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Report Finds Many U.S. Cities Forced To Retrench On Infrastructure Projects


America’s infrastructure investments – levels of which have long trailed behind those of Asia and Europe – will be further stifled this year by pressures to cut federal spending and reduce the deficit, compelling cities to be evermore creative and resourceful in securing partnerships to start or continue infrastructure projects, according to Infrastructure 2011: A Strategic Priority. The report, released by the Urban Land Institute and Ernst & Young, emphasizes the challenge faced by many urban areas trying to provide adequate transportation and other infrastructure services for their residents, workers and businesses.

"For those who have read our infrastructure reports over recent years, one consistent finding is that the U.S. seriously lags behind the rest of the world in addressing its infrastructure issues," said Howard Roth, Ernst & Young's Global Real Estate Leader. "The U.S. is facing increasing federal, state and municipal budget deficits, and lacks any type of comprehensive national policy or the political will to develop a long-term approach to funding the significant maintenance needs of aging U.S. infrastructure, much less the modernization and greenfield development of critically-needed new projects. We need to refocus our priorities: streamline the procurement process, attract private capital more efficiently, strategically invest in projects with national merit, and regain our stature as a global competitor. We need to take a page out of the playbooks of several nations around the world highlighted in our report, or we face the risk of serious deterioration of our country's economic and social well-being."

With $2 trillion needed just to repair and rebuild deteriorating roads, bridges, water lines, sewage treatment plants and dams, the nation’s infrastructure woes will only get worse, as the politically fractured government erodes support for both existing upgrades and new initiatives, noted ULI Executive Vice President Maureen McAvey. (Public spending on transportation and water infrastructure as a share of the U.S. gross domestic product peaked at 3.1 percent in 1963, then declined steadily to 2.4 percent in 2007, according to Congressional Budget Office data.)

“America’s unwillingness to confront its infrastructure challenges is undermining the ability of our urban areas to compete globally. If we persist with short-sighted decisions, we will lose talented workers and companies to nations and cities overseas that are committed to infrastructure as a vital component of livability and economic viability,” McAvey said. “Infrastructure as a national priority is not political rhetoric. It’s a must to keep America’s standing as a global leader in innovation.”

States and local governments, which are already suffering from decreasing tax revenues, are also facing both the phase-out of federal stimulus funding and the likelihood of further declines in federal funding, the report says. (The federal government’s share of total public expenditures for transportation and infrastructure is about 30 percent.) The ramifications are significant:

  • Infrastructure built with federal grants decades ago will not be repaired or replaced, due to the shortage of state and local maintenance and operational funding.
  • Local governments will scramble for what’s left of available federal capital project dollars.
  • More states will reject federal capital funding, fearing future unfunded operating burdens.
  • Transit system expansions in car-dependent metro areas will struggle to move forward.

The report provides a snapshot of the infrastructure challenges, particularly those related to transportation, faced by 20 major U.S. metropolitan regions – Atlanta, Boston, Charlotte, Chicago, Dallas-Fort Worth, Denver, Detroit, Houston, Indianapolis, Los Angeles, Miami, Minneapolis-St. Paul, New York City, Oklahoma City, Philadelphia, Phoenix, Salt Lake City, San Francisco, Seattle and Washington, D.C.

While all are experiencing fiscal constraints, the report cites Denver, Minneapolis-St. Paul, Seattle and Salt Lake City as being particularly successful in moving projects forward, due largely to the willingness of local governments to pool resources and their ability to gain consensus on planning and spending strategies.