Donald Fry: Making transportation a top-tier priority

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By Donald C. Fry

Pennsylvania Governor Ed Rendell and other speakers at the Greater Baltimore Committee’s September 22 Transportation Summit drew enthusiastic applause from the business audience when they called for major spending increases for transportation infrastructure at both the federal and state levels and for appropriate increases in gas taxes and other revenue sources to fund it.

Why do business leaders so readily support increases to fund transportation infrastructure? Because they recognize the critical importance of capital assets to business and economic growth.

Business leaders are acutely aware that our nation and state have allowed funding and spending for roads, transit, port and airport facilities to stagnate for more than a decade. By GBC estimates, Maryland faces a shortfall in excess of $50 billion for transportation projects that have been planned, but are not funded for construction.

Nationally, Governor Rendell called for as much as $3.5 trillion in federal spending during the next decade to maintain America’s deteriorating infrastructure and to build new projects including a high-speed rail system “that really works like it does in Asia and Europe.”

Rendell noted that there are many creative ways to fund infrastructure without impacting the federal deficit, including lifting the ban on imposing tolls on existing interstate highways, and creating an infrastructure bank to nurture private investment in transportation. “But you can’t do it all without federal spending,” he said.

“Do you know any business that’s grown without investing in its own future?” Rendell asked. “Of course not. There isn’t one. That’s how growth occurs.”

This exposes a major difference between the perspectives of business leaders and many elected officials.

The best business executives are relentlessly adept at sorting through their capital investment options, analyzing financing alternatives and the anticipated return on investment (ROI), and prioritizing. They’re skilled at deciding how to most effectively apply a limited amount of their investors’ money to capital needs. They are always calculating ROI.

But there is one other important variable that business executives also consider – whether an investment is for an asset that is an essential prerequisite to the business’ ability to operate successfully, to grow and to prosper. In an executive suite, that prerequisite element almost always trumps ROI calculations.

In the business world, executives are comfortable with rigorously prioritizing, distinguishing essential prerequisites from other important capital needs and making tough decisions when it comes to core infrastructure.

That’s the kind of process that led CSX Corporation to invest $5 billion in rail infrastructure during the last three years even though business volumes are down 15 percent, the company’s chairman, Michael J. Ward, told the GBC audience.

In the public policy world, legislators are considerably less comfortable with such decisions. They represent constituencies much broader than the makeup of a typical corporate board of directors.

Lawmakers at both the state and federal levels operate in a chaotic, tactics-first environment. They sift through hundreds of bills and endure a flood of disconnected tactics shaped by an incredibly broad range of competing policies and disparate political agendas.

Many are driven by the politician’s innermost desire to please everybody. Rendell put it more bluntly when he called lawmakers in Washington “scared rabbits” when it comes to issues such as increasing the federal gas tax.

In both our nation and state’s capital, inaction too often rules the day.

In Washington, the development of a long-term six-year transportation funding strategy — in the form of congressional transportation reauthorization legislation — is basically on hold.

Action on a more than $500 billion draft reauthorization bill has been put off by the Obama administration and Congress until after the November election. After the election, virtually all experts predict “the most narrow margins in both Houses in years,” American Road and Transportation Builders Association President Pete Ruane told the audience at the GBC summit.

“The difficulty of getting anything done,” said Ruane, “is going to be extremely hard in the coming months.”

In Maryland, transportation funding has not been a top-tier issue in Annapolis for almost two decades. For instance before the recession, while revenue to Maryland’s general operating fund was increasing by 58 percent and overall state spending was increasing by 65 percent from FY 2000 to 2008, Maryland’s lawmakers allowed revenue to the Transportation Trust Fund to stagnate as it increased by less than half those rates.

Then, after lawmakers in November 2007 passed what was supposed to be a $400 million annual increase in transportation revenue for FY 2009 and beyond, they almost immediately took back $50 million a year for five years for the general fund, and recession revenue declines eroded the rest. The state’s six-year budget for spending on capital projects was cut by more than $2 billion in the last 15 months.

In the halls of our national and state capitals, the attitude that will get our elected leaders through the infrastructure funding maze has got to be one of setting important priorities. It has to be about identifying the critical core prerequisites without which we cannot grow and prosper.

Transportation infrastructure –- maximum mobility for people and goods –- is clearly such a prerequisite.

In our personal lives, we know what our core prerequisites are. We buy a house. Then we spend what it takes to maintain it or renovate it in order to retain its value as an investment and as a primary asset that determines our quality of life.

Our house is a top-tier priority in our lives.

We must urge our elected leaders to recognize transportation infrastructure as a top-tier priority more than worthy of the cost.

Donald C. Fry is president and CEO of the Greater Baltimore Committee. He is a regular contributor to Center Maryland.

Previous Center Maryland columns by Donald C. Fry:

Primary voters in a mood for transition

Reading Maryland's fiscal tea leaves

Getting beyond sound bites and bumper stickers

Biotech tax credit more popular than ever, but the ‘rock-concert’ lines are gone

Bad timing for upcoming business tax report

For economic indicators, the ‘whipsaw’ effect continues

Do census data foretell a Baltimore city population rebound?

Remember the value of business after the election

New report ranks Baltimore among stronger regions to weather the recession

New living wage proposal: wrong idea, wrong time for Baltimore

Northeast needs more attention from federal rail planners

New national report has familiar ring for Maryland bioscience advocates

New report underscores Maryland’s work force development challenges

State’s health initiative: a ‘win-win’ for employers and their workforces

As Baltimore hikes taxes, are state’s counties next?

After the ‘fiber from heaven’ scramble, what’s next?

BRAC growth no longer a future event – it’s happening now

Economic development is a contact sport

Despite the recession, bioscience growth still percolates in Baltimore

State stumbles in enacting new education collective bargaining process

Wind power has potential in Maryland, but solar emerges as early renewable option

It's not good to be clueless in cyberspace

Amid fiscal shuffle, Maryland lawmakers pass measures to spur business growth

Thankfully, Baltimore leads with substance over style in luring Google

Leave damaging transportation provisions out of the budget

Amended budget continues recession-induced fund shifts and stimulus rescue

General Assembly setting stage for combined reporting push in 2011

Wrong timing for proposal to change Baltimore City school board

Baltimore City isn’t alone in facing pension funding challenges

A government investment program that delivers

Proposed transportation fund raid -- a bad habit continues

Where's the outrage over crime?

Small business is where innovation lives
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Donald C. Fry has been the president and CEO of the Greater Baltimore Committee (GBC), the central Maryland region's most prominent organization of business and civic leaders, since November 2002.


Under Don’s leadership, the GBC is recognized as a knowledgeable and highly credible business voice in the Baltimore region, Annapolis and Washington, D.C. on policy issues and competitive challenges facing Maryland. Its mission is to apply private-sector leadership to strengthening the business climate and quality of life in the region and state.


Fry served as GBC executive vice president from 1999 to 2002. From 1980 to 1999 Fry was engaged in a private law practice in Harford County. During this time he also served in the Maryland General Assembly. He is one of only a handful of legislators to have served on each of the major budget committees of the General Assembly.


Serving in the Senate of Maryland from 1997 to 1998, Fry was a member of the Budget and Taxation Committee. As a member of the House of Delegates from 1991 to 1997 Fry served on the Ways and Means Committee and on the Appropriations Committee.


Fry is a 1979 graduate of the University of Baltimore School of Law. He earned a B.S. in political science from Frostburg State College.