Pamphlet offers fresh look at infrastructure spending

Tom WestWe all know that the times are changing. It’s not just the weather, but life in the Great Recession is a lot different than anyone less than 70 has experienced.

Recently, I was reading a pamphlet called “Curbside Chat,” published by Strong, a Twin Cities based non-profit organization, and I was struck again by how something that we all have taken for granted was more illusion than real.

I was alerted to the pamphlet by an on-line posting from Tom Horner, the 2010 Independence Party candidate for governor.

I can understand why he sent it. “Curbside Chat” should be required reading for every city councilor, county commissioner and economic development director around.

It asserts nothing less than that the communities that will survive and prosper going forward are not those that have grown and prospered during the previous 60-plus years.

That prosperity was based on the automobile, and led to the spread of mammoth metropolitan areas. The growth of this system was financed by state and federal government aid; both public and private debt (local governments issuing bonds to pay for improvements and families taking out ever larger mortgages to finance their dream homes), and, most insidious, what the pamphlet calls “The Growth Ponzi Scheme.”

The Growth Ponzi Scheme has been the practice of local governments to use the additional revenue gained from new growth to pay off liabilities from past growth.

We often hear about a local government extending a road or a sewer line to accommodate a new business or residential development. The rationale is that growing the tax base and improving the infrastructure are good things. But too often, the benefit of the improvement does not come close to covering the ongoing increase in the costs of upkeep.

The first generation of suburban expansion relied on savings and investment. The second generation of expansion was financed by increasing levels of debt. The third generation was financed by gradually abandoning lending standards — which the subsequent disaster has made obvious.

“Curbside Chat” presents a dozen examples of what this means. For instance, a city engineer estimated at $80-$100 per foot the cost for basic maintenance of a typical city street surface. He was then asked how much tax revenue will be collected for the street maintenance effort. The answer was $27 per foot. To cover the cost, private sector investment (think taxes) would need to increase by 300 percent.

Or consider a new sewer system for a small city. With federal support, the original system was built in the 1960s and upgraded in the 1980s. The cost to replace the system is $3.3 million and the feds are broke. The tab comes to $27,000 per household. The city’s median household income is also $27,000.

“Curbside Chat” says the solution begins by stopping unaffordable growth. Do only those things that actually increase the tax base more than the cost of adding infrastructure.

That may mean filling in the vacant lots with new houses before adding a whole new subdivision.

It may mean helping 50 businesses add one employee each instead of luring one business employing 50 people away from another community with grants and subsidies.

It may mean easing building regulations and reviewal steps originally designed for whole subdivisions so smaller projects, like converting single-family homes to duplexes, become possible.

In the same way, 8th District Congressman Chip Cravaack has taken heat for coming out against extending  commuter rail service from the Twin Cities to Duluth. He noted in a StarTribune article that 1,154 bridges in Minnesota  (8.4 percent of all the bridges in the state) are “structurally deficient.”

He puts the blame squarely on prior Congresses which “not only raided the Social Security Trust Fund to pay for an increasing number of government programs, they also diverted funds from the federal gas tax away from maintenance of our roads and bridges.”

Cravaack noted that the North Star Commuter Line can’t get any more funds for expansion from Big Lake to St. Cloud because of low ridership. Cravaack wrote, “The wisest course of action for us is to not spend money on a venture that can’t pay for itself. Instead, we must first attend to the crumbling roads, the bridges in urgent need of repair and the incomplete highway projects that we have throughout the state.”

The “Curbside Chat” concludes, “Sustained prosperity will emerge in communities where local leaders grasp the changes that are happening, engage their citizens … and take proactive steps to strengthen their communities. Local leaders are waking up to the fact that they are on their own, that help is not coming from Washington, D.C., the state capital, the transportation office or any of the traditional sources. This can be scary, but also liberating.”

Tom West is the editor and general manager of the Dairyland Peach. He may be reached at (320) 352-6569 or by e-mail at [email protected]

Comments Closed