get people at home connected to to the, the global world that's out there.
Broadband, WiFi, connecting rural areas to high speed Internet, something that can change the game for economic development. At the same time, growth trends and transportation trends we see today might be pretty different fifty years from now as we try to prepare for the future. We're seeing things right now that might give us a hint.
Unmanned cars or or autonomous vehicles as as they're known.
A lot of people in government and in the private sector are keeping tabs on this with the best data they can get. But otherwise, how do we best do that? Well, I use a crystal ball, which is here on my desk. Just kidding. Just kidding. Yeah. Torbit might be joking there, but he's not lying. He actually does have a crystal ball on his desk. Alright. So let's wind this thing down. I'm pretty sure some of you have been talking back to this podcast over the past fifteen minutes or so with your own comments, questions, solutions, ideas, concerns, exceptions, what have you. You wanna know more about a particular tool we discussed, or you've got more to say about the origin of the problem. That's expected. This obviously wasn't a proton microscope 360 cellular look at all things infrastructure. Just a conversation about where the financial question seems to be going and how we can impact the answer. So I'll kick it back to Nicole Dupuy from the National League of Cities for a final word. So, Nicole, in terms of what we can achieve and what we can actually reach for, what has to happen from a municipal standpoint? What does this report recommend?
What we think cities essentially need is more flexibility at the local level to, use use the tools that, might be at their disposal to pay for their infrastructure needs. They need a strategic and predictable investment from federal and state governments. Of course, they need better communication between, their state partners and and the folks at the city level to determine, what funding priorities might be. A lot of times, there's a disconnect between, the states and the cities. And and, of course, they need, greater local authority to raise the revenue, that's necessary
to, pay for their infrastructure needs.
Again, you can read the entire study and find those recommendations from the National League of Cities at nlc.0rg. Look for the report called Paying for Infrastructure in a New Era of Federalism, a State by State Analysis. And send me your ideas. I'm at bbrown@nclm.org or on Twitter at muni equation. That's at m u n I equation. This podcast has been a production of the North Carolina League of the Municipalities. We're on the web at nclm.0rg. My name is Ben Brown, and I thank you for being a part of The Municipal Equation. We're at soundcloud.com/municipalequation. Subscribe on iTunes or find us on your favorite podcast app. We're on most of them. Stitcher, Overcast, TuneIn, etcetera. If you have an idea for a future episode, please let me know. Talk to you next time. This is Ben Brown.
