MAY 24, 2019

It’s Infrastructure Week – did you remember to buy a card for that nice bridge you cross every day on the way to work?

Corny jokes aside, this week adds visibility to an issue that’s almost near the top of our policy priorities: Investing in the public works that make our economy work. 

A modern definition of ‘infrastructure’ encompasses traditional transportation assets like roads and bridges, airports and maritime ports, but also a wider portfolio of transit systems, trails, and physical quality of life projects that enhance quality of life and competitiveness. It extends to broadband access and other tools to move information along with people and freight.

State of Improvement
As a state, Indiana is shaking off the effects of past underinvestment in infrastructure.  In 2016, we were squarely in the middle of the pack among states in funding (spending about 10 cents of every dollar on infrastructure), with billions of dollars in critical but unfunded projects sitting on INDOT’s wish list.

In 2017, your Chamber advocated for a legislative package that increased gasoline and other vehicle excise taxes and shifted the resulting revenues to infrastructure.  As a result, Indiana has far outpaced other Great Lakes states in increasing state spending on transportation from 2016 through 2018 (more than doubling every state but Michigan), according to the National Association of State Budget Officers.

This legislative session largely continued this momentum:

  • The 2020-21 budget allocates over a billion dollars annually to ongoing highway maintenance and construction programs, continuing the level of investment supported by the 2017 package;
  • Lawmakers maintained the integrity of the ‘special transportation fund’ (where a portion of gas tax revenues can still be clawed back for general fund purposes before being earmarked for the highway fund) despite some calls to use it for the Department of Child Services budget;
  • Legislators continued funding the Public Mass Transportation Fund at $45 million annually and continued funding upgrades to the South Shore commuter rail line in Northern Indiana (though they failed again to lift the ill-considered ban on light rail projects in Central Indiana); and
  • Added $650 million for Governor Holcomb’s ‘Next Level Connections’ initiative, a “multi-modal” infrastructure investment plan that covers broadband deployment, local trail grants, support for non-stop airline routes and a planned southeast Indiana (Ohio River) maritime port.

All Potholes are Local
To paraphrase Tip O’Neill, infrastructure gets very personal at the local level, as residents are intimately familiar with the condition of their own neighborhood streets and sidewalks and the routes they take to work.

And local infrastructure challenges aren’t easy to pave over.  Property tax caps have slashed local revenues for capital projects, and the state formula to allocate local road funding (based on road miles rather than lane miles) has a built-in disadvantage for larger cities – which also don’t collect revenue on the commuters who put a daily strain on their streets.

Indianapolis has pursued creative infrastructure financing solutions, such as the public-private partnership to upgrade and operate the city’s parking meters, which brought in new funds earmarked for roads and sidewalks.

The transfer of the city’s water and stormwater systems to Citizens Energy has also yielded new revenue capacity to modernize water infrastructure and curb the environmental impact of combined sewer overflows into the White River and Fall Creek (through the ‘DigIndy’ deep tunnel project).

Sticking with water, the city is taking advantage of new financing tools to help to reconnect our region with the White River (and other waterways) for the public good and private development.  In this case, the ability to create tax increment districts to finance flood control projects is paying off for the historic neighborhood of Rocky Ripple – a priority from our 2018 legislative agenda. 

Looking Further Down the Road…
Ultimately, just like Indiana in 2017, cities like Indianapolis needs a more comprehensive solution for sustained investment in infrastructure.  A bipartisan City-County Council commission has been formed to explore longer-term options, and we’re pleased to support their efforts.

And sometimes playing defense
For well over a decade, we’ve championed the cause of mass transit connecting people, employers and neighborhoods across Indianapolis (and the region) with more frequent, convenient service as another form of critical infrastructure investment.  In 2016, the voters of Marion County spoke loud and clear in favor of a modern, practical transit system.

But with IndyGo improving service across the city and construction crews busily preparing for the Red Line rapid transit route to get underway in the fall, we still have to push back against misinformation and reactionary attitudes towards transit.  This week, advocates successfully headed off an attempt to strip local funding (approved by voters via referendum) for transit (Proposition 181).

As progress stays on track, we’ll stay vigilant to protect these important investments in mobility, economic development and neighborhood redevelopment.

From Regional Cities to Regional Capacity
Last week’s Indianapolis Business Journal highlights the uncertain fate of Indiana’s Regional Cities Initiative, a program pushed by then-Governor Mike Pence (along with the Indy Chamber and other metro business groups) in 2015 to stoke population growth and economic development in the state’s metropolitan areas.

We supported Regional Cities (and competed for funding) to fill a gap in our regional ability to finance transformative quality of life projects designed to attract new residents and investment by thinking bigger about infrastructure.

That gap is structural and persistent: The Urban Institute-Brookings Institution Tax Policy Center (2016 data from the U.S. Census) notes that Indiana local governments collect 80% of the general “own source” revenues per capita raised by local government (on average) across the United States, while local capital budgets have declined by a third (per capita) since 2000. 

Regional Cities was a way to encourage collaboration and investment, but we need to build regional capacity to sustain these efforts for the long haul.  So we’re pleased to see expanded revenue-raising and priority-setting powers for Regional Development Authorities (the “investment hub” concept) as a legislative summer study topic – so stay tuned for more on the ‘next frontier’ of our infrastructure agenda.