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Country Getting Creative to Fund Infrastructure Changes

From politicians in Washington to residents whose cars are routinely damaged by potholes, perhaps the most agreed-upon issue in the U.S. is the country needs an infrastructure upgrade.

Frustrated by inaction at the national level, the president and CEO of the U.S. Chamber of Commerce recently announced $25,000 in cash prizes will be awarded to innovators who submit the most viable ideas for long-term, sustainable funding for infrastructure improvements. The competition is open to everyone, including students, business leaders and academics.1

Newly empowered House Democrats say repairing and replacing America’s crumbling infrastructure is one of their top priorities, as well as expanding the country’s broadband foundation.2

As the nation broadens its scope to national infrastructure, it’s a great reminder for each of us to look at our own. The road to and through retirement is paved by the financial strategies you put in place along the way. Contact us for a thorough review of your situation.

While infrastructure improvement has been a national talking point, the federal government owns only 8 percent of the country’s infrastructure and funds about 14 percent of it. The rest is managed evenly between state/local government and the private sector. However, the federal government regulates all major projects, whether national, local or privately funded and managed.3

In a break from how federal funds have been historically used to fund infrastructure projects, the Trump administration proposed the use of federal funds as an incentive for states to turn infrastructure projects into revenue-producing venues. The criteria in the competition for project funding includes innovation, effective use of technology, and social and economic return on investment.4

Creating infrastructure that essentially pays for itself (albeit through consumer household dollars) is one way to cut federal spending. According to a new study by the Reason Foundation, leasing existing toll roads, bridges, airports, seaports, water and wastewater facilities, and university parking systems to private partnerships could generate up to $885 billion for state and local governments to spend on new infrastructure projects.5

Despite the lack of national focus the past few years, there is some improvement on the infrastructure front. Compared to the 2013 report, the 2017 Infrastructure Report Card revealed slight improvements in the areas of hazardous waste, inland waterways, levees, ports, rail, schools and wastewater. Unfortunately, there was no score change in aviation, bridges, dams, drinking water, energy and roads. Parks, solid waste and transit actually declined. Overall, America’s cumulative grade remained a D+.6

According to a recent rating index, states with overall infrastructure in the most need of repair are Florida, Georgia and Minnesota. States in the best relative shape are Rhode Island, Hawaii and West Virginia. However, throughout the country, seven out of every 100 miles of roadway are reportedly in poor condition. Nine percent of bridges nationwide have been identified as structurally deficient, and 17 percent of dams are classified as presenting high-hazard potential.7

Content prepared by Kara Stefan Communications.

1 John Schultz. Logistics Management. Jan. 10, 2019. “U.S. Chamber head Donohue offering $25,000 for best infrastructure funding ideas.” https://www.logisticsmgmt.com/article/u.s._chamber_head_donohue_offering_25000_for_best_infrastructure_funding_id. Accessed Jan. 10, 2019.

2 Jacob Pramuk. CNBC. Jan. 3, 2019. “Nancy Pelosi and House Democrats take control — here are the policies they plan to pursue.” https://www.cnbc.com/2019/01/03/nancy-pelosi-and-democrats-take-house-majority-plan-to-check-trump.html. Accessed Jan. 11, 2019.

3 Knowledge@Wharton. Oct. 22, 2018. “Improving U.S. Infrastructure: Getting Past the ‘Coupon Effect.’” http://knowledge.wharton.upenn.edu/article/white-house-infrastructure-plan/. Accessed Jan. 10, 2019.

4 Ibid.

5 Inbound Leasing. Dec. 10, 2018. “U.S. Infrastructure Investment: A Private Matter?” https://www.inboundlogistics.com/cms/article/us-infrastructure-investment-a-private-matter/. Accessed Jan. 10, 2019.

6 American Society of Civil Engineers. “America’s Grades.” https://www.infrastructurereportcard.org/americas-grades/. Accessed Jan. 10, 2019

7 Samuel Stebbins. USA Today. Aug. 13, 2018. “Infrastructure spending: Which state is falling apart the worst?” https://www.usatoday.com/story/money/economy/2018/08/13/infrastructure-spending-states-that-are-falling-apart/37270513/. Accessed Jan. 10, 2019.

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