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ECONOMIC ANALYSIS: Long road ahead for financing transportation

October 1, 2007

The recent Indiana Logistics Summit framed a number of issues that matter to Hoosiers young and old. I've done a fair amount of transportation and economic development research, but this conference held in Indianapolis was a chance for me to listen and learn. Here's my take on some of the issues:

Nationally, a significant piece of the public transportation infrastructure (roads and bridges, for example) has already outlived its anticipated life span. Solid engineering and construction coupled with continual maintenance means catastrophic failures are few and far between-although not unheard of. However, replacing or updating this infrastructure is important to the overall health of the domestic economy and the viability of many communities nationwide.

Indiana certainly is not a major truant in infrastructure repair and replacement, but there is work to be done.

A bigger problem in Indiana is coping with the growing demand for transportation services-primarily to haul freight, but also people.

Making prudent infrastructure investments and establishing clear transportation policy matters not only to Hoosiers but to residents of surrounding states. But here, too, our approach to transportation planning in Indiana is a source of pride, not lament.

Financing transportation infrastructure is tough business. We have many more drivers on our roads who demand more goods and services each year. Our rail lines look much as they did when my grandparents were children, and the Ohio River and Lake Michigan-two underappreciated transport routes-are of finite size. We need to better leverage all these assets.

Some service improvement comes from technology (like the gee-whiz intelligent transportation systems our university scientists create), some from better logistics planning, and some from simply more construction. All these need money.

At the same time, the real value of the gasoline tax-which funds such projects-is about half what it was 30 years ago. A combination of rising construction costs and dramatic fuel-efficiency improvements have rendered it inadequate.

Perhaps the biggest problem facing the state is the belief that government alone can solve our transportation problems. Any student of economic history knows that private construction and ownership of roads and bridges have a long history in our nation.

Don't believe me? Most turnpikes were private roads just a little over a century ago. And, all those covered bridges that grace Parke County? Most were financed privately. From this perspective, the trend toward public-private partnerships looks like good, old-fashioned Hoosier wisdom.

I don't usually like to make long-run forecasts, but this I do know: Without growing private-sector involvement in building and operating transportation infrastructure, Indiana's economy will face its share of potholes and traffic jams.



Hicks is director of the Bureau of Business Research at Ball State University. His column appears weekly. He can be reached at bbr@bsu.edu.
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