Editor At Large

Kirk Landers

Vice President
and
Editorial Director

Be careful what you wish for

Millions of Americans have been praying for a return to normalcy since September 11, and last month the United States Congress gave the people what they wanted. After nearly two months of kissy-face bipartisanship, our leaders divided along party lines over an economic stimulus package and whether airport security should be put in public or private hands.

As we go to press, the debate is becoming increasingly acrimonious.

Welcome back, everyone. Let the games begin.

Of the two issues, the one with the most direct bearing on better roads is the economic stimulus package, since infrastructure spending is one of the bones being picked over. For one glorious minute in late October it seemed as though a coalition of moderates from both parties would put together a combination of tax cuts and government spending that would include $5 billion for roads and transit.

That was dashed when House conservatives pushed their Banana Republic stimulus package through the House. Along with several legitimate economic stimuli, the House package sought to restore economic vitality by padding the profits of the country’s largest corporations and slashing taxes for the richest 2% of the U.S. population.

Imagine how the good people of Panama must have felt when it turned out their economic structure was the envy of the United States! All we have to do to have a robust economy, it turns out, is to quit taxing big corporations and rich people.

As for the package proposed by the Senate Democrats, it gets high marks for its homage to humanitarianism, and for pragmatically addressing the issue of who’s going to pay for all the new security measures we feel we need now. But the closest thing to economic stimulus in the package is a tax cut for lower income families and public works spending.

Tax rebates for families who didn’t get them before don’t hold much promise as an economic stimulus. While the rebated dollars would get spent right away, as the Democrats point out, that burst of spending doesn’t seem likely to create a sustainable economic surge.

Increased public works spending has merit in an economic stimulus package. We have substantial needs for infrastructure investment, and there is endless data to show that this work generates good jobs and, by extension, more consumers. Selfishly, we’d love to see the infusion of more cash in the highway market, especially when some states are backing off their rebuilding plans due to revenue shortfalls. But, the fact is, public works spending, by itself, isn’t going to get the job done.

The best stimulus package for America would be a compromise plan that includes public works spending and tax breaks for corporations that directly stimulate corporate consumption and investment. The House bill had several of the latter elements in it, buried though they were beneath the higher profile give-backs. These ranged from investment tax credits, which encourage businesses to invest in capital equipment, to incentives for investing in research and development. In both cases, corporations help stimulate the economy by consuming things, and in both cases, the investment should make those corporations more competitive in the future.

Every solution has its price, however. Increased federal dollars for public works construction creates a short-term bubble in the sector that will someday burst when federal spending returns to normal levels.

Corporate tax incentives are also a risk. When the investment tax credit was dropped in the Reagan tax reforms of the mid-’80s, it changed the economics of ownership, encouraging more outsourcing and rental. Many knowledgeable business analysts would say that U.S. companies became more efficient and successful as a result. Would a restoration of the ITC undo all that? Probably not. There were other factors contributing to the outsourcing and rental trends of the ‘90s. But it would once again change the economics of industrial production.

It may be that things will have to get worse before there is sufficient imperative for Congress to compromise on a stimulus package. Of course, that might end up being the voting public’s reward for electing such a conflicted group to office because there’s a good chance the economy will begin moving upward again in the second or third quarter of 2002 without any help from legislators.

Solving our capacity problems

In just a month we’ve gone from maddeningly congested airports and sardine-can seating on flights to empty aircraft and an entire airline industry in deep financial trouble.

Our once-gridlocked highways have loosened up, too, as layoffs and shut-downs eliminate jobs and commuters, and declining consumer demand takes commercial haul trucks off the road. It will be a while before data appears, but it’s safe to assume that mass transit and rail usership is also down, and for the same reasons.

Suddenly, our transportation infrastructure does not have such a severe capacity problem.

If we took a poll of Americans right now, we might find a few nut cases who would say this is a good way to resolve our congestion and air-pollution problems, but most would say that terror and recession are not solutions to anything, they are just obstacles to overcome.

The majority is right. The nation’s fear of flying will evaporate as soon as the federal government completes decisive steps to ensure safety. And the recession will eventually run its course even though at some point it will seem to millions of Americans that it will never end, that this one is different than the other ones we’ve had. That is the nature of recessions.

And when the recovery begins in a year or so, the metropolitan regions of the country that have been experiencing population growth will once again have gridlock on their major highways because the number of cars and car miles has increased much faster than the number of lane miles has increased. Gridlock will also return to slow-growth and no-growth metro areas that suffer from suburban and exurban sprawl.

So we need to continue the unresolved debate of 2001: how do you accommodate the transportation needs of the American people in good times? Here are a few ideas.

First, the tendency among elected officials is to reduce repair and rehabilitation work when times are tough because tax funds decline and budgets get tight. But for congestion purposes, we’re best off getting as much of this work done in a recession as we can. There are fewer cars and trucks on the road, so construction is less intrusive and, hopefully, safer. In addition, work that is bid out to contractors tends to be cheaper in tough times because more contractors are bidding on fewer jobs, driving costs down.

Next, we need to find a capitalism-friendly approach to regional population planning and zoning — not to prevent construction of new homes and businesses, but to make sure the real infrastructure costs in green field developments are covered by the users of that infrastructure. That would help slow the pace of sprawl in a fair and businesslike way and it would help growing communities prepare for growth more adequately.

Third, we need to get more creative in our approach to alternative transportation. For example, we have set aside millions of federal dollars for bike trails, let’s use some of it to test the feasibility of commuter bike lanes. True, the masses of Americans are not going to become bicycle commuters, but that’s not what we’re looking for. We need to reduce rush hour volume on certain problem roads at problem times by relatively small percentages. A cost-effective, space-effective design for a commuter bikeway might be part of the solution for many such problems.

And finally, we need to be more practical in managing our roads. Summer brings our worst air-quality problems and our worst traffic congestion because that is when we have the most drivers on the road and the most road construction taking place. Put another way, as usage peaks, capacity bottoms out. The prevention disciplines preached by the Foundation for Pavement Preservation need to become part of the management orthodoxy for all high-volume roads. If we can extend the major repair cycle for such roads by even two years we will have done more to mitigate congestion than we could achieve spending much more on light rail or new lane miles.

Most of all, we need to keep working on our transportation infrastructure, from the skies to the roads, through these difficult days. Politicians will say it’s good for the economy, and it is. But it’s more important than that. Our economy had filled our transportation system to beyond its capacity in 2000. If we are to grow larger than that, we will need more capacity. Period.

October 2001

After Terror Struck in America

Where were you?

Like many in this industry, when terrorists struck Manhattan and Washington, DC, five members of the Better Roads staff were in the Philadelphia area, getting ready to attend the last day of the American Public Works Association show.

We were stepping into a car when a motel guest hailed us with the news: Terrorists had struck the World Trade Towers. Like citizens all over the country, we got to a television set and watched in horror as the catastrophe played out. When the second plane hit the second tower and early reports of an assault on the Pentagon came on the air, we knew there would be no show in Philadelphia that day.

Nor would there be any air transportation, and for many hours afterward, no trains or buses either. Interstate passenger travel in America basically shut down.

We were luckier than most that day. We were in a Philadelphia suburb and our Chicago contingent made the decision to drive home immediately. We quickly located a rental car and plotted a route home that would keep us away from the heaviest traveled bridges and tunnels in Philadelphia, and, later, far from the area in western Pennsylvania where the fourth airliner had crashed.

Our passage was uneventful after we got north of Philadelphia, save for the alternating bouts of rage, sorrow, frustration, and grief all Americans experienced that day.

It occurred to me, periodically, how remarkable it was that we could move freely about on a day that America was under assault from a foreign enemy. Sometimes it made me think of how vulnerable that makes us, that another squadron of terrorists could be zipping about the country in car bombs, using our magnificent interstate highway system to quietly and efficiently hone in on new targets. Other times, I thought of how difficult it would be for an attacking power to stop Americans from covering long distances by vehicle, just because of how extensive our highway infrastructure is. And, sometimes, I thought about how an invading power might isolate the population-dense northeast from the rest of the country by targeting bridges that link large metropolitan areas to the rest of the country.

But mostly, like everyone else, I thought about what this all means for America and the world in the months and years to come. John F. Kennedy’s assassination changed American politics for generations. The atrocities of September 11 will do the same. We just don’t know how.

Short term, we have a good chance of sliding into a worldwide economic recession, perhaps a nasty one, given the weakness of the European and Asian economies, and the vulnerability of the U.S. economy just prior to the attack.

Long term, we may be redefining the terms of war and peace, and how the nations of the world relate to each other.

Our roads and streets and bridges will be less important than many of these weighty issues, but never unimportant. As we have seen, this infrastructure has great import, both to our economy and our national defense. The difficult task facing all of us whose careers revolve around highways will be to maintain the national commitment to infrastructure in the tense days ahead. We will need our roads and bridges during and after this crisis just as surely as we needed them before it. Let us all pledge to keep that point front and center as our nation does what it must to deal with the bloody outrage of September 11.

September 2001

Infrastructure and the O'Hare Airport Dilemma

As the United States scrambles to modernize her infrastructure for everything from planes, trains, and automobiles to natural gas and electricity distribution, one of the big tricks is going to be not making one area better by making another one worse.

Just such a dilemma is currently being sorted out in the state of Illinois, where political leaders are trying to solve chronic air traffic congestion at Chicago’s O’Hare Airport. The governor’s favored solution is to build a new airport in a rural location well outside the city. The opposition, led by the mayor of Chicago, favors a $6 billion expansion and reconfiguration of O’Hare’s runways that would dramatically increase its capacity for air traffic.

The public debate over the two options has been spirited, relatively constructive, and seemingly thorough. The strikes against the O’Hare runway reconfiguration and expansion have been cost, aggravation to the airport’s suburban neighbors, and the feeling that another airport will be needed anyway because air traffic will surpass the reconfigured airport’s capacity soon after work is completed. The strikes against the governor’s plan are that the airlines don’t want it and the proposed site is a great distance from the metropolitan Chicago area.

Not discussed in the public debate are the ramifications each choice has for roads, traffic congestion, and sprawl, even though the financial stakes are enormous.

The site for the proposed new airport is located 15 to 20 miles south of the city’s southernmost suburb and perhaps twice that distance from the city center. It is accessible from the north and south by a single interstate highway which would have to be widened if the new airport attracted significant usage. Access from the east and west is limited to state and local roads. Rail access to the site would be very expensive, given its distance from major population areas. On the positive side, land there is cheap and there are few neighbors to complain about noise, so there would be a chance to build an uncompromising design for modern air travel.

O’Hare, on the other hand, is served by several interstates, handles high volumes of auto traffic relatively smoothly, and has an excellent light rail system connecting it to the city center. It is also much closer to the huge majority of area residents than the rural site would be and the sprawl that grows up around major airports has long since taken root there.

If you’re calling the shots, do you go with the close-in compact model and put $6 billion into O’Hare, or do you go with the seemingly less expensive green field option? Would the distant new airport relieve auto traffic congestion in the O’Hare area and extend the design life of the roads there, or would it simply create another congestion headache for traffic planners to deal with in future years?

Is it better for air quality to remove some of the traffic from a place like O’Hare by routing it to a less traveled area, even though people may burn more fuel by driving more miles to get to the alternative airport?

We don’t know the answers to those questions, but it wouldn’t take a blue ribbon panel to answer an equally momentous question: Would a new, rural airport create a new corridor for sprawl? Of course it would, just as surely as the old one did. And while we’re squeamish about legislative initiatives to control sprawl, we flatly oppose creating unnecessary stimulants that will cause it. Somehow, that subject has not been a part of the Illinois debate, but it should be.

Our opinion, for what it’s worth, is that the existing airport needs to be developed to its full capacity because it is the most space-efficient, sprawl-efficient, and infrastructure-efficient choice. The next priority would be to develop another airport in the region, but if the real costs of ground transportation infrastructure were factored in, it might make more sense to buy more expensive land closer to the metropolitan area, or to develop one of the municipal airports in northwest Indiana.

Decisions like this need to be made on the basis of real long-term costs and benefits to the region. The debate over airport facilities in Illinois — or anywhere else, for that matter — cannot be an informed one until the total long term investment in roads, bridges, and light rail is calculated for each option.

Sorting out our sluggish Economy

The U.S. economy will be characterized by sluggish growth—not recession—for the rest of the year, and slow to modest growth next year. That seems to be the consensus of economists based on the latest revisions of first-quarter 2001 economic data.

Any kind of growth in the gross domestic product is good news, given that America’s pre-1990s economic model would call for a recession by now. Consumer spending is sustaining the economy right now, keeping us one step ahead of recession. And the star of the consumer spending show is housing which, ironically, used to tank in weak economic periods. Housing starts, though down a little from the peak years of the late ‘90s, are holding at a high plateau, and sales of existing homes are strong.

No panacea

But sluggish growth is no panacea for private construction businesses or the public agencies that employ them.

In the current Better Roads Economic Report economist James Haughey predicts that U.S. economic growth will average 2% at best in the middle of this year and 3% at most for most of next year.

What will that feel like? Competitive. For private businesses, this kind of economic environment means that growth has to come at some other company’s expense because the pie isn’t getting much bigger. For government agencies, trust fund receipts and revenues should be all right, but general tax revenues will be as flat as the economy and there will be pressure to reduce taxes to stimulate growth.

Highway construction looks to be in better shape than most sectors of the economy during this period. Spending will be up 5.3% this year over 2000, one of the few growth sectors in construction. But highway construction is not exactly a hot market when you consider that in 2000 the market actually declined 3.6%.

From the government agency point of view, inflation is also mitigating the impact of increased highway construction spending. According to Haughey, when you factor in inflation, the amount of highway construction work undertaken this year will be essentially the same as last year. “First quarter contract prices were up 9.5% from a year earlier,” writes Haughey, “But the pace of inflation will ebb over the year as modest surplus capacity develops for materials, equipment, and labor.”

Haughey notes that in 2000, contract prices rose 6% while total spending dropped 3.6%, resulting in a total decrease in highway construction volume of 10 percent.

Mixed signals

Price increases for concrete, asphalt, and steel should slow dramatically through the rest of the year, while labor costs will continue to rise despite an increase in unemployment. The culprit: medical and drug costs.

Oil and energy prices, though still seemingly volatile, show signs of leveling off. OPEC has achieved its $26 per barrel target price for oil and Haughey, for one, believes it will stay there for many months to come. Fuel and petroleum products should hold at current price levels for the rest of the year.

While the overall economic outlook is middling, there are broad sections of the economy that are in recession. Heavy manufacturing, including construction equipment, is one such sector. And geographic regions which rely on manufacturing for economic vitality are feeling the pain, too. This includes the Great Lakes states and, to a lesser extent, the mid-Atlantic region and some industrialized southern states. In these areas, government budgets at the state and local level will be under more pressure than usual this year and next.

It is hard to find an economist anywhere who is forecasting anything very negative or very positive for the U.S. economy in 2001 and 2002. Barring a shock, such as a war or the collapse of a trading partner’s economy, slow growth is the mainstream forecast of the day.

In the highway sector, slow growth can be a positive time, especially if it helps stop inflationary trends in prices for construction commodities. With little or no increase in costs, even a modest increase in highway spending will result in our first increase in real highway spending since 1999.

The Politics of Congestion

One of the hot news stories in early May was the release of the Texas Transportation Institute’s report on traffic congestion in 68 U.S. metropolitan areas. For several days, newspapers around the country ran major stories on the data, and on local reaction to the basic message that congestion is getting worse everywhere and costs motorists billions of dollars a year in wasted time and fuel.

The news media’s presentation of this body of facts was laced with plenty of spin from special interest groups, and appropriately so. To highway construction groups, the data was absolute proof that the nation’s road capacity needs to be expanded. To other groups, the data made a case for more mass transit and other transportation alternatives.

Unfortunately, this legitimate and vital debate over the future of transportation in the U.S. was also laced with some pure disinformation and it may take months or years to set the record straight.

When TTI released its congestion study, a Washington, D.C.-based group called the Surface Transportation Policy Project issued its own analysis of the data. The hallmark of STPP’s analysis was the conclusion that congestion had gotten worse despite a 14.8% increase in lane miles between 1990 and 1999 in the 68 urban areas covered by the study. This led the group to the conclusion that road building is not an effective solution to congestion.

Misleading Statistics

If you’re thinking that a 14.8% increase in metropolitan highway capacity seems awfully high, you’re right. The Federal Highway Administration reports that lane miles of all roads grew just 1.3% during the 1990s.

Shortly after STPP released its report, The Road Information Program issued a rebuttal. The growth in lane miles in the 68 urban areas was almost entirely the result of changing boundaries and reclassification of what once were secondary roads into the principle arterial category, not new construction. “Much of what STPP reports as new lane mileage of major roads is actually existing freeways and other streets that were not reported in 1990 because they were...outside what was then considered...the area’s urban boundary,” wrote TRIP’s director of research, Frank Moretti. By 1999, many of these urban boundaries had been expanded—the physical area occupied by the 68 urban areas in the TTI study increased 17% between 1990 and 1999.

There was no double-digit increase in highway capacity in the ‘90s and no other major group, for or against highways, tried to advance that bit of deception.

Still, the STPP fiction worked its way into the news coverage of the event. In one startling instance, a Chicago daily picked up the organization’s message without checking any other sources, reporting as absolute fact that increased road capacity does not mitigate congestion. Hopefully, few other newspapers were duped this badly, but dozens undoubtedly picked up quotes from the STPP report, too.

History Repeats

This is not the first time that STPP has distorted statistics to make a point. Their most notable previous transgression was in 1998, when their “Pothole Index” prompted a biting public response from the American Association of State Highway and Transportation Officials (AASHTO) for “false and misleading conclusions about highway spending.”

In that instance, the surface transportation group condemned states for spending too little on highway maintenance and too much on new construction. The entire basis for their conclusions was an analysis of how each state spent federal highway funds. No mention was made of how state and local funds were spent, even though they comprise about 75% of all highway spending and are funneled primarily into maintenance.

In point of fact, about 80% of all highway spending goes to maintenance and repair.

No matter where you line up in the debate over road construction’s role in congestion mitigation, there is no room for the Machiavellian distortions of facts by the Surface Transportation Policy Project. If you believe that expanding road capacity can relieve congestion, the work of STPP is frustrating and destructive. If you believe that expanding road capacity is harmful to the environment, your image is being compromised by an organization that lacks sincerity and ethics.

We call on people on all sides of these deliberations to condemn STPP’s situational ethics and keep this important dialogue on a professional, responsible level.

June 2001

Are Highway Users Really More Satisfied?

The highway industry seems to be headed in the right direction, too. Pavement recycling technologies are becoming an established part of highway management programs at state and local levels, reducing costs and environmental impact. Super pave technologies are producing smoother pavements that promise to last longer. And cutting edge highway managers are beginning to focus on preventative measures to extend highway life—the ultimate answer to potholes, construction congestion, and public demand for a more efficient highway system.

A conversation with Chairman Young

Balanced view

Working with Mineta

Next-TEA

A soft landing after all?

These prospects suggest that contractors will see some relief in bidding competition later this year, as growth in private markets reduces some of the pressure on public works bids. This scenario also argues against making large-scale cuts in highway operations in state and local government agencies, even though budget-conscious elected leaders are worried about shrinking tax revenues. Revenue shortfalls may end before the cuts can be made anyway, and most government agencies need all the help they can get to launch improvement projects made possible by the Transportation Equity Act for the 21st Century.

What’s next for roads?
"Get used to your favorite Washington, D.C. advocacy group calling on you to write your elected officials about how they should vote on various issues
this year."

Reprinted from Better Roads Magazine
Copyright James Informational Media
All Rights Reserved