Infrastructure Funding: Taking the Wrong Path
December 1, 2011
A recent American Society of Civil Engineers (ASCE) report estimated the United States will need to spend $2.2 trillion over the next few years to bring the country's infrastructure to acceptable levels. A $2 trillion projected estimate for infrastructure sounds daunting, but it is important to examine what planners consider "infrastructure," says Peter Swanson, a Hatton W. Sumners Scholar at the National Center for Policy Analysis.
Traditionally, infrastructure spending included highways, railroads, bridges and waterways. Infrastructure now encompasses public parks and recreation, schools, and high-speed rail and transit projects. Public transit is often inefficient, underutilized and subject to cost overruns. Yet the ASCE Report Card includes these items as investment needs, rather than optional amenities. For example:
- The $2.2 trillion in infrastructure spending needs outlined in the civil engineers' report card includes $63 billion for improvements along highly questionable Amtrak routes as well as railways that carry freight.
- The total also includes $160 billion for schools and $85 billion for parks and recreation.
- In addition, there is $265 billion for public transit bus and light-rail projects.
Although there has been a push by the federal government to increase federal infrastructure investment, states and localities account for the lion's share of the spending. Consider:
- Federal spending represented only 23 percent of total public spending on infrastructure in 2007, according to a Congressional Budget Office report.
- Of this 23 percent, just 7 percent went toward operating and maintenance expenses for already established infrastructure.
- The other 16 percent was capital funding for new projects.
The United States has the capability to address the country's infrastructure issues, but there is only a loose connection between federal spending and improvements in public infrastructure because of misguided federal policies. Typically, the federal government offers seed funding to states to initiate capital spending projects, but leaves the states to complete and maintain them. As a result, state and local governments are encouraged to spend money on projects that may be a lower priority than projects initiated and funded locally.
Source: Peter Swanson, "Infrastructure Funding: Taking the Wrong Path," National Center for Policy Analysis, December 1, 2011.
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