Infrastructure Spending

(from Maine Townsman, January 2009)
By Douglas Rooks, Freelance Writer

As Mainers survey a bleak economic landscape at the start of a new year, the view has rarely had so many peaks and valleys.

As David Littell, commissioner of the Maine Department of Environmental Protection (DEP) put it, it’s already clear that “this will be a huge recession, perhaps the biggest since the Great Depression,” and that, all over Maine, “people are afraid of losing their jobs, and what will happen to their families.”

On the other hand, “there’s hope with the arrival of a new administration” in Washington, he said, citing the stimulus bill that will engage Congress during the first months of the Obama administration.

Spending on infrastructure is a longstanding, if recently neglected, tool to combat economic downturns, and if Congress approves, state officials like Littell and David Cole, commissioner of the Maine Department of Transportation (DOT), may be important people for municipal officials to keep an eye on.

That’s because DEP and DOT have jurisdiction over many of the infrastructure programs most likely to receive added federal funding, and the most likely to translate down to job-creating endeavors at the municipal levels.

But first there are important questions about how much the federal government should try to do, and how federal dollars should be distributed to states and local governments.

Charles Colgan, former state economist and current chair of the state’s Consensus Economic Forecasting Committee, said that we do need to go back to the Great Depression and New Deal era to find a comparable effort to rescue the national economy.

While there was a modest boost to transportation infrastructure during the Reagan administration – mostly at the insistence of Congress – and a small anti-recession program known as CETA (Comprehensive Education and Training Act) during the Carter administration, the scale of the current effort is much larger.

But much has changed since the 1930s, Colgan said, particularly in the capacity of state and local governments to participate.

Where President Franklin Roosevelt had to create new bureaucracies like the WPA (Works Progress Administration) and CCC (Civilian Conservation Corps) to distribute the federal money, Colgan said the Obama administration is likely to use existing channels.

“To the extent that we can use the programs we have now, money is more likely to be spent quickly and effectively,” Colgan said.

And there are a lot of them: the state and local road programs administered by the Maine DOT, the wastewater treatment, hazardous waste cleanup, brownfields and estuaries program overseen by DOT, the safe drinking water programs at the Department of Health and Human Services, and weatherization and energy-efficiency grants at the Maine State Housing Authority, among others.

Some observers would like a broadening of the focus beyond the “shovel ready” projects that have absorbed the most attention so far. Richard Barringer, the former State Planning Office director who recently chaired the Quality of Place Commission for the Baldacci administration, said that Maine should use the opportunity to rebuild communities and refocus attention on downtowns. “We have to look at where we’d like to be in five or 10 years,” he said. “It important not just to spend money, but to get the results we want to see over time.”

Barringer said that some projects – such as road repaving – are capital-intensive and may not put that many Mainers back to work. “We need better roads, but it’s just as important to get our community infrastructure back into shape,” he said.

Barringer said Maine’s cultural agencies have put together extensive lists of repairs and renovations needed for downtowns to return to an economically competitive position. In 2005, a survey showed $337 million in unmet capital needs, while a recent revision showed $140 million in projects that would meet the “shovel ready” criteria, including being labor intensive and capable of starting within six months.

The reason for all the apparent haste is that, in previous downturns, it’s taken a long time to get dollars flowing. “During the Great Depression, you could build the Hoover Dam, for instance, and just get it done,” David Littell said. “Now it takes years of planning before projects like that can start.”

Nevertheless, the DEP chief does not agree with suggestions that environmental rules simply be waived, as California Governor Arnold Schwarzenegger recently suggested. “We would be in favor of expedited review, but not suspending the rules entirely,” Littell said.

As it happens, Maine has a long list of projects that have either been delayed or cancelled in recent years, starting with the Maine DOT, which removed almost a quarter of the projects from its mostly recent two-year Transportation Improvement Plan.

Of the Baldacci’s administration’s $3.6 billion request to the new administration for infrastructure assistance over the next two years, transportation projects account for nearly $700 million of the total, while another $130 million would go for Clean Water Act projects.

The water and sewer programs administered by the federal government, often with state or local matches, have been falling far short of needs, Littell observed. So the promise of new funding is timely, and “could help us catch up on much of the ground we’ve lost in recent years,” he said.

There are plenty of ideas about how to spend money, and municipal officials are among those who’ve been thinking and planning. The announced goals of both the federal government and the state response seem broadly in sync with the views of municipal officials, according to a recent survey of the MMA membership.

MMA’s 2009 Federal Issues Paper (FIP) estimates that local officials would like to see 51% of funding used for transportation, the bulk for road and bridges; 18% for housing; 16% on wastewater and drinking water improvements, 8% on communications and energy, and 6% on public buildings.

The FIP notes that road conditions have deteriorated markedly since 2006, and that Maine’s road network received a grade of D, while bridges got a D+ from the American Society of Civil Engineers. MMA will advocate that a portion of federal grants go to minor collector roads, which now require a one-third municipal match for any major improvements.

For housing, weatherization provides the best “bang for the buck,” and should be required as part of housing grants, the FIP states.

On wastewater and drinking water programs, MMA will advocate using grants rather than loans, an approach supported by DEP as well. David Littell said that in 75 percent of Maine communities with wastewater treatment plants, using the loan program would exceed the applicable income threshold, which provides that the median household not be required to pay more than two percent (of income) in user fees.

At the Kennebec Valley Council of Governments, Director Ken Young said that creating an economic boost should be the central goal, and that some projects will create a much bigger payoff than others. Those that can be jump-started with an infusion of federal cash are leading candidates, in his view. He gave several examples from communities in his part of the state.

In Hartland, Prime Tanning has carried out a successful consolidation that has increased employment from 112 employees to 226 in just over a year. The leather products company could expand even further in the coming year, but there’s a problem.

Some discharges from the plant are classified as special waste, which needs to be disposed of in a secure landfill. At the moment, sludge needs to be hauled to Norridgewock at triple the cost a local landfill would charge. Hartland would like to upgrade its treatment plant to handle the waste, and is eligible for a grant that ordinarily requires a 50 percent municipal match.

“If we would increase the federal commitment to, say, 90 percent, the town could probably handle the rest,” Young said, for a project that could provide a substantial employment boost in one of the state’s rural areas.

A similar situation exists in Pittsfield, where an existing industrial park is full and the town would like to expand. An Economic Development Administration (EDA) grant would cover half the cost of $400,000 in required infrastructure. Boosting the federal share to 90 percent would make it far more likely that the project could happen this year, he said.

At DEP, Littell is carefully tracking legislation that will originate in the U.S. House Transportation and Infrastructure Committee, chaired by Rep. James Oberstar of Minnesota. While Oberstar is best known for his advocacy of transportation programs, his committee also has jurisdiction over the water and sewer programs DEP would like to see expanded. “In this Congress, he’s the leading advocate of Clean Water programs,” Littell said of Oberstar.

Among current programs likely to receive increased funding are wastewater treatment plants and non-point source pollution projects, the latter of which pleases Littell. “We have major needs not only for agricultural uses, but also the thousands of miles of dirt roads, public and private, that contribute to the sedimentation of our lakes and streams,” he said. Non-point projects provide the need for plenty of labor, which in the past has included Americorps volunteers and other seasonal employees, he said.

The Brownfields program, where sites are cleaned up and immediately redeveloped, is also high on the priority lists, and there could be new funding for the estuaries program, which currently includes Casco Bay.

Littell would also like to see funding for hazardous waste sites that used to be covered by the Superfund program, as well as new challenges such as several hundred former dry cleaning establishments that may have unsafe levels of chemicals.

While the actual levels of federal funding are unknown, the incoming administration has repeatedly referred to a $100 billion infrastructure program that would work through state governments. According to the Maine Better Transportation Association, for transportation projects this would amount to $160-$180 million for Maine over two years, if historic distribution formulas are followed.

Whatever the actual amounts, it’s clear that a lot of infrastructure spending will be occurring soon, so we should also think clearly about the long-term consequences, Charles Colgan said.

“We’ll be borrowing from the future to take care of the present,” he said. “These are projects that would take place over the next 10 years, and instead we’re advancing them to the next two.” It makes sense to do that to revive the economy, he said, but everyone should remember that “the same money’s not going to be there for awhile, as we begin to pay down the debt.”

So while we should be thinking long-term, that doesn’t mean we should only be thinking big.

Colgan thinks the idea of pushing ahead with a planned expansion of the Portland International Jetport, owned by the city, is a good one. “That one will happen anyway, but it’s important if we can make it happen sooner.” Federal funds would be added to the revenue the airport already plans to raise from ticket taxes and assessments on airlines. From the point of view of Portland officials, the sooner the $66 million project can start, the better.

But not all valuable projects are on the scale of the airport expansion. Colgan called attention to the condition of culverts in southern Maine, where seasonal flooding has been worsening, causing damage and economic disruption in many coastal communities.

“The problem is that most culverts are undersized in terms of current needs, which is a reflection of the global warming problem,” Colgan said. “In the usual course of things, they won’t be replaced until they wear out, but by that time flooding could become a major problem.” By pushing such projects ahead now, towns and cities could boost current employment and also reduce the damage from predictable future events, he said.

Colgan also advocates a new attitude toward Maine’s public buildings. Traditionally, the public has tolerated deficiencies in schools, municipal buildings and other facilities on the idea that “If it isn’t falling down, it’s good enough,” he said.

But when buildings have problems like toxic mold – which afflicted dozens of school buildings in recent years – that attitude may be faulty. “When our kids are getting sick from poor indoor air quality, you have to wonder,” he said.

So a broad focus on public needs should drive the debate over the next two years, and beyond, the experts seem to agree. A focus on energy and environmental improvements makes sense, Colgan said, because he expects them “to be the driving force of the Maine economy over the next decade.” Federal aid, he said, gives Maine “an opportunity to use this capital to get a head start” on the needs of the next generation.

Douglas Rooks is a freelance writer from West Gardiner and regular contributor to the Townsman.