InfrastructureRecession-related cost measures blamed for U.S. infrastructure lagging development

In an alarming fall, the United States is currently ranked 19^th in the quality of its infrastructure, according to the World Economic Forum’s Global Competitiveness Report. Additionally, the American Society for Civil Engineers (ASCE) has given the country a D+ on its annual Infrastructure Report Card, arguing that $3.6 trillion is needed by 2020 for maintenance and upgrades.

As Five Thirty Eight reports, over 90 percent of the $267 billion spent at state and local levels on construction is sourced from state and local governments. Further, in 2014 no state is expected to run a negative balance in both general and reserve funds. Yet, as the news site asks, “why aren’t states pulling the trigger on big capital projects?”

First, many states are still struggling with paying off recession-era debt. The years prior to the recession led to a level of borrowing that could not be sustained throughout thinner years and because of that, the need to pay off debts has taken precedent. Aranth Prasad, the transportation secretary of Florida, recently reported that the state had paid down $3.6 billion in state debt, foregoing other budgetary concerns, and that officials there see the move as a matter of pride.

Also, in order to finance large scale infrastructure projects, many state and local governments turn to the municipal bond market, but with the lessons of the recession still in the minds of many officials, fewer have been issued after a decade long flat line from 2002 to 2012.

Lastly, while there is heavy federal assistance to state and local governments in transportation infrastructure — nearly 30 percent of total output according to a Pew study — the Highway Trust Fund (HTF), which distributes the income from the national gas tax to state transportation departments, is having little impact.

While the HTF usually distributes around $40 billion to $50 billion a year to state governments, it is finding its end-of-year balance is down to nearly $1 billion in 2014.

In the case of a state like Florida, which receives $2 billion in aid from the HTF, the money does not stretch far. “There will be impact – but it’s a short impact,” said Prasad.

Unfortunately, these debt-cutting measures and HTF amounts do not provide long term fiscal solutions which are what is necessary for infrastructure development on the scale that the World Economic Forum and ASCE call for, and more measures are do not appear to be quickly forthcoming.