Fiscal Myopia: Infrastructure

Aug 16, 2017

“I want to say a few words to those who actively worked in opposition to raising the gas tax – ever: this nonsense has hurt the state,” Baton Rouge Representative Steve Carter said when withdrawing his gasoline tax bill from consideration this past spring, effectively calling some of his fellow lawmakers shortsighted.

The tax revenue would have helped with the $13-billion backlog of deferred highway and bridge maintenance.

“This year alone, I’ve closed 39 bridges. If we did not close them, they are one truck away from potentially collapsing,” DOTD Secretary Shawn Wilson says. (When we spoke, the total was 39. As of yesterday, DOTD’s 2017 bridge closure total is up to 43.)

Further, Wilson says, the failure to fix revenue and roads is affecting the entire state economy.

“We have over 12-thousand bridges in the state of Louisiana, and if those bridges start to go out on a regular basis, all that stuff that supports our economy can’t get to the marketplace, and that backs up. Shift happens when that happens -- shift --  S-H-I-F-T.”

It’s already cost the state one major project: an expansion at Baton Rouge’s Exxon plant, which went to Houston instead.

“They needed a couple of things. They needed a lot of land that we had available. They needed deep water. We have the Mississippi River. But they also needed to move people and goods efficiently over the roads and bridges. And that is where we lost out on a $10-billion investment.”

What about federal highway funds, you ask?

“I still need dollars to get the projects,” Wilson responds, adding that next year there’s not enough money available for the state to put up its required match.

Couldn’t we borrow the money – bond out the projects?

Louisiana’s constitution limits our capacity to borrow, saying “annual repayment cannot exceed six percent of state general fund revenue”. With a conservative cadre in the Legislature determined to cut the budget, rather than raising revenue – in order to “shrink the size of government” – they are effectively shrinking the state’s capacity to borrow and build.

Additionally, the state’s revenue uncertainty causes our bond rating to drop and interest rates to rise, making it cost more to borrow less.

Wilson sums it up:  “Good roads cost, but bad roads cost more.”

Tomorrow, we’ll test our economic vision.