Fix the Pensions, Fix the Tunnels: Let the States reduced their unfunded liabilities

If states reduced their unfunded liabilities, they could afford to invest more in infrastructure.

The hallmark of President Trump’s second year in office is supposed to be infrastructure. On February 12, the White House released its blueprint for, as Trump put it last June, “new roads, bridges, tunnels, airports, and railways gleaming across our very, very beautiful land.” Though it offers some changes to business as usual, the plan isn’t ambitious enough.

The key to long-term success in fixing America’s physical assets is to stop treating three problems — decaying bridges, soaring public-sector pension costs, and fraying private-sector retirement security — as separate. They are inextricable.

The purported White House outline starts off promisingly. It acknowledges what many transit and other infrastructure advocates have acknowledged since the Obama-era stimulus program: Money isn’t sufficient to solve our infrastructure woes.

To ensure that states use new federal money wisely, the program would rank projects for funding, in part, according to whether their sponsors, usually state governments, could reduce the risk of cost and schedule overruns. They could do so by updating procurement policies, for example, so that one bidder couldn’t undercut others and then make up the difference in “change orders,” which require more money, once a contract was well under way. State governments could also change procurement policies to avoid having dozens of contractors and subcontractors working on the same project at the same time, often at cross-purposes.

The problem with our decaying infrastructure is elected officials being too greedy, cowardly and/or self-promoting to address the real cost of all the cool public infrastructure projects they are first in line to take credit for building. They are there to fund the initial project. They are at the ground-breakings and the ribbon-cuttings and any other events which glorify them and their "forward-thinking"; but once a given project is complete, they move on to the next "big-ticket" item.

Very few governments, local, state or federal, are willing to include recapitalization costs in their budgets. Very few of them engage in any form of planning for the future of their existing infrastructure.

There is always something "new" to build or expand, but working to make sure sufficient funds are budgeted/set-aside to properly operate, maintain and eventually refurbish/replace existing infrastructure is just not glamorous enough for them.

So, elected officials invariably find more visible and/or "pretty" things on which to spend taxpayer money. By the time they finally get around to grudgingly funding infrastructure renewal/replacement it is only because they have neglected it for so long that a true emergency has developed. Then they suddenly "realize" that they have set aside nothing to renew/replace these pieces of critical infrastructure. Suddenly, a tax increase is "necessary" and "inevitable".

This cycle is occurring every day, all over this country.

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