Infrastructure Needs a Reality Check


This month, the Southeastern New Mexico Economic Development District is hosting six “capital outlay application workshops.” Dave Venable, the organization’s president, told the Alamogordo Daily News that the events “will go over all the details on how to do the capital outplay applications and talk about making sure the infrastructure improvement plan is also completed for counties, cities, villages and municipalities.”

Interesting timing, given the drop in oil-and-gas revenue that is plaguing the state’s fiscal health. Severance taxes, which fund Santa Fe’s sleazy capital-outlay process, aren’t generating the kind of money they did just a few years ago. The 2017 legislative session is sure to be disappointing for local governments seeking pork — er, “critical community infrastructure.”

Meanwhile, The Wall Street Journal observes that infrastructure spending by local and state governments across the country is dropping, with bond issuances falling “to levels not seen in the past 20 years.” Low interest rates haven’t been able to compensate for sluggish revenue and taxpayer resistance. In addition, “Many struggling legislatures and city halls are instead focusing on underfunded employee pensions and rising Medicaid costs.”

So the picture isn’t pretty for fans of infrastructure spending. But that’s not necessarily a bad thing. Powerful interests publicize the nation’s infrastructure “crisis,” but taxpayers need to be skeptical. As the Cato Institute’s Randal O’Toole recently noted, the number of structurally deficient bridges in the U.S. has “steadily declined … even as the number of highway bridges has grown,” and the “average roughness of [highway] pavement has steadily improved.”

As for the Land of Enchantment, the latest version of the Reason Foundation’s report on the condition of state highways found that New Mexico ranked “7th in the nation in highway performance and cost-effectiveness.” Its best performance was in “maintenance disbursements per mile (1st), capital-bridge disbursements per mile (6th) and rural arterial pavement condition (6th).”

When the infrastructure lobby isn’t peddling its crisis meme, it’s pushing public-project spending as a powerful tool to promote economic growth. But again, skepticism is warranted. Last year the Andrew M. Warner, an economist at the International Monetary Fund, told the Journal, “When you flip the infrastructure switch, the light doesn’t necessarily turn on. The returns are a long way from being automatic.”

In New Mexico and elsewhere, infrastructure is vital, and government’s role is essential. But taxpayer spending on roads, bridges, sewers, and the like must make financial sense. To the extent possible, it must be purged of politics. And its value in job- and wealth-creation must be subjected to strict scrutiny.

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3 Replies to “Infrastructure Needs a Reality Check”

  1. There’s some federal bait-and-switch going on because 15-20% of “roads & bridges” money goes for bicycle lanes and public transportation. So when you gas up in Gallup you’re helping to support the NYC subway. These may be worthy projects but should be funded separately.

    When roads and bridges actually are built, rules that favor union labor jack up the cost by 10% or so, which amounts to an indirect taxpayer subsidy to unions. Which kick back some of that money to politicians.

  2. Having just driven across the country and into Canada, I can tell you infrastructure (orange barrel) spending is on! Even in Canada. Money, not wealth, is being poured into Main Street. Maybe this is like election years in the past, but finally the pork (previously given to the big banks…to save them from failure) is going to the cash starved cities (and citizens).

    We must always watch for corruption, cronyism, favoritism etc., in pork barrel spending, but it’s good to see that the spigot has finally, after 8 severe years, been opened to let communities function.

    The problem we face is that the cash will not stay in town to do much because it will quickly go to Walmart and Amazon and on to China. We can fix that but no one has the guts to shop locally.

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