Category Archives: Nevada highways

Infrastructure Funding and Financing: Another Trumpian Disaster in the Making

Let’s start with the ASCE’s report card on Nevada’s infrastructure.  The last report card on our kitchen table gives us an overall average C-.  Nevada’s two lowest grades (both D’s) are in categories for schools and dams. The claims from the current White House administration would imply that Nevada will see marvelous levels of investment in Job Creating Infrastructure Projects.  Not. So. Fast.

There are some questions related to projected infrastructure legislation which Nevada elected officials may want to consider very carefully.

#1. Does the infrastructure legislation address Nevada’s greatest needs?  The answer at present is “maybe not.” The commentary coming from the White House, and from members of Congress imply that most of the infrastructure plans are part of the Transportation budget.  [Hill] Again, roads and bridges are important, so are airports, but the greatest needs in this state are for projects and funding for upgrading schools and dams.

This past February a dam failed in Elko county, flooding farmland, homes, and stopping traffic on the Union Pacific RR. Obviously dams must eventually get their due. First, we should notice that the state of Nevada doesn’t keep a ranking of hazardous dams, most of which fall into the “earthen” category.  Secondly, it should be noted that a high hazard dam refers to the damage possible should the dam fail, not to the actual condition of the dams themselves.  Third, many dams in this state are privately owned.  About one third of our 650+ dams are constructed for flood control, another third for mining operations, and the remaining third fall into the amorphous category “anything else.” The state has been relying on 11 engineers to keep track of the 650+ dams, and Governor Sandoval’s budget proposal calls for three additional engineers in the Water Division for the next fiscal term. [LVRJ]

School facility upgrades and construction generally lie outside the common understanding of ‘infrastructure’ expenditures, being the province of local school districts, and based on the shifting sands of bond issues. Nothing signaled by the administration thus far would suggest expansion of federal interest in this category of infrastructure investment.

#2.  Will the legislation address Nevada’s needs for the construction and maintenance of roads and highways?  Maybe not.   The situation at present:

“The Nevada Department of Transportation maintains 5,300 miles of state highways, which includes many rural roadways within Nevada. Without an increase in the gas tax since 1992, the state funding levels have stagnated and Federal funding has remained at a similar level the past 5 years. Hence, the maintenance of the existing highway system has fallen behind and the state will need approximately $285 million annually for the next decade to catch up on the current backlog of highway maintenance. The current funding levels provide only 60% to 70% of the required funding to maintain the state highways. This has resulted in an increase in the number of lane miles requiring either an overlay or full rehabilitation from 28% two years ago to 38% currently.” [ASCE]

New construction is great, no one should argue against it where it’s needed to improve the flow and traffic and attendant commerce, however, when nearly 40% of the current roadways need overlays or full rehabilitation, the problem is focused on maintaining what we have at present not necessarily on new construction projects.

#3. Does the administration’s plan differentiate between financing and funding?  This is important.  A definition is in order:

“Infrastructure funding and financing are different concerns. Funding specifies how resources will be collected to pay for infrastructure construction, operations and maintenance, and repairs. Financing generally concerns how to raise the large upfront costs needed to build the infrastructure.” [EPI]

So, the administration has spoken of “a trillion dollars in infrastructure investment,” what does this mean?  For the administration is apparently means “leveraging private dollars.” Again, some translation is necessary.  What the administration is talking about is the financing of construction projects. And, we’re back to the difference between funding and financing — if states are facing the same questions posed back in 2015, when Republicans proposed that HTF projects be limited to the revenue accumulated from gasoline and diesel taxation, then many projects, especially of the improvement and maintenance variety will be put on hold. [BondBuyer] Infrastructure funding will be a function of how the administration budget addresses the issue of raising the money necessary to construct, operate, and maintain.  However, if the administration is speaking of “leveraging private funds,” then we should assume that the White House is referring to new construction.  And, now we enter the land of the P3.

A P3 is: “Public-private partnerships (P3s) are contractual agreements formed between a public agency and a private sector entity that allow for greater private sector participation in the delivery and financing of transportation projects.” [DOT]

Let’s put this question of infrastructure investment in purely financial terms:  Who benefits from P3 structuring?  Hint: It isn’t necessarily the state and local governments because bond yields for such things as school construction, road construction, and other large projects have been dropping since their “highs” around 1982 (13+%) to the current rates (3.5+%). [MuniBond]

Bluntly stated, it’s not the financing that’s a problem for state and local governments, they’re paying almost historic low yields (interest) on the bonds they’ve issued for major projects.  The administration is approaching the infrastructure investment issue from the wrong end of the stick — focusing on the financing and not the funding.

#4. Is the use of the P3 structure based on the needs and capacities of the states and municipalities or the desires of private investment?  Some attention is required because:

“In theory, they can(P3)  be effective—but they provide no free lunches. Funding must still be found for the projects—and ordinary households will end up paying the costs through taxes or user fees. In addition, the details of contract construction and oversight are daunting and require a competent, democratically accountable government to manage them. In short, P3s do not allow for simple outsourcing because they do not bypass the need to fund infrastructure or the need for competent public management.” [EPI]

Or, P3s don’t replace the more traditional methods of financing — local and state taxation is still required for paying project costs. There’s nothing ‘simple’ about these arrangements, and they require extensive oversight and management.  Before leaping into a P3 it should be revealed that these generally allow governments and investors to ignore the requirement of Davis-Bacon Act ‘prevailing wages.’ This may ‘create jobs’ but it doesn’t create ‘good paying jobs’ in the construction sector.

#5. Does the administration plan specify financing and funding of infrastructure projects or is it simply a “tax credit” giveaway to investors?  It certainly sounds like it at this point, but the administration, as is becoming more obvious every day, seems to be short on specifics, and the only solid at the moment is the “tax credit” portion of the pronouncements.  If this is a tax credit for projects already in the planning stage, then it’s hard to characterize this as a bright and shiny new proposal.

#6. Location, Location, Location?  Granted that Nevada is an urban state, with most of the population located in two counties, but the roads, bridges, and dams are aligned through predominantly rural areas. Investors, in P3 or other financing schemes, can clearly see the benefits of construction in urban areas (toll roads, toll bridges, etc.) Rural areas, not so much. Nor does the financing strategy address other infrastructure issues in urban areas — how, for example, does Clark County improve its public transportation facilities and components? Washoe County? Or, Douglas, Lyon counties, and Carson City?  How will investment be directed to poorer areas, or areas under served by current transportation systems? Stated more generally:

“The other problem is that Trump’s approach makes it less likely he’ll actually create new jobs. If the customer base can afford it, and they really need the infrastructure, then the project is almost certainly already profitable and private firms are already willing to do it. The tax credit just sweetens the deal on the margins. Where there’s demand, the private market can already create jobs. The less you’re willing to redistribute, the fewer new jobs you can create.” [TheWeek]

This is another point at which the magic hand of the Market fails on one side and succeeds on the other — where there is demand (and the capacity to meet that demand, the tax credits are minimally useful (except to investors) — where there is great need but little capacity to meet the demand, then the tax credits aren’t an inducement to job creation.

We need to take some care to observe whether the “infrastructure” plan is (1) truly about infrastructure needs in Nevada? (2) truly a job creating plan and not merely a way to get tax credit benefits to the investor class, or ignore the Davis Bacon Act requirements for American workers, (3) about getting the infrastructure investments where it is actually needed.

Caveat Emptor.

 

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Filed under Economy, Federal budget, Infrastructure, Nevada highways, Nevada politics, Politics, public transportation

Pride and Prejudices: Beautification Bashing and Civic Pride

Quick Quiz for the Day: Who said this?

“We have placed a wall of civilization between us and the beauty of our countryside. In our eagerness to expand and improve, we have relegated nature to a weekend role, banishing it from our daily lives. I think we are a poorer nation as a result. I do not choose to preside over the destiny of this country and to hide from view what God has gladly given.” [quote]

100 points if you knew that the statement was made by President Lyndon Johnson as he signed the Highway Beautification Act of 1965, an effort spearheaded by his wife, Lady Bird Johnson.  This week Senator Tom Coburn (R-OK) took issue with two small beautification projects in Nevada. The Senator  “labels two beautification projects along the Las Vegas Beltway, one at Eastern Avenue and one at Flamingo Avenue, that cost taxpayers approximately $690,000 as prime examples of habitual waste of federal transportation dollars on aesthetic enhancements.”  [LVSun]  Coburn, it seems, would gladly banish from our daily lives what “God has gladly given.”

The question raises at least one fundamental issue about public expenditures.  Do we fund only those things which are strictly utilitarian, without concern for design and aesthetic appeal, or do we build into our national infrastructure elements that promote a sense of ourselves as social creatures who have a natural inclination toward making our surroundings attractive?

Even some normally Strict Utilitarians can provide evidence for the latter description.  A tiny Nevada border town has a community hall, a metal building of little architectural grace, but evident functionality.  For years it sat surrounded by its functional gravel parking lot,  its functional chain link fencing, and a scruffy unused lawn area.   And, it sat that way until some funds were made available for “community improvements.”  Certainly, there were some projects which might have been more utilitarian, but the one selected by the rib-rock conservative community was “Let’s spruce up the community hall area… We look like a pit stop not a real town.”

When we combine our natural inclination to make our surroundings more attractive with a sense of community pride — good towns look good — interesting things happen.  Some decorative use of gravel was applied to the area, along with some trees and shrubs.  A local concrete company, hired to put in some edging, ask if the workers could “get creative” and instead of straight lines insert curves to give the lawn area more of a “park feel.”  Those working with the concrete  had seen this configuration in another location and thought it “looked nicer.”

The walkways were completed, the shrubbery and trees from a nearby nursery planted, some new sod laid in the grassy areas… and no, this did not transform the location into the South Lawn of the White House, nor did it in any way replicate the gardens of Kensington Palace.  However, it did engender more ideas.  “We need to “spruce up” the Flag Pole!”

The beautification funds expended, the community dipped into its own resources, and given how nice the new hall lawn area looked it was considered unseemly not to put some lights up around the flag pole.  And, if we “light up our flag at night” then we “need to install a nice cedar ‘thingie’ around the base to keep debris and wandering creatures away from the lighting fixtures… and then “we need a new State flag…”

There must be something to that “natural inclination toward making our surroundings more attractive,” because the lights were installed, the cedar ‘thingie’ constructed, and a State flag flown below Old Glory.   OK, it’s not the Iwo Jima Memorial, it’s not even close.  However, it is constructive evidence that beautification projects cross pollinate with ideas which are informed by civic pride.

The Coburn Theory, i.e. only that which is utilitarian should be funded by taxpayer dollars, negates our natural inclination to improve our surroundings, and our equally natural inclination as human beings to take pride in community structures as part of our sense of self.  If one’s local (state or national) government is a necessary evil, then there is no pride to be derived from its physical components and manifestations.   If one’s local (state or national) government is an extension of a sense of community, then it’s logical that the buildings and appurtenances will reflect a measure of good old fashioned civic pride.

That curved concrete edging  illustrates another point as well.  Human beings accrete ideas like sandstone, each bit added to the next.  Someone had seen those curvatures in another setting, made an aesthetic judgment about the effect, and determined that  curved edging would be an appropriate and pleasing addition.  The trees planted were species recommended for hardiness, and for being attractive in other community settings.  The shrubs were ones known for withstanding wind and low temperatures.  Ideas about the plants and trees were gathered from both public and private settings, combined into a plan, and installed around the hall.

The Coburn Theory not only negates the natural inclination to make our surroundings reflective of our sense of community, it also constrains our compilation of ideas about what constitutes an attractive environment.  If rock mulch and native plants are used to control erosion along the highway — would this work in my yard?   Would a more intensive or more complex planting of native and non-native species I saw along a highway give me ideas for my own property?  How does what works on my property inform my notions of what kinds of planting would work for our government installations?

We can erect utilitarian metal buildings for government purposes, but it won’t be long before we’re tinkering with ways to make them look more attractive. We can construct perfectly utilitarian highways, but it won’t be too long before we’re thinking about how to impede erosion in the most attractive way feasible.  Perhaps, the most unfortunate implication of the Government Is A Necessary Evil philosophy is that it tends to obliterate our sense of civic pride.  This community hall is ‘ours’ and reflects who we are or aspire to be; this highway is ‘ours,’ and we want its travelers to find it impressive. A little pride isn’t necessarily a bad thing.

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Filed under ecology, Nevada highways

>Coffee and the Papers: No help for Nevada from the Federal Highway Trust Fund

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Nevada sits with a $3.8 billion deficit in its highway funding, and if we thought help might be coming from the other 49 states we are going to have to think again. The federal gasoline tax hasn’t been increased in 14 years and in 2009 the Federal Highway Trust fund will start falling short of planned federal spending. [LVRJ]

Business 2.0 says Las Vegas should experience a 6.5% growth rate based on commercial construction and hospitality (gambling…) [LVRJ] Good news? We’re growing — bad news we’re growing and the infrastructure isn’t keeping pace?

When 24% of the counterfeit conservative voting base says “Keep looking for another candidate” — maybe it’s time to start looking for another candidate? [LVRJ] There goes the old saw: Democrats want to fall in love; Republicans want to fall in line? The California GOP has found a challenger for freshman Congressman Jerry McNerney (D-CA) who defeated Richard Pombo in 2006. [Hill] Florida Governor Crist has signed the bill to move the Florida Primary to January 29. [MH]

Dealers opposed to Wynn’s tip sharing scheme used the Internet(s) to organize their opposition — leaving all those union busting consultants charging hefty fees to keep American corporations “union free” to devise new ways to “exert control over employee communications?” Watch for more company-sponsored sites, e-mail controls, and other “controlled” (you get to say what management wants you to say) and “accountable” (your name’s on it so they can retaliate later?) company communications.? [LVSun] Gee whiz, Steve Wynn’s sounding like the latest crop of whining pundits — all exercised that anonymous folk could say blasphemous things about him and his schemes… and the GOP is dithering that their party’s stuck in the circa 2000 Internet. When the ABC-PAC (conservative) raises $385.00 and John Edwards alone has racked up $3 million on Act Blue’s site — yes, the GOP very likely has a problem: Too much top down-marching orders-fall in line organizing? [WaPo]

The Nevada Legislature’s Gift Shop may open its Olde Wyne Shoppe? While — “what was that stuff in the glasses on the cruise ship?” — Dawn Gibbons plays at being ‘Lemonade Lucy’ Hayes at the Governor’s house? [LVSun] The governor’s spokesman says that Gov. Gibbons will have no problem signing the bill — just as soon as he unties the dinner napkin from his head and stops making “Rrrrrr” sounds?

Public school administrators voiced their concerns about the impact of the No Child Left Behind Act and the associated state legislation that is hampering local districts’ attempts to provide specialized instruction and curricula that reflects community needs. [RGJ] Not to put too fine a point to it, but when bean counters are put in charge of education, not surprisingly, we get beans.

Another one bites the dust. Hard on the heels of the Chrysler buyout by a private equity firm, Alltel Corporation has agreed to be bought by TPG Capital and Goldman Sachs for $25 billion. [Reuters] And, the “dollar buying ever less of world’s goods: the dollar has fallen 5% against the euro and the pound so far this year – the equivalent of a 20% annual decline” [CSM] Should make the trade deficit numbers look better?

The Army Times compares the Congressional pay package for troops with the White House proposal. Congress wins. The White House response: “Providing bigger pay raises for everyone is considered by defense personnel and budget officials as unnecessary and wasteful when there are other military priorities that are not funded or not fully funded.” So, we pay the fat contracts first and if we have anything left over — then we pay the soldiers, sailors, airmen, and marines?

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Filed under Economy, Las Vegas, Military pay, Nevada highways, Nevada legislature, Steve Wynn, Union busting