Illinois transportation infrastructure in jeopardy
By Doug Whitley and Ben Brockschmidt
Illinois is the transportation hub of America where waterways, interstates, railroads, pipelines, fiber optic networks and global air travel converge. The foundation of Illinois's economy is built on transportation.
We have more interstate miles than any other state with the exception of Texas and California. More freight and passenger rail networks meet in Chicago than anywhere else in the country. The Chicago region has the second longest and third busiest transit system in the country, handling 1.6 million trips per day. And, the Mississippi River crossings in southwestern Illinois continue to be the Gateway to the West two hundred years after Lewis and Clark departed from the Illinois shore near Alton.
The combination of these transportation systems has allowed Illinois businesses to grow and flourish due to the ability to move people and goods quickly and efficiently.
But the quality, reliability and reach of Illinois' transportation infrastructure is in jeopardy as both the state and federal government programs to fund capital construction projects will expire next year. The "Illinois Jobs Now" program approved in 2009 ends in July. The federal funding for MAP 21 ends simultaneously with the federal fiscal year on Oct. 1, 2014.
In Illinois, it is projected road and bridge funding will collapse by $2 billion. The impact will be a reduction in the number of annual construction projects by two-thirds and is expected to reduce construction-related employment by nearly 20,000 jobs.
Neither of the last two federal surface transportation bills have had sufficient funding to fulfill the nation's construction needs. The Congress has found it necessary to shore up the U.S. Department of Transportation's Highway Trust Fund with transfers from the general funds because the 18.4 cents per gallon federal tax on gasoline and 24.4 cents per gallon federal tax on diesel fuel in effect since 1993 have demonstrated no sustained revenue growth and there have been no revenue increases to bolster the fund.
Too many people take our transportation infrastructure for granted. Even though almost everyone uses the transportation networks every day, little thought is given to the expense associated with building or maintaining the extensive systems we rely upon. Matters of connectivity, speed, efficiency, reliability, modernization and safety are important to assure user confidence and continued private sector investments to sustain economic growth.
Data recently released by the Federal Highway Administration ranked Illinois interstates the fifth busiest in the nation with over 31 billion miles traveled just on those highways in 2011. The Illinois Department of Transportation is responsible for 16,000 miles and 900 bridges. Illinois local governments are responsible for 123,000 road miles and thousands more bridges. Without a renewed financial commitment on the part of the governor and the General Assembly, it is anticipated that one in every three Illinois road miles and one in every 10 bridges will deteriorate to an unacceptable standard. (The Illinois Toll Highway system of nearly 300 miles is self-sustaining; it is user fee-based and receives neither state nor federal funds.)
Most transportation infrastructure is designed with a lifespan of 30 to 50 years. During that time, basic upkeep and maintenance is enough. Once that lifespan is reached, simple repairs are no longer sufficient and a complete rebuild is required. That is the status of much of Illinois' infrastructure. Large segments of Illinois' interstate system have reached its 50-year design life and need complete reconstruction. Transit systems across the state continue to operate with older equipment in constant need of repair when new buses and trains are in order. Much of the population in the Chicago region is dependent upon commuter rail. The presence of safety-related slow zones, resulting in longer times to get to work, are an indicator of efficiency and productivity challenges that employers and their employees' experience.
Access to public transit service has increasingly become important to metro areas throughout the state and even in rural counties where access to public transportation is critical to serving an aging population.
The CREATE rail construction program has provided some relief for Amtrak and Metra trains and has also reduced the time it takes freight rail to pass through the Chicago region, but more than half of the projects remain to be completed. Over the last few months, the CTA has been working on a $1 billion complete rebuilding of the south branch of the more than 40-year-old Red Line. This rebuilding will decrease commute times by 20 minutes along that corridor, improving travel times for many of the 250,000 riders of the Red Line.
Earlier this year, the American Society of Civil Engineers released their Report Card for America's Infrastructure, awarding a "D+" to the overall condition of America's infrastructure. Also receiving a "D+" was the state of Illinois, the same grade it received in when the last report card was issued in 2010. Maintaining such a poor performance is not a good thing as the report identified that 8.7 percent of Illinois' bridges are considered structurally deficient, 7.5 percent of Illinois bridges are considered functionally obsolete, and 73 percent of our almost 140,000 miles of public roads are in poor or mediocre condition.
While the report card is just a letter on a web page or piece of paper, the impact of that grade is felt every day through congestion and vehicle wear. According to a report by the Chicagoland Operators, the costs of traffic congestion in the Chicago area result in more than $8 billion in lost productivity each year. For consumers dealing with congestion, adding insult to injury is an additional $292 in extra vehicle repairs and operating costs due to poor or mediocre roads each year.
Earlier this year, the Washington Post reported poor infrastructure is the result of declining investments from a variety of areas but the main drop in investment came from states and local governments cutting back on spending since 2008. Historically, states and local governments were the primary drivers of investing in roads, highways and bridges.
Illinois is no exception to this as identified by an article from the Chicago Tribune in May 2012. This article discussed a drop of almost 20 percent in six-year funding. The original 2012-2017 transportation plan was over $3 billion more than the 2013-2018 plan, which shows reductions impacting highways and state-maintained local roads. We're not the only state to do this either. California saw a 31 percent decline in transportation spending while Texas' fell by 8 percent.
But in an era where millions struggle economically, fewer people seem to care about deteriorating infrastructure until disasters like the high-profile bridge collapses in Washington and Minnesota. The loss of life due to lack of modernization or failed maintenance is not an experience Illinois highway users or elected officials should wish to flirt with, let alone share.
How to finance infrastructure investments
Historically, most transportation funding is paid for by gas taxes and other "user fees" that people only pay if they use the system. However, the Illinois Jobs Now! program was financed primarily from the introduction of video poker machines across the state, fees associated with privatizing the state lottery operations, higher taxes on alcohol, candy, soft drinks, and beauty products. Only increases in driver's license costs and license plate fees were user related. Collectively, these revenues are dedicated to make the debt service payments on construction bonds for the next two decades.
The 2009 program did not commit any revenue to annual routine maintenance of the existing roads and bridges. And therein lies a fundamental problem that must be addressed. In 2012, the federal government passed the most recent surface transportation bill, MAP-21, which authorizes spending of federal fuel tax dollars on transportation projects in all the states. Surface authorizations prior to MAP-21 were typically passed every 5 or 6 years and identified what programs and projects federal money could be spent on. The multi-year authorizations also allowed state and local governments — and businesses — to plan long term. This allowed businesses stability to hire people long term, purchase equipment knowing what projects would pay for it, and allow for a constant flow of projects. In contrast, MAP-21 is a two year bill and expires in September 2014, right before the next election.
Before MAP-21 there were nine temporary extensions of the previous federal transportation law. Each time an extension was about to expire and there was uncertainty on a new extension, state and local governments had to prepare to end projects regardless of where they were in the planning or construction phase. This extended period of uncertainty regarding congressional commitment to financing the nation's transportation networks also impacted private businesses and construction professionals who work in an environment where planning, permitting, engineering and construction often dictates a process that frequently extends 10 years or more.
As in many other areas of national importance, Congress has failed to offer a deliberate and stable approach to meeting the nation's needs. While the Chinese are investing 9 percent of their GNP toward infrastructure and the European Union dedicates 5 percent towards transportation needs, the United States is currently devoting only 1.6 percent of GNP to building and maintaining the transportation networks that have made our country's economy the envy of the world. A June 2012 report by the Council on Foreign Relations stated that the rest of the developed world on average spends 52 percent more of its GDP on transportation than the US.
Clearly, the message to state and local officials is that they should no longer look to the federal government to finance the majority of their infrastructure programs. The most successful states and regions going forward are going to be those where the elected officials and citizens accept responsibility for meeting their own needs. Waiting for Congress has proven to be a failed strategy.
Today, Illinois Jobs Now! is reaching the end of its life. In Illinois, the typical funding cycle for publicly funded transportation construction work begins again every five to six years. That moment has arrived.
A new state capital plan is needed, one that doesn't rely on uncertain tax revenue from video poker or other gimmicks. Both Illinois' gas tax and the federal gas tax have been unchanged for over 20 years. The lack of growth in road fund taxes is insufficient to meet the needs for state and local roads and transit systems.
Today's vehicles are far more fuel efficient than those operating 20 years ago. Today's motorists are paying a far smaller percentage of the price of fuel for road work than was paid in the early 1990s, while the costs of materials, equipment and labor have only increased. The anticipated growth of hybrid, electric and other alternative fuels vehicles will further suppress the impact on construction funds from traditional highway user fees.
In a Transportation for Illinois Coalition report released earlier this year, an assessment of Illinois' transportation needs was conducted. Over the next five years, Illinois will need $63.5 billion on the low end and $74.4 billion on the high end just to maintain our existing road and transit networks in a state of good repair. Despite the need, taxpayers will not support that level of funding, but some reasonable amount must be raised to sustain our fiduciary responsibilities to sustain the systems our predecessors have provided for us.
The good news with all of this is that we have the ability to improve our transportation infrastructure. In May, legislators introduced TFIC-supported legislation that would eliminate the flat rate per gallon tax on gasoline and replace it with a 9.5 percent tax on the wholesale price of fuel. While this approach is more volatile and harder to predict receipts, the wholesale approach is expected to guarantee an increase in tax revenue, while reflecting market pricing that has consistently grown over the years.
The state of Virginia adopted this approach earlier this year — and under a Republican governor. This is not the only option for increased funding for transportation. Just this year over a dozen states have passed, attempted to pass, or seriously considered legislation to increase taxes to pay for transportation infrastructure.
While Virginia is the only state to move to a wholesale tax, other states are considering it. Meanwhile, Wyoming (10 cents per gallon), Maryland (indexed to inflation), Massachusetts (also indexed to inflation) and Vermont have simply chosen to raise their existing motor fuel taxes.
Oregon, which was the first state to tax gasoline, has initiated a pilot program of collecting taxes by vehicle miles traveled. This pilot program is the successor to a previous test and will include 5,000 volunteers using several methods to record how many miles they travel.
A new state capital bill needs to do more than just increase funding. Even though the amount of money diverted continues to shrink, we need stronger protections to prevent future diversions and ensure that motorist's user fees intended for transportation are actually spent on transportation. Ideally, this philosophy of taxation should also include the state sales tax that is applied to fuel purchases, but directed to the state's General Fund instead of the Road Fund or Highway Construction Fund. While desirable, it is probably not practical to expect such a change while the state's General Fund remains in such a dire condition.
The next state transportation program also needs to include a pay-as-you-go component to ensure that ongoing maintenance and repair programs have a steady stream of investment. Without pay-as-you-go provisions, regular maintenance and repair is not only delayed but results in higher costs when they are performed. According to the American Association of State Highway Officials, $1 spent to repair a highway while it's in fair condition prevents costs of $6 to $14 to rebuild the same highway once it has reached poor condition.
Investing in infrastructure creates jobs, and not just for engineers and construction workers. Businesses rely on transportation. Warehousing, logistics, manufacturing and service industries alike locate in Illinois because of our infrastructure. Transit throughout the state increases the access employers have to their workers and potential employees. Interstates and railroads help move finished goods and agricultural products across the country while connecting us to international markets. However, all of these things rely on certainty. The certainty that an employee can arrive and leave from work at the same time each day along with the certainty that a truck can make it across the region in the same amount of time are strong economic contributors to Illinois' economy.
Maybe because highways and trains aren't sexy and thus are frequently taken for granted they appear to get little attention from policymakers until they collapse or gridlock brings commerce to a halt. If we lose our edge in transportation, the state will squander one of its greatest competitive advantages.
Doug Whitley is president an CEO of the Illinois Chamber of Commerce. Ben Brockschmidt is executive director of the Illinois Chamber's Infrastructure Council.