Public Infrastructure: The 100 Billion Dollar Question

Published March 13, 2013

NC SPIN's Tom Campbell speaks to members of Carolina's AGC about our public infrastructure needs.

Transcript of Tom Campbell's Speech:

It was the Spanish philosopher Jorge Santyana who said, “Those who cannot remember the past are condemned to repeat it.”

So before we begin any discussion about public infrastructure in North Carolina let us examine our past. In researching the subject I learned that our infrastructure has been funded by lotteries, tolls and taxes.

We proudly boast that North Carolina opened the first public university in the nation in 1795, but did you know the first construction was financed by a lottery? North Carolina was never a state of great wealth, and our yeoman ancestors weren’t fond of paying taxes, so alternative funding sources were needed.

Following the economic stagnation our state experienced following the Revolutionary War, people saw the need for better ways to move goods and services across the state and a series of plank roads was constructed. During the 1850’s, we built about 500 miles of these plank roads and paid for them by charging tolls. Typically, one rider on horseback paid half a cent a mile, while a teamster with two horses paid two cents a mile. Three horses paid three cents and a team of six paid four cents per mile.

During this same time railroads became the faster and better way to haul freight and passengers and, in 1848 the General Assembly passed authorizing legislation for the North Carolina Railroad, which formally opened in 1856 with a 233-mile track between Charlotte and Goldsboro. Taxpayers owned two-thirds of the company with private investors owning one-third. I have hanging in my office a 1,000 dollar coupon bond signed by Governor William Holden, sold to help pay for the western portion of the railroad. Unfortunately, there was corruption that led to Holden’s impeachment and the subsequent bankrupting of the western railroad, but that’s another story for another day.

In 1839, the legislature passed the North Carolina Public School Act and a resolution for a referendum to modify the constitution. It passed in all but seven counties. The legislature had previously established a literary fund consisting of bank stocks, proceeds from sales of state land, dividends, license fees, taxes and money from the federal government to help in funding but it was many years before public schools were actually constructed.

Skip to 1921. Cameron Morrison was our governor and half his inaugural address focused on roads. He became known as the “Good Roads Governor,” urging the legislature to pass and the public to approve a 50 million dollar bond package to build 5,500 miles of roads. It was funded by automobile and gasoline taxes. In 1923, we passed another 15 million dollars in road bonds. Morrison also got the legislature to approve 20 million dollars in bonds for improvements for higher education and the state’s charitable institutions.

In 1949, Governor Kerr Scott said he was going to build farm to market roads and get us out of the mud, so we approved an unprecedented 200 million dollar road bond project. And of course, the granddaddy of all North Carolina bond projects was the November 2000 passage of the 3.1 billion dollar higher education bond package.

We could talk about the creation of The Research Triangle Park and the NC Biotechnology Center that greatly accelerated our economic growth, and while it is always difficult to generalize, I think it is fair to say that during times when we were the “Rip Van Winkle” state we were not addressing our public infrastructure needs. And during those times when we were being hailed as the “Dixie Dynamo” it was partially due to our investments in infrastructure. We have a history of using bonds, taxes, tolls and lotteries to build airports, water and sewer systems, public parks, help with industrial projects and build hospitals, lots and lots of schools and other buildings.

Now that we have remembered the past, let’s look at the present and peek ahead to the future.

Even in this recessionary period, North Carolina is growing at the rate of about 100,000 people per year. The Office of State Budget and Management projects that by the year 2030 we will grow from our present population of 9.6 million people to some 11.6 million and will have the 8th largest population in the nation.

Since that 2000 Higher Education Bond package we have done practically nothing to address our growing needs to upgrade or expand our public infrastructure.

The American Society for Civil Engineers periodically releases a report card for public infrastructure. In their 2009 update they graded our state a D+ on airports, a C- for bridges, a D for dams, B- for drinking water, C for rail, D- for roads, C- for schools, C- for storm water, C+ for wastewater. A new report card will be released on March 19th rating our national infrastructure, with the new state report card expected in May and since we haven’t done much since the last report we can only suspect North Carolina’s report card grades will be even lower.

What does all this mean in terms of dollars?

  • To bring our airports to good or excellent we need to spend half a billion dollars.
  • 31 percent of our bridges are considered deficient, requiring approximately 8 billion to fix or replace.
  • Another half billion dollars is needed for dams.
  • The North Carolina Rural Center, in its Water 2020 report, estimated the cost of repairing and upgrading our water systems at 17 billion dollars.
  • Governor Easley’s blue-ribbon Transportation study estimated we needed to spend at least 29 billion on roads over the next 20 years to repair and meet the need for new roads.
  • Almost 15 percent of our public school students are housed in mobile classrooms and 46 percent of current school facilities need renovation.
  • A recent FCC report shows us tied with Mississippi at the bottom of states with broadband connections.
  • We’ve got main streets in rural communities across the state that desperately need revitalization if those communities have any chance of surviving.
  • And we haven’t addressed higher education, hospitals, courthouses, jails, public parks, energy or other infrastructure.

Mathematics wasn’t one of my best subjects in school, but even I can easily add up to 100 billion dollars in North Carolina infrastructure needs. That number is growing every single year and we aren’t doing anything to address these needs. Much of our public infrastructure was built 30 to 50 years ago.

If anything we are getting further behind. Here is but one example. In 1989, we approved the North Carolina Highway Trust Fund to improve primary transportation corridors within the state and build loops around seven metropolitan areas. It was estimated to cost 8 billion dollars and take 13 years to complete, but in 1998, the State Auditor said it would require 23 additional years and almost 12 billion more dollars to complete. We capped the gas tax, the primary source of revenue, our vehicles are more fuel efficient, meaning we are buying less gas. Still, we have the highest gas taxes in the Southeastern. The funding mechanism we have clearly isn’t working…but we aren’t doing anything about it.

Here’s another. 70 percent of our state’s water systems are municipally owned and most were built 40 years ago. We have the highest number of small water systems of any state in the nation. 138 of the 214 water systems in towns of fewer than 2,500 are losing money and unable to properly maintain their systems. Few of our water systems are charging the actual costs of service. We have a public health threat facing us if we don’t act. We haven’t started any new large water reservoirs to meet our growth needs in more than 30 years…which is about the length of time it takes to bring one online. As stated earlier, funds needed to repair and expand water systems are projected to be greater than 17 billion dollars. And this doesn’t include a discussion on waste water and storm water treatment…which also need a lot of work.

Now maybe you want to argue with the math. Maybe you don’t think we need 100 billion dollars in infrastructure improvements. Maybe you think the number is 50 billion… or 25 billion….you pick the number. The point is that the need is greater than we can meet all at one time…but whatever the number is it is growing daily because we aren’t doing anything to reduce the need.

So far, I suspect I’ve been preaching to the choir. Most folks will agree that we have a big need to improve North Carolina’s public infrastructure. What we haven’t reached agreement on, and what I call the 100 billion dollar question, is how are we going to pay for these improvements?

Government is nothing more than a social contract among the citizens of a town, a state or a nation. And our society has agreed that one of the public purposes of government is to provide infrastructure…So unless we want to dissolve that social contract, which, by the way, I believe would create chaos, we need to figure out a way to get about the job of rebuilding and expanding our public infrastructure.

If my former boss, the late State Treasurer Harlan Boyles, was around today he would telling anyone who would listen that now is the time for our state to engage in a major public infrastructure building and renovation campaign. And he would say we should buy at today’s costs for tomorrow’s future needs. Those of you who remember Harlan will also remember he was a fiscal conservative, but he was also a realist who knew when it was time to act.

Here is why he would say we need to sell bonds to finance infrastructure improvements. We have historically low interest rates and governments like the state of North Carolina, that have Triple-A credit ratings can borrow money as cheaply as any of us can remember. We currently owe about 7.1 billion dollars of state debt and the major credit rating agencies consider us a low debt state. Construction costs are still very reasonable. We will likely never have a better time to build than this moment.

We have the 5th highest unemployment rate in the nation and have been stuck in that position for many months. The recovery being experienced in other states has yet to manifest itself firmly here in North Carolina. Ask one of our citizens in the I-85 Piedmont crescent how things are today and he or she will say they are bad but getting better. Ask a person east of I-95 and they will report things are bad and getting desperate. Ask a person in the mountains and they will say things are about the same…times were never real good and they haven’t changed.

A multi-billion dollar public infrastructure building and renovation program would put tens of thousands of people to work…we’ve heard it estimated that for every billion dollars in construction money we spend we will create 28,000 new jobs.

If this is sounding like a not-so-subtle sales pitch I would say you are hearing me clearly. If properly designed and enacted, a public infrastructure building program would lower our unemployment rate while also updating our public infrastructure.

Now I know there will be some who say how are we going to pay for all this? We pay for it with improved state government efficiency, by reducing the costs of state government and also through the growth this program will surely provide. Doesn’t that sound like a win-win solution?

The truth we don’t want to hear is that we are staring down the barrel of an infrastructure crisis in our state. Our history demonstrates all too clearly that when we stepped up to our responsibility and improved our infrastructure our economy prospered and when refused to provide that infrastructure our economy and the health of our people languished. Are we, as Santyana told us condemned to repeat that history?

I want to close with a reminder of Sir Isaac Newton’s first law of physics. Newton’s first law states that an object at rest remains at rest until acted upon by force. Folks, our public infrastructure is at rest and will stay that way unless we do something to change it.

Recently I spoke to about 250 people at the NC Farm Bureau Leadership Conference and asked how many of them would support a public infrastructure bond referendum. Fewer than 5 percent raised their hands. Friends, we need to conduct a massive education campaign to let our citizens know the need for infrastructure and I want to respectfully ask you to get involved with anyone who will listen. Now is the time for action. We need to get in touch with all our elected officials, legislators and our governor and tell them that now is the time to get North Carolina Moving Forward. They need encouragement, they need to know there is public support, that this is important and that we expect them to act.

A new campaign will be launched later this year called NC Moving Forward, and all of us need to get involved because we all have a stake in North Carolina’s future. If that future is to be positive, vibrant, healthy and prosperous, we must act to improve our infrastructure…and there is no better time than right now. Friends it is our time to answer the 100 billion dollar question.

March 14, 2013 at 12:09 am
dj anderson says:

Great case for more needs than money, so how do we prioritize our spending?

The 1/2 billion for airports...how green is jet travel? Green house gases at altitude is 30x worse than on the ground. Does GWarming endorse the huge increase in global jet traffic? It's an inconvenient truth that "think global, but act local" is the direction to take, not "local go global."

The 29 billion stated for highways...The continued massive investment in individual auto trans and truck transport vs steel rail is not green minded, either. How much fine earth are we going to turn to desert under pavement? One more inconvenient truth about cars and trucks.

On the third of our bridges being "Deficient," do we want to fix bridges that can't carry normal loading first, or do we fix those that don't have break down lanes first? Do we add more lanes on high traffic bridges or let the bottle neck choke out single car traffic in favor of mass transit? More inconvenient thoughts to consider...if one is thinking green.

Do we really want to make it easier to live in one town and work in another by having light rail, or should we encourage people to live and work locally, and companies hiring reps in each town rather than flying and railing them about? Is this another inconvenient truth?

On the half-billion for dams, I thought dams were being torn down for the sake of river ecology? Am I wrong? Even Hoover Dam would not be built today!

ON the growth, would it not only be greener to control our growth? Would not in Wake, we be better off had the County Commissioners and Board of Education have restricted water, sewer and building permits until infra structure were in place instead of having schools, hospitals, jails, police and fire trying to play catch up?

Would our quality of life not be enhanced today had Wake had planned growth? Water is abundant in NC, but we have outraced it to the point of summer use restrictions and water barrels on house corners. Water is NC's most valuable resource, but we risk much with fracking greed, risk much with nuclear waste pools at Shearon-Harris, and pollution of our rivers and ground water by industry, agriculture, electronic, and manufacturing.

Capitalism seems to demand eternal growth, but that conflicts with realities of the environment and global warming, doesn't it? What are we to do? Maybe as we plan for more and more, we should consider actually plan for less and less destruction and stress on our land and water. Is money the only consideration, the prime one, or does quality of life ever come first?

I'm not giving answers or suggestions, just asking questions. There's a lot of talking the talk and little walking the walk of enlightened, planned growth, or not...

March 14, 2013 at 5:39 pm
dj anderson says:

ON the half bi$$ion for airports...is it green to promote the huge world wide high altitude jets when the green house emissions are 30x worst at altitude than on the ground

On the 29 billion for highways...is it green to promote private vehicle use and truck transport instead of steel rail, and to pave over even more fine earth to make concrete desert beneath rather than promote mass transit and living close to work?

On the repair of a third of our bridges will we give priority to those bridges whole weight limits are too low due to safety or will we repair the 'deficit' bridges which lack flat tire pull off lanes or too few lanes? Should we not think green & let car & truck traffic choke it self out and force cargo onto steel rails and people into mass transit and living closer to work?......does global warming figure into our planning or is it just an inconvenient truth?

On the water issue, and water is NC most valuable natural resource, is it good ecology to dam more rivers? I thought we were taking down dams for the sake of rivers? We've gambled ground water for the sake of fracking already. Maybe NC should not allow uncontrolled growth and determine how many people our water resources will support?

On the schools being in trailers...well, in Wake that is due to poor planning and control of growth. there are trailers due to the board of education having empty classes rooms in parts of the county and over crowding in other parts. County commissioners represent bankers, builders and realtors more than existing citizens, and can't see that growth must be controlled by water, sewer and building permits so that infrastructure can keep pace with building to avoid schools, jails, water/sewer, hospitals, police & fire & emergency services from being over-loaded. Is there a limit on, or ideal population in NC?

Capitalism seems to demand unlimited and unstoppable growth, which is why the population of NC is straining resources and endangering the ecology and quality of life here.