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Cost of doing nothing adding up 10/5/2015

10/5/2015, In Business Blog – Here we go. The real life impacts of kicking the can down the road on transportation funding are now being felt. The Wisconsin Department of Transportation recently announced a several year delay of the five most significant improvement projects in Wisconsin other than the Zoo Interchange. Judging from the reaction, people do not seem happy.

The projects are: I39/90 from Beloit to Madison; Hwy. 10/441 in Appleton; Hwy. 23 between Fond du Lac and Sheboygan; Verona Road in the Madison area; and Hwy. 15 near New London. The announcement indicates that each of these projects will be delayed two years.

What is somewhat misleading about that is the two-year delay is a best-case scenario. If the next budget follows the precedent of recent state budgets, those delays will be indefinite. In other words, it will take additional funding in the next budget just to limit those delays to two years.

TDA commissioned the Fiscal and Economic Research Center (FERC) at the University of Whitewater to conduct an economic impact study on four of these affected projects (Hwy. 15 was not included in the study). The research quantifies what many of us know intuitively — these projects will create jobs in the short-term and have a significant positive impact on the economy as a whole in the long-term.

Key findings of the report (available online here) include:

  • The projects under study are expected to have a combined, short-term impact on Wisconsin’s economy of close to $3 billion from the construction of the projects.
  • The construction activity will lead to over 4,100 jobs in the state from the road construction industry and its suppliers.
  • After completion of the projects, businesses will benefit by almost $185 million annually, as a result of increased accessibility, reliability, and road quality.
  • The increased business will support in excess of 1,700 jobs moving forward.

The delay of these projects will obviously delay the benefits listed above. Delaying these projects will also cause them to be significantly more expensive. Construction inflation in Wisconsin has averaged around 5% a year since 2000, while general inflation has increased on average at a rate less than half of that. This is driven largely by commodity prices, such as asphalt and steel.

If you think that delaying these improvement projects will free up money to put into basic maintenance of our roadways, think again. The vast majority of the state’s transportation budget is spent on maintenance and rehabilitation, and that is also taking a hit. I can say with certainty that we will hear in the near future of rehabilitation projects all across the state that are being pushed back, as well.

As far as funding for our city, county, and town roads: if the state can’t keep its projects on schedule, it is unlikely that aids to local governments are going to increase. Municipal road and public works officials across Wisconsin will tell you they have roads engineered to last 30 years that are on a replacement schedule well over 100 years as of today.

No matter where you live in Wisconsin, you will be affected. The UW–Whitewater study demonstrates just how impactful these corridors are to commerce in our state. However, the delay of these four projects is simply the symptom of a much larger problem.

Anyone who thinks we are saving taxpayer money by ignoring, deferring, and delaying is sadly mistaken.