To improve our nation’s infrastructure, cities need the freedom to explore innovative financing tools — but they also need a renewed commitment from their partners at the state and federal levels of government.
This is a guest post by Councilmember James McDonald.
As federal and state funding for infrastructure has become less predictable, the stress on city budgets has come to a breaking point. The devolution of this relationship has forced cities and states to raid general funds for transportation and infrastructure maintenance, construction and new purchases. This failure in federalism has left cities searching for a better way and not a one-size-fits-all approach from the federal government. While cities invited the campaign conversations on infrastructure of the past year, it is now time for more action and less rhetoric.
In Florida, the greater Miami-Dade metro area — home to the 7th most populous county in the United States, with over 2.7 million residents — is taking a lead in innovative transportation and infrastructure improvements.
Known for its highly congested roads and highways, local government in the Miami area has taken the problem into its own hands and invested in improvements. The Miami-Dade metrro has the 15th largest transit system in the country, covering 360 square miles. This includes bus, elevated heavy rail, and automatic people movers.
To alleviate some of the congestion, the region began searching for innovative solutions, combining private innovation with local paracticality to create the Brightline, a commuter rail system currently under construction. The rail system will connect downtown Miami to West Palm Beach via Fort Lauderdale and eventually to end in Orlando. The system will place stations centrally in the heart of downtowns with access to shopping, dining and business centers within walking distance. Not only will this help lower daily traffic levels, it will help residents save time and money on their commutes while bolstering local brick-and-mortar businesses.
The connection between private enterprise and local government is key to creating economic development and fostering a creative environment that serves local needs. One of the ways local government and private business have collaborated is through public-private partnerships (P3s), which have become something of a buzz word in Washington.
Although public-private partnerships have been deemed the saving grace of our nation’s infrastructure problems, nationally only seven percent of recent infrastructure projects were eligible for a P3. Innovative financing is welcomed and needed — but P3’s are just one tool in the financing toolbox.
More than two-thirds of all public infrastructure is funded by tax-exempt municipal bonds. Local governments own 78 percent of road miles, half of the nation’s bridges, and 95 percent of water infrastructure. This tool saves localities an average of 25–30 percent on interest cost, thanks to investors who are willing to accept a lower interest rate to invest in cities.
Traditional means of paying for infrastructure no longer cover all costs, so innovation is welcome and needed. But this calls for a reversal of the eroding relationship between all levels of government. Cities need autonomy to make local decisions, but research finds that most cities have limited authority regarding the number and scope of infrastructure funding tools. The patchwork model used over the past decade is no longer a viable option.
A recent study by the American Society of Civil Engineers (ASCE) estimated a $3.6 trillion price tag to bring the nation’s infrastructure to a “state of good repair.” This goes well beyond President Donald Trump’s $1 trillion plan and the $305 billion FAST Act. While the act is a great starting point to address some local surface transportation needs, it does not go far enough in closing the infrastructure gap.
Focus nationally has been on infrastructure financing, and there has been a disturbing absence of discussion around direct federal investment or funding. Congress has supported surface transportation grant programs such as TIGER and FASTLANE — but real improvements to our infrastructure deficit are going to take federal investment directed to local governments, where money is most needed and where it will be put to the best use.
The lack of funding from the federal level coupled with many states’ inability to raise their own gas tax has started an alarming trend of straining general funds to cover immediate needs with no forward outlook.
A fix needs to be identified to fully fund the Highway Trust Fund beyond the expiration of the FAST Act, and a federal revenue commitment is needed to bring transportation systems into an acceptable state.
Cities need strategic and predictable investment from their federal and state partners. The Miami-Dade metro area has successfully used public and private financing to address our needs, but public-private partnerships will not save our ailing infrastructure network.
Cities need the freedom to explore innovative financing tools — but they also need a renewed commitment from their partners at the state and federal levels of government.
Featured image from Getty Images.
About the author: James McDonald is a city councilmember from Pinecrest, Florida, and serves on the National League of Cities’ Transportation and Infrastructure Services Federal Advocacy Committee.