By: Amy Wise, HCBI Executive Director
A quick search on any search engine will give you a multitude of reports on the direct effect of transportation in relation to economic activity. Transportation infrastructure impacts all of our wallets through the cost of goods or services, job creation and retention, commuting costs, vehicle fees and maintenance. One study showed that the average cost of driving on rough roads can cost the average American motorist approximately $335 a year in extra vehicle operating costs (The Road Information Program, Rough Roads Ahead: Fix Them Now or Pay For It Later).
Transportation’s impact on businesses
The lack of reliable transportation options impact a business’s bottom line the same way that a household is impacted. Higher transportation costs and higher inventory carrying costs – partially attributable to an unreliable, unpredictable transportation system directly impact the price we as consumer pay for goods and services. Location plays a significant impact on the costs associated with supply chain and distribution. One recent study in Site Selection Magazine showed that “up to 80% of supply chain related costs are locked in by choice of location”. Costs are not only fuel related. Time lost to a company while drivers sit in congestion, accidents, behind farm tractors, also impact the cost of product distribution.
When it comes to attraction of new large businesses to Huntingdon County, our lack of solid transportation options put us at a significant disadvantage. Increasingly communities like ours are discounted as good options from the beginning of a site selection search even though the county has many positives like a solid workforce and available sites. Area Development’s 26th Annual Corporate Executive study (2012) once again showed that highway accessibility and labor costs are the top two factors when selecting a location for their facilities. 94% said highway accessibility is very important/somewhat important and 88% labor costs. In fact, proximity to major markets showed the greatest jump in importance — 16.6 percentage points — moving from 17th place in the 2010 Corporate Survey rankings, with a 66.4 importance rating, to ninth place for 2011, considered “very important” or “important” by 83 percent of the 2011 Corporate Survey respondents.
For the at least past five years, PennDot has been in “maintenance mode”, attempting to keep pace with the aging infrastructure of Pennsylvania. Nearly all capacity-add projects have been set aside as there is not enough money to maintain let alone add new. Additionally it is estimated that the funding gap between what is available for road/bridge maintenance and repair is about $3.5 billion short. Additionally, the main funding source for transportation is expected to fall by $57 billion (federally) over the next eleven years due to the scheduled increase in federal fuel economy standard (The Wall Street Journal, 09.17.2012). In Pennsylvania the fuel tax revenue is expected to be $470M less per year than it is today (Decade of Investment Report, 2011).
Spending continues to outweigh revenue and many previously incurred debts are coming due. In 2010, federal lawmakers transferred $14.7 billion dollars from the general fund to cover the deficit of the Highway Trust Fund (funded by the gas tax). On the state level, debt payments rose by 18.8% over the last four years.
Inefficient and ineffective Uses of Funding
In 2007, only 60% of the federal highway trust dollars were spent on roads and bridges. On a state level, PennDot only spends 75% of its funding on roads and bridges. Also on the state level, a total of 13% of PennDot’s annual budget goes to debt reduction and other programs including the Pennsylvania State Police whose costs have increased by 66% over the last ten years.
The cost of maintaining, repairing and building the transportation system continues to climb each year as well. Factors like inflation and increased costs (wages, materials) make the buying power of limited funding even less effective. It is critically important to make improvements in the time that is takes to build roads. Congressman Shuster during a press conference in September cited an Oklahoma interstate project that took fifteen years from announcement to completion. Now take in to consideration that buying power decreases by 3% annually based on the average inflation rate. Therefore 20 years from now, 33% more funding will be required to complete the same amount of road work.
Congress has made minor progress in improving the financial crisis by adopting a new two years federal transportation bill call Moving Ahead for Progress or MAP 21. While the bill is a good temporary fix, much more work is required to put the highway trust fund back on a sustainable path. In 2011, Governor Corbett assembled a task force of transportation related specialists around the Commonwealth to brainstorm ways to increase transportation funding without significant tax increases. The plan called for changes to vehicle registrations, inspections and licensing, the use of modern technology to decrease long term reinvestment needs, and increase efficiency in delivery of services by PennDot. The impact to the average Pennsylvania driver for year one of the proposed changes would be approximately $0.70 per week, $36.40 annually; by the fifth year it would cost the average driver $2.54 per week, $132 annually. The income generation would be $2.5 billion to the state transportation system.
Economic Impact of Transportation Construction in Huntingdon County
Transportation alone cannot provide a community with economic prosperity. Numerous other factors must exist for a community to be deemed suitable to a business – workforce, taxes, land availability, proximity to markets and much more play a role. In communities where these other factors exist (like those of Huntingdon County), transportation enhancements and expansions can act as the catalyst for economic activity. Analysis of the latest U.S. Census Bureau data shows the design, construction and maintenance of transportation infrastructure supports the equivalent of 122 full‐time jobs in Huntingdon County. This employment includes the equivalent of 61 jobs directly involved in transportation infrastructure construction and 61 jobs that are sustained by those employees and companies spending throughout the region’s economy. Additionally, the existence of more than 5,234 full‐time jobs in Huntingdon County in key industries like tourism, retail sales, agriculture and manufacturing are dependent on the county’s transportation infrastructure network. According to the U.S. Census Bureau, there are at least 139 firms in Huntingdon County that are in some way directly involved in transportation construction related work.