In general, according to a Governing magazine columnist, America’s infrastructure is lacking in overall quality compared to some other developed countries. Budgeting is cited as one reason, with maintenance funds falling victim to budget shortfalls.

A German graduate student once told me he was amazed at the poor roads, sidewalks and other features in Cambridge, Mass., where we were both living and studying at the time.

“It looks like a third-world country here,” he said. “Apparently, no one cares.”

I don’t think that is the case, but I do think we have become accustomed to a lower-quality public environment, one that would not be tolerated in France, Germany or Japan. It was already ironic that Cambridge, a rich, liberal city that lavishes praises on the public sector, put up with it. Regardless, the chronic maintenance cutbacks in this country result in shoddy-looking and poor-performing infrastructure systems, more accidents and a negative impact on economic capacity.

One explanation may be our budgeting process. States and cities generally pay for maintenance from annual operating budgets. You can’t borrow money to repair a pothole. That leaves the pots of money set aside as tempting targets.

“Maintenance budgets are one of the first places mayors and governors look for money to fill budget shortfalls,” says William Reinhardt, editor of Public Works Financing. “That’s because the effects of underfunding maintenance are not immediately obvious.”

In contrast, states and cities borrow money to build new roads, bridges and train lines. It can be tempting to use the money that would have gone for maintenance to pay the interest costs on bonds sold to build new stuff. Political pressures come to bear as well. Developers and real estate interests often clamor for new highways and other infrastructure, and fund politicians who support them. While citizens whine about potholes, they rarely vote on that basis.

Whatever the reason, peculiar budgeting practices occur. A transit manager at a major American city told me a revealing story during a tour:

“See those lights,” said the official, pointing to some bulbs within some rusting metal frames hanging over the platform. “It would only cost about $1,000 a year to maintain those well. We can’t get that. So instead, we will wait until they rust out and fail completely. Then we will replace them, at a cost of perhaps $100,000.” This is poor governance and poor economics, to say the least.

The U.S. Chamber of Commerce sent a letter to Congress on January 23 encouraging it to support investment in the nation’s surface transportation infrastructure. The letter had around 1,000 signatories from the business community, as most feel enhanced transportation infrastructure (better bridges, public transportation, etc.) will make America a better place to do business. Congress has until March 31 to reauthorize the current funding law: 

TO THE MEMBERS OF THE UNITED STATES HOUSE AND SENATE:

As Congress embarks on a new legislative session, we, the undersigned companies and organizations, urge you to Make Transportation Job #1 in 2012 and pass federal highway, transit and safety legislation before the current law expires on March 31. The long-delayed reauthorization of federal highway and public transportation programs is a major piece of unfinished business that can provide a meaningful boost to the U.S. economy and its workers and already has broad-based support.

To grow, the United States must invest. There are few federal efforts that rival the potential of critical transportation infrastructure investments for sustaining and creating jobs and economic activity over the short term.

Maintaining at 2011 levels—and ideally increasing—federal funding for road, bridge, public transportation and safety investments can sustain and create jobs and economic activity in the short-term, and improve America’s export and travel infrastructure, offer new economic growth opportunities, and make the nation more competitive over the long-term. Program reform would make the dollars stretch even further: reducing the time it takes transportation projects to get from start to finish, encouraging public-private partnerships and use of private capital, increasing accountability for using federal funds to address the highest priority needs, and spurring innovation and technology deployment.

We recognize there are challenges in finding the resources necessary to adequately fund such a measure. However, with the economic opportunities that a well-crafted measure could afford and emerging political consensus for advancing such an effort, we believe it is time for all involved parties to come together and craft a final product.

In 2011, political leaders—Republican and Democrat, House, Senate and the Administration — stated a multi-year surface transportation bill is important for job creation and economic recovery. We urge you to follow words with action: Make Transportation Job #1 and move legislation immediately in the House and Senate to invest in the roads, bridges, transit systems that are the backbone of the U.S. economy, its businesses large and small, and communities of all sizes.

How to pay for current and future road repairs is a challenge for nearly all states. The federal Highway Trust Fund is not the answer, at least not in its current form. Governing magazine asked a Tax Foundation expert for his perspective on some alternatives. Governing reports:

Commute to work is a bit on the bumpy side, then you know the answer is road repairs. The follow up question is: Given how long this downturn has afflicted state and local budgets, who’s going to pay to repair potholes and the like?

Well, it’s not going to be the feds. The Highway Trust Fund, which finances an average 45 percent of a state’s highway and transit capital costs, is shrinking. One reason for that shrinkage is that the federal gas tax has been stuck at its current rate (18.4 cents per gallon) since 1993, which means it is not keeping up with inflation, to say nothing of state needs. Congress is not likely to raise the federal gas tax rate this year or next, so that leaves the states. In theory, they have a little room to raise or tinker with their gas tax formula — something most states have not done in years.

Given the importance of a healthy road system to economic development, what approaches could states take to raise revenue for road repair and building? I put that question to Mark Robyn, an economist with the Tax Foundation. Here’s an edited version of our conversation:

Is this a good time for states to raise their motor fuel taxes?

It’s difficult to raise most taxes. The gas tax — an excise tax — is interesting because it’s one of the few that states levy that really looks like a user fee. You pay it when you use a specific service, and the rate is set at a level to pay for the service you consume. It’s like an entrance charge to a state park. You wouldn’t call that a tax as long as that revenue is used to pay for upkeep of the park and the charge reflects what the costs are.

The gas tax, though not perfect, is an approximation of that relationship. Revenue received from gas taxes usually is used for road and highway maintenance; the fee you pay approximates how much road you consume. But different cars get different gas mileages; electric cars don’t even use gas but they also don’t cause less damage to the road. So the gas tax is not perfect but it is similar to a user fee. If states want to structure the gas tax like a user fee and if the state is not getting the money it needs for roads and repair, the next logical step would be to increase the gas tax. But people have to believe the money is being spent wisely. Not all states do that, and people say, "Well, I see this waste of money. If you increase my taxes, you’ll waste a portion of it." When I say states are wasting money, I mean they are using it for road projects that people don’t see as valuable — the "bridge to nowhere." If there are no "bridges to nowhere" and people are driving over potholes, they’ll be more willing to accept gas taxes to avoid potholes.

When is federal transportation funding not really transportation funding? According to the Heritage Foundation, it’s when 35% of the allotted funds that come from our gasoline taxes are "diverted to high-cost, underutilized programs like trolley cars, transit, covered bridges, hiking trails, earmarks, administrative overhead, streetscapes, flower planting, hiking and bicycle paths, museums, transportation enhancements, tourist attractions and archaeology."

I don’t think Heritage or anyone else is questioning the need for at least some of the initiatives identified above. The concern, a legitimate one, is where should the money come from. Interested to hear your perspective on this one?

Below is an explanation from Heritage about the requirement to divert funds, the 12 categories eligible for diversion and how one state has used its funding:  

Under current law, each state is required to devote 10 percent of the Surface Transportation Program (STP) funds it receives each year from the federal highway trust fund to eligible enhancement projects as defined in existing statutes. Under legislation extended by SAFETEA-LU (P.L. 109-59), fiscal year 2012 spending authorizations for the STP will total $9.3 billion, implying that enhancement spending would then total $930 million that year.

According to current law, enhancement program spending must be limited to the following 12 purposes:

• Provision of facilities for pedestrians and bicycles;

• Provision of safety and educational activities for pedestrians and bicyclists;

• Acquisition of scenic easements and scenic or historic sites (including historic battlefields);

• Scenic or historic highway programs (including the provision of tourist and welcome center facilities);

• Landscaping and other scenic beautification;

• Historic preservation;

• Rehabilitation and operation of historic transportation buildings, structures, or facilities;

• Preservation of abandoned railway corridors;

• Inventory, control, and removal of outdoor advertising;

• Archaeological planning and research;

• Environmental mitigation; and

• Establishment of transportation museums. 

The Virginia Department of Transportation provides detailed information on its enhancement projects, and its annual list illustrates just how silly the program can get, as measured by the misspending on approved projects using scarce federal transportation dollars. Among the 82 approved projects costing $30.2 million for FY 2012 are the restoration of the historic Bull Mill in Scott County, a hiking trail on an abandoned rail bed in Buchanan County, renovation of a former rail passenger waiting area in Danville, renovation of the LaCrosse Hotel, restoration of the Assateague and Cape Henry lighthouses, construction of a pilot schooner for a Norfolk museum, smartphone-based battlefield tours, and gateway signs to various Virginia wine regions.

Our friends at Inside INdiana Business ran this release from Honda, illustrating how the car company is making efforts to move toward the future — and how its Indiana production facility is playing a key role:

Honda Manufacturing of Indiana, LLC (HMIN) today marked the start of mass production of the all-new 2012 Civic Natural Gas as it moves to increase production of the alternative-fuel Civic to support an expanding network of certified Civic Natural Gas dealers across the U.S. Engines for the Civic Natural Gas will continue to be supplied by Honda’s engine plant in Anna, Ohio.

HMIN will ramp-up production of the Civic Natural Gas (formerly the Civic GX) during the 2012 model year to meet anticipated increasing demand for alternative-fuel vehicles. The added production will support Honda’s growing network of U.S. Honda dealers qualified to provide retail sales and service support for the Civic Natural Gas, expanding from 72 Honda dealers in four states to nearly 200 dealers in 36 states, including one new Honda dealer in Indiana.

The 2012 Civic Natural Gas is powered by the cleanest internal combustion engine ever certified by the U.S. EPA and is the only OEM-made natural gas vehicle available for retail purchase in America. It is part of Honda’s growing portfolio of advanced environmental technology vehicles which include three hybrid models, the world’s most advanced fuel cell electric vehicle, the FCX Clarity, and the Fit EV electric vehicle and a Honda plug-in hybrid car, both launching in 2012. The fully redesigned 2012 Civic Natural Gas model goes on-sale October 18, 2011, with a Manufacturer’s Suggested Retail Price (MSRP) starting at $26,155.

“We’re extremely proud Indiana is the home for this all-new Civic Natural Gas,” said Jun Nishimoto, HMIN President. “As the sole producers of the Civic Natural Gas, our associates in Greensburg are making an important contribution to Honda’s global effort to reduce CO2 emissions and advance the deployment of vehicles that can help the transition away from gasoline to cleaner and more sustainable alternative fuels.”
 

The road to high-speed rail has been a rocky one in many places. In the Northwest, purposeful efforts to slow down are proving successful – producing more riders at less cost. The goal is to increase the speed incrementally. Are there lessons to be learned? Governing magazine has the column.

Civic leaders still call their town the “Hub City,” a holdover from its role a century ago as a rail center for the movement of goods and people in all directions. A dozen passenger trains a day — half northbound, half southbound — still rumble through this western city of 16,000 that sits equidistant between Portland and Seattle.

They are run by the Washington state government-subsidized Amtrak Cascades passenger service, which has taken a deliberately incremental approach to developing the Cascadia corridor running from Eugene, Ore., to Vancouver, B.C.

Passenger rail service has been central to the corridor’s strategy and is reflected in a 15-year track record of increasing ridership (up 10 percent in the last year alone) and fares that cover nearly two-thirds of operating expenses. The strategy has marshaled local investment in infrastructure and forged partnerships with those who have an interest in the shared rail bed, including cities and towns along the corridor, Amtrak, the freight carrier Burlington Northern Santa Fe, federal funding agencies and regulators.

In the Northwest, passenger rail has purposely taken some of the speed out of high speed. Instead, the Washington State Department of Transportation (WSDOT) measures its rail initiatives based on a three-part definition of convenience: reducing total trip time while boosting system efficiency and average speed. Scott Witt, former director of WSDOT’s State Rail and Marine Office, says a number of studies all indicate that sticking with faster (rather than fastest) rail would allow the region to realize 90 percent of the ridership and revenue targets at 50 percent of the cost of true high-speed rail, which can peak at 150 mph on Amtrak’s Acela service in the Northeast.

The lion’s share of the $781 million in federal passenger rail funding awarded to Washington is dedicated to raising the average speed by eliminating slow parts of the corridor with new bypasses and other upgrades.

This incremental approach to higher-speed rail has not isolated the service from the complexities of establishing a governance structure for the multistate, binational effort in which five governments must act in concert with one another. As part of that mix, the Federal Railroad Administration (FRA) is transitioning from being a regulatory and safety organization to one responsible for project delivery, funding and management. Witt, whose career has been in project delivery, notes, “The FRA just has not seen this level of funding and complexity before.”

Still, he remains confident that the state will get there. “Our long-range vision is still to establish a dedicated high-speed track with trains running at up to 150 miles per hour,” says Witt, “but we’re laying the foundation to get there step-by-step.”

The leaves are changing colors and there’s a crisp bite to the morning air. We all know what that means: It’s time to register for the 2011 Indiana Logistics Summit on October 12-13!

Okay, the changes in the weather and trees also mean that fall is upon us (which is probably what you thought I was getting at with that first sentence).

But how better to celebrate the fall season than by simultaneously celebrating the logistics, transportation and distribution industries during the two-day conference that features presentations by more than 20 industry experts, networking opportunities, booth displays, a reception at the Indianapolis Motor Speedway Hall of Fame Museum, golf at the Brickyard Crossing, Speedway track tours and more.

This year’s summit also coincides with the 100th anniversary of the Indianapolis Motor Speedway – where the event will be held – as well as the 50th anniversary of the Ports of Indiana. Special events are planned to recognize both. The event is co-hosted by Ports of Indiana and Purdue University.

You’ve got to move fast to register for the conference. The full agenda and online registration is available at www.indianalogistics.com.