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Infrastructure Week Highlights Urgent Need to Invest in our Declining Transportation and Water and Sewer Systems

By Jon Honeck, GOPC Senior Policy Fellow Infrastructure Week is May 15 – 19, 2017.  GOPC considers infrastructure, especially transportation and water infrastructure, to be vital components of Ohio’s economic revitalization agenda.  During Infrastructure Week, groups across the nation are holding events and doing everything they can to draw attention to the unacceptable condition of the nation’s infrastructure.  Overall, the American Society of Civil Engineers (ASCE) gives U.S. infrastructure a grade of “D+”.  Although the term “infrastructure” usually brings to mind surface transportation – roads, bridges, and railways – the ASCE’s concerns extend to many forms of infrastructure that make a modern economy work, including drinking water and wastewater systems, air travel, ports, and the electrical transmission grid.   The ASCE estimates that underinvestment will cause the average family to lose $3,400 each year as a result of infrastructure deficiencies. 

As seen in the chart below, public sector spending on infrastructure declined from nearly 3.5% of gross domestic product (GDP) in the late 1950s to just above 2.5% today.  Although federal policy definitely shapes overall societal policy choices (e.g., the interstate highway system), the chart also makes it clear that states and local governments have been doing the heavy lifting when it comes to infrastructure spending, and probably will continue to do so in the future.  Federal outlays in recent years been about 0.6% of GDP, about one-fourth the state and local government total.

 Infrastructure Spending as a Percentage of U.S. GDP

infrastructure chart

Source: GOPC analysis of BEA and CBO data.

Across the country, states are doing what they can to take charge of their own destiny, including finding ways to pay for what they need to improve transportation.  Most states, and the federal government, rely on gasoline excise taxes to pay for surface transportation.  For many years, discussions about raising the gasoline tax were off the table at both the state and federal levels.  The federal gasoline tax has not been raised since 1993; Ohio’s has been the same since 2005.  This inaction meant that state transportation budgets have failed to keep pace with inflation, putting more pressure on their ability to perform basic maintenance.  As the economy has improved, however, state leaders have put together coalitions to support improved funding.  Since 2012, nearly half the states have adjusted their approaches to taxing gasoline.  Some of the most recent to move in this direction in 2017, including Indiana, South Carolina, and Tennessee, are generally considered to be fiscally conservative states.  These changes at the state level may build momentum for a reexamination of transportation funding at the federal level. 

The country’s focus on infrastructure is not only an opportunity to rebuild, but also to improve and rethink what we need to be successful in the 21st Century, as GOPC outlined in a Cincinnati Enquirer op-ed.  Proceeds from the state gasoline tax in Ohio are constitutionally required to be spent on highways, and do not address the needs of Ohio’s residents for public transit or alternative modes of travel such as biking or walking.  Despite an increased transfer of federal funds to public transit in the Ohio Department of Transportation budget, Ohio’s overall state level of support for public transit is minimal compared to that of other states.  GOPC believes that future state transportation reform should include a dedicated revenue source for public transit that will help local transit authorities design the kind of flexible and affordable systems that Ohioans deserve.