Transportation Policy Academy 2016—Brian Pallasch, American Society of Civil Engineers

Brian Pallasch is the managing director for government relations and infrastructure initiatives at the American Society of Civil Engineers (ASCE) in Washington, D.C. He was among the presenters at a policy roundtable CSG hosted on May 19 as part of the 6th Annual CSG Transportation Leaders Policy Academy in Washington. During these excerpts from his remarks, he talks about ASCE’s recent report “Failure to Act: Closing the Infrastructure Investment Gap for America’s Economic Future.” He also discusses the importance of factoring in operations and maintenance costs and the overall lifecycle costs of projects as the investment price tag is considered, how much the federal gas tax would need to go up and how much individuals might have to pay on a daily basis to close the infrastructure investment gap, and whether public-private partnerships might help to close the gap.

On the economic impact of inadequate infrastructure investment…

“We’ve only been paying a little more than half of the investment needs that we need to start addressing in this country. …This has a cascading effect on the U.S. economy, businesses, workers and, more importantly, families.”

“Every time it takes longer to get to work or a major water main breaks or the power goes out, it costs businesses and that ultimately hurts the competitiveness of the American economy and U.S. workers. Infrastructure … is the backbone of our economy and it’s necessary to actually keep the economy moving. If we can’t move goods out of the Port of Seattle, they can’t get to the middle of the country.”

On how investment has improved some infrastructure but surface transportation lags behind…

“Recent federal, state and local investments in some ways have had a stabilizing effect on the gap and are moderating some of those potential economic losses from growing more significantly. The economic analysis however in the report indicates that our nation’s inland waterways, marine ports, electricity infrastructure and airports as well as wastewater and drinking water infrastructure—those areas have actually seen some level of improvement. So in terms of the investment, gaps have gone down a little bit. … However, as you can imagine, in the area of surface transportation, that gap has not shrunk, unfortunately, and while the physical condition of America’s roads and bridges has improved a little bit … roadway congestion continues to increase … (and) the condition of America’s public transportation facilities continues to decline.”

On the importance of O&M (operations and maintenance)…

“With the failure to close the infrastructure investment gap, economic consequences grow as well. … Every day we delay, America’s infrastructure goes from needing to be repaired to needing to be replaced. … If we’re not doing the proper (operations and maintenance), if we’re not doing the work up front on an ongoing basis, you go from having to repair the bridge and do some seal work and maybe paint it if it’s a steel bridge, to having to just replace the entire bridge. And one of the things that I think we are urging is that we spend a little bit more time on that (operations and maintenance) stuff that sounds boring. No one gets to cut a ribbon but it does extend the life of our infrastructure.”

On the importance of factoring in lifecycle costs of projects…

“We also think we should spend a little more time talking at the beginning of a project (about) what’s the true lifecycle cost of that project. Yes it might be able to be done cheaper but if the life of that project is going to be less or the maintenance costs increased … then the total lifecycle cost of that asset is actually more than what you might pay if you invested a little bit more up front. And I think that’s a conversation that you as state legislators should have with your (state departments of transportation) and your departments of environmental quality and all the other groups that are building your infrastructure to understand what you’re getting for the money that you all are putting out and what you’re collecting from the citizens.”

On how lack of investment could impact economic growth…

“With input costs to businesses rising, the loss to business sales by the year 2025 will reach over $7 trillion. If the investment gap is not addressed through the nation’s infrastructure sectors, the economy is expected to lose almost $4 trillion in GDP, which effectively means we’re not going to grow. It’s not that we’re going to recede or shrink as an economy, we’re just not going to realize that growth. … Due to the lost sales and the decrease in GDP and all the other things I talked about, two-and-a-half million jobs will be put at risk in the year 2025.”

On the costs of closing the gap per individual…

“But if we invest … if we close that entire gap … if we did that over 10 years, we’re talking about having each family invest $3 a day. That seems pretty easy. That’s a cup of Starbucks coffee around the corner. … We can eliminate the cost of the investment gap. Another way to put this and the way we’re starting to talk about this is ‘would you pay $3 for better infrastructure? Would you pay $3 not to be stuck in traffic? Would you pay $3 not to hit a pothole?’ That is frankly from our perspective the key finding of the report: being able to put those terms in more manageable numbers that folks can readily understand.”

“Congress,… states and private infrastructure owners and local governments need to take the costs of failing infrastructure seriously. Closing the infrastructure investment gap is possible and the economic consequences caused by these gaps are avoidable with prudent investment.”

On how much the federal gas tax would need to be raised to close the investment gap…

“At the federal level, ASCE has called for … a doubling of the gas tax, going from 18 cents to 36 cents. … The federal gas tax has not been raised since 1993. It has certainly lost purchasing power during that time. I am not one of these folks … (who says) the federal gas tax is dead. The federal gas tax is not dead. $41 billion comes into the federal treasury every year from the federal gas tax. That’s pretty good. That doesn’t seem like a dead tax to me. It is a tax that has not kept up with things like inflation and purchasing power because actually construction inflation has gone up faster than our inflation. … Each penny of federal gas tax increase gets you about $1.6 billion. … We probably missed a real strong opportunity in the last couple of years to raise the federal gas tax when the price of gas was so low. Maybe one of these presidential candidates will think about doing it.”

On the use of public-private partnerships (P3s) to finance infrastructure projects…

“I think one of the better P3s in this area … is our HOT lanes project around the beltway in Virginia. (The Virginia Department of Transportation) came to the table with a lot of money in that project. … The private investor brought money. And (for) those of us who use it every once in a while, it’s expensive. … I’ve seen tolls up to $16 to go eight miles. … It’s one that works. It paid for an expansion of the full roadway. It got some cars off. It’s freed up the free lanes. It’s ensured speed in the HOT lanes. But it’s not a free project. So I think (P3s are) terribly important and they are worthwhile but … the thought that we could double the amount of P3s or double the amount of tolling and somehow get ourselves out of that gap, even if we doubled it, we’re not getting to $1 trillion, which is what the surface transportation deficit is.”

Further Reading