Transportation and Economic Growth Linked in Utah

In the March/April issue of Capitol Ideas, I wrote about how the state of Utah has used transportation investment to drive the state’s economic growth. Among those I talked with were two legislators—one a civil engineer, the other an economist—as well as a planning official for the Utah Department of Transportation. But there is plenty more to the story of Utah’s success as I learned in this February interview with Abby Albrecht of the Utah Transportation Coalition, which arrived too late to be included in the published article. The coalition is an organization formed by the Utah League of Cities and Towns, the Salt Lake Chamber of Commerce and the Utah Association of Counties.

CSG: Utah is often mentioned as a great case study of a state that has recognized the nexus between transportation investment and the economy and experienced some success from that in recent years. What are some of the factors that have gone into that assessment?

Abby Albrecht, Utah Transportation Coalition: Utah has a proud tradition of fiscal responsibility stretching back nearly 170 years to our pioneer roots. Our ancestors established a self-sustaining economy in the harsh climate of a rough mountain desert with an ethic built on a foundation of hard work, self-reliance, thrift and faith in the future. Our pioneer forebears held fast to the axiom: ‘Use it up, wear it out, make it do or do without.’ That ethic has evolved through time into a profound sense of stewardship for the state’s financial resources, which includes careful budgeting and moderate living in the present and wise planning and investment for the future. The economic prosperity that results from such a philosophy, in turn, provides the resources we need to solve community issues and plan for the future.

CSG: What are the challenges Utah will face in the years ahead, particularly when it comes to population growth and how important will it be to the state’s economy for transportation investment to keep pace with that? Is Utah well positioned to plan for that future and the investments that will need to be made or is there still work to do on that front?

Albrecht: Utah’s growth has been constant since the 1800’s. Our population will likely hit 3 million this year and is expected to double by 2050. In order to keep Utah moving, we’re faced with the challenge of keeping up our infrastructure at a comparable pace. Transportation planners estimate that miles traveled per year on Utah’s roads will increase by 80 percent during the next 30 years. Thankfully, our state legislature has proven time and again that maintaining a strong transportation system is a funding priority for Utah, and we’ve addressed transportation maintenance and expansion through a variety of funding mechanisms—with a decided preference for using local rather than federal dollars. However, our current Unified Transportation Plan shows a significant deficit—a little more than $11 billion—for what will be needed to fund transportation infrastructure between now and 2040. So this year we are working hard for legislative approval of far-sighted budgeting options to make up that deficit so we can be prepared for future transportation needs. For example, our state gas tax hasn’t been adjusted since the late 1990s. While we are not specifically advocating that the gas tax be raised, that is certainly one of the possibilities the legislature is considering.

Editor’s Note: The Utah Legislature this month passed and Gov. Gary Herbert signed a bill that will raise the state’s gas tax five cents a gallon beginning in July. The increase is expected to bring in $100 million over the next two years, according to the Associated Press. An indexing mechanism will allow the tax to rise and fall with the price of gas.

CSG: When state officials and others consider which transportation projects to invest in, how important is it for them to consider which ones will have the greatest economic impact? How big a factor should that play? Do you think project decision making ever comes down to investing in a project that might fix an aging bridge out in the country, say, or building an interchange somewhere else that might attract a company to locate there? Are there those kinds of difficult decisions?

Albrecht: There are always hard decisions that have to be made when you’re dealing with limited budgets. But through our Unified Transportation Plan we have tried to anticipate Utah’s transportation needs in terms of maintenance, growth and economic development. All are important, and all deserve their place and priority. In creating the Plan, we asked all of Utah’s major transportation entities to identify, prioritize and estimate costs for Utah’s transportation needs between now and 2040. The Plan reflects Utah’s approach to providing transportation choices to residents, responding to the anticipated population and job growth, and maintaining and preserving the systems that we have in place.

CSG: How important is transportation investment to attracting new businesses and industries to locate in Utah and has the state traditionally done a good job on that front?

Albrecht: Transportation options are critical to attract new businesses and industries to Utah. Businesses and their employees are beginning to expect sustainable transportation options, including transit and active transportation. And we’ve seen where business development happens around transportation development. Recently far-sighted community leaders in Lehi, Utah, campaigned aggressively for significant transportation improvements. A state road was widened and commuter lanes were added. A commuter rail station was opened, and a crossing was installed for future light rail expansion. And a trail network was expanded in the area. It is not coincidental that during the past three years more than 100 new businesses have opened in the corridor, including Adobe, Traverse Mountain Outlets, Xactware and a planned health center. Experience has shown that a robust transportation system provides to new businesses and industries a large choice of distribution channels and markets, employees with options to more easily get to and from work and the means for products and service to get where they need to go.

CSG: Various reports that I’ve read list a variety of different ways transportation investment can bring benefit to the economy. I want to ask you about several different sectors or areas that stand to be impacted and see if you have any thoughts on their economic significance for Utah and the business community:

•           One is the potential for creation of jobs within the transportation industry itself

Albrecht: Utah’s transportation system is the backbone of our economy. We believe the application of our Unified Transportation Plan will generate more than 182,000 jobs, including a significant number in the transportation industry itself. We believe it will also contribute more than $183 billion to Utah’s gross domestic product and grow Utah’s household incomes by more than $130 billion by 2040. And the economic growth stimulated by transportation investments will create $22.2 billion in new tax revenues. Think about that for a second. For an $11 billion investment in future transportation infrastructure, we expect to return more than $22 billion in tax revenues—nearly doubling the investment. That’s a pretty sound investment no matter how you look at it.

•           Another would be the potential benefits to improving rural connectedness

Albrecht: Our Unified Transportation Plan addresses both rural community needs as well as larger regional and statewide transportation issues. Representatives from rural communities as well as those from large metropolitan areas have all had input on the development of the plan and are comfortable that it meets their respective needs, including connectedness. Though our partners have diverse needs and interests in transportation, we are united in supporting a sustainable future for Utah’s transportation system.

•           Another would be the potential to improve freight mobility

Albrecht: Utah’s trucking industry has participated in the creation of our Unified Transportation Plan. And with good reason. Trucks transport 87 percent of the total manufactured tonnage in the state, or nearly 200,000 tons per day. More than 81 percent of Utah communities depend exclusively on trucks to move their goods. According to Richard A. Clasby, executive director of the Utah Trucking Association, “the trucking industry understands that we are part of a vast traveling public that needs good, efficient, safe transportation infrastructure that will respond to future needs.” To that end, Mr. Clasby says, “the Utah Trucking Association endorses and embraces Utah’s Unified Transportation Plan” as a way of helping truckers “do our work better, safer and more efficiently in order to facilitate Utah commerce with fewer impacts to the flow of traffic and to the quality of our air.”

•           Another would be the potential to improve America’s global competitiveness. Is it fair to compare what we’re investing in our infrastructure to places like China or Brazil or India?

Albrecht: To be honest, our focus has been fairly localized: to make smart and sustainable transportation choices to support a high quality of life and economic growth in Utah. So I don’t really have a lot to say about infrastructure in China or Brazil or India. But there’s no question that the same economic benefits to Utah’s economy that I mentioned in the first bullet point above would apply similarly elsewhere. As America responds proactively to prepare for the transportation demands of the future, we will be that much further ahead as we work to remain competitive in the international marketplace.

•           Another would be the potential to improve travel time and ultimately quality of life for commuters

Albrecht: Every Utahn benefits from an efficient transportation system. Even Utahns who don’t drive enjoy taxpayer savings from fiscally responsible planning, reliable delivery of goods and services and a healthier Utah, with healthy air, a healthy environment and a healthy quality of life. For Utahns who need a reliable system to get around each day, a functioning system means less travel time, more time with family, more free time and time to pursue a balanced life. The $11 billion investment that we propose as part of our Unified Transportation Plan will save households time and money. And by providing more and better active transportation options we can save Utahns billions of dollars in healthcare each year.

•           Another would be the potential to improve access to jobs for employees and access to workers for employers

Albrecht: As noted in my response to Question 4 above, providing and maintaining sustainable transportation options benefits businesses and employees. Experience has shown that a robust transportation system provides to businesses and industries a large choice of distribution channels and markets, employees with options to more easily get to and from work and the means for products and service to get where they need to go.

•           Finally, the potential benefits to the tourism industry

Albrecht: Tourism is vital to Utah’s economic health, and so tourism impacts are clearly a consideration in all of our transportation infrastructure planning for the future. Consumer surveys indicate that ease of access, lack of traffic congestion and multimodal options are all important to attracting visitors. Even trails and bike paths can have significant impact. For example, a study of bicycling tourism in Moab, Utah, estimated the annual economic impact of bicycling to be $1.33 million, with the average consumer spending per person estimated to be $585.

CSG: Are there other significant indicators or metrics folks in state government or elsewhere should be using to measure the potential for or the impact of transportation investment on the economy so they can make the best decisions about which projects to choose?

Albrecht: There are two things I’d like to mention. First, air quality is a significant issue in Utah, and we believe our Unified Transportation Plan will directly benefit Utah’s air quality. Currently, vehicle emissions are responsible for more than half of Utah’s air pollution. The Unified Transportation Plan, along with vehicle fuel efficiency improvements, would reduce vehicle emissions 53 percent by 2040. It will also make sustainable transportation options more accessible and feasible for more Utahns by advocating a centers-based approach, with growth concentrated in areas where it makes sense, providing for fewer vehicle trips and improving air quality. It also calls for investment in walkable areas, bike lanes, transit and better traffic flow so as to promote alternatives to private vehicles and reduce idling, thereby improving air quality.

Implementing the Unified Transportation Plan will also make resources available to address other important infrastructure needs. For example, we can plan future sewer, water and telecommunications maintenance to occur at the same time as road projects, thus saving millions of tax dollars through infrastructure projects completed simultaneously. Lower infrastructure costs have the potential to lower the tax burden and utility costs of residents. Any tax dollars saved could be made available for other public needs, including healthcare and public education.

More on the Transportation-Economy Nexus in Utah

In addition to the Unified Transportation Plan, Utah is also guided by the work of Envision Utah, a nonprofit organization that began work in the late 1990s to engage with local communities on growth issues around the state. State Rep. Justin J. Miller, a Democratic lawmaker and economist who is featured in the Capitol Ideas article, talked about what the organization is working on these days.

“Envision Utah—they’re giving tools to local communities to help encourage more of the multi-use developments, especially within urban areas and as suburban areas begin to increase their density and population to make sure we’re not isolating commercial hubs from residential hubs from office buildings or industry but more integrating them as much as possible,” Miller said. “And that really cuts down on commute times, which is one thing that I think outside companies when they look at Utah obviously take a look at. … I think Utah’s always done a very good job in mitigating those particular types of situations (whether) it’s the addition of carpool lanes or the addition of (commuter rail system) Frontrunner that we’ve seen in the past couple of years, it really does open up opportunities. If somebody lives in Provo right now or if a company comes in to Lehi or Draper here in Utah, (commuters) have the opportunity to instead of having to drive 30 minutes to get to work … they can sit in a comfortable chair on the commuter train and maybe get some work done.”

Jeff Harris, Director of Planning for the Utah Department of Transportation also discussed how Envision Utah is emblematic of the state’s overall approach.

“I think Envision Utah and those things are outcomes of what I would call just a strong culture of cooperation here,” he said. “I have no other way to describe it. I’ve been in this business now 18 years. … I really think that the public number one, policy leaders, elected officials really do understand the value of investing in our state’s roadway and transit infrastructure. You look at Utah, a red state; you look at Arizona, a red state. Both (have) conservative legislators. But their approach to transportation is almost 180 degrees different. I’m not speaking ill of Arizona at all but I think our elected officials have gotten the connection. … Smart, targeted investment is going to help the state compete long term and improve not only our quality of life for our citizens, because it does come down to that—greater choices for business, greater choices for how we move, where we live, how we travel. All of that together … it does seem to be in our culture to some extent.”

I also asked Harris to address the question I had for Albrecht about the potential for what Utah is doing to impact America’s global competitiveness.

“To the extent that the transportation system improves mobility, increases transportation choices, improves supply chain, access to labor resources, improves connectivity of people and commerce, I do believe that our investments that we’re making and the investments that the country as a whole could make will absolutely benefit it from a global competitiveness perspective,” he said. “Big multi-national firms aren’t necessarily headquartered in the United States or Europe or anywhere else. So when they make a decision about where they’re going to locate their facilities, they’re going to look where can they most cost-effectively operate their business. And transportation infrastructure is one component of that. …The extent to which we can improve our transportation infrastructure and keep it at a level that makes it easier for business, cost-effective for business to operate, investment in transportation will absolutely improve not only Utah’s, not only our region’s, but the country’s global competitiveness. If we let that go and it goes down the drain and Europe steps up, they’ll go to Europe.”  

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