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States Can Balance Investments in Infrastructure and Other Priorities

March 9, 2016 at 12:45 PM

Now is an especially good time for states to invest in infrastructure assets that are key to long-term economic growth, but these much-needed investments shouldn’t come at the expense of priorities like schools and health care.  Washington, for example, is doing it right; Mississippi and Texas, however, are robbing Peter to pay Paul.  

Washington policymakers last year approved a 16-year multi-modal package to invest billions in improving roads, ferries, transit, pedestrian, and bike projects — without taking funds away from other priorities.  Higher excise taxes and vehicle fees funded the initiative.  

By contrast, Mississippi policymakers are considering raising taxes for much-needed road and bridge repairs — but some lawmakers will only support this if they cut other taxes to offset the increases, taking funds from other necessary services.  Mississippi already has cut K-12 school funding by 15 percent per student since 2008, after adjusting for inflation.

And in Texas, voters last year approved a constitutional amendment to dedicate part of general sales taxes and motor vehicle sales taxes to transportation — which will help roads but leave less for other priorities, including schools and health care.  Texas’ K-12 funding per student is 11 percent below the 2008 level, after adjusting for inflation.

As Washington shows, states can make important infrastructure investments without stripping resources from other priorities.  And now is a great time to do it.  With tax collections at low levels in many states and the economy near full strength, states can raise new revenue, as did Washington.  Alternatively, many states use debt to finance infrastructure projects, and borrowing conditions have rarely been better, given today’s low interest rates.


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