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States Should Take Initiative on Infrastructure to Boost Economic Growth

The condition of roads, bridges, schools, water treatment plants, and other physical assets greatly influences the economy’s ability to function and grow. Commerce requires well-maintained roads, railroads, airports, and ports. Growing communities rely on well-functioning water and sewer systems and uncrowded, safe schools. Every state needs infrastructure improvements that have the potential to pay off economically in private investment and job growth — and it’s time for states to make those investments, as we explain in our updated report.

There’s a real unmet infrastructure need across the country, as anyone who drives on roads or flies from airports can see. The American Society of Civil Engineers gives our public infrastructure a D+, or “poor,” rating.

States and local governments — the primary stewards of most of the country’s public capital — may be awaiting a promised federal plan to invest more in public infrastructure. More federal help would be welcome, but the type and amount of assistance they’d get under any new federal initiative remain unclear and President Trump’s infrastructure proposal seems to omit many important areas of need. Simply put, states should take the lead.

States should reject the flawed economic growth strategy of cutting taxes and offering corporate giveaways, and instead identify and make infrastructure investments that provide the foundation for a strong economy. It’s an especially good time for states to make those investments.

  • The investment will improve state economies, now and in the future. In the short term, even though employment is recovering, millions of Americans are working less than they would like and making less than it takes to get by. Key infrastructure investments would provide immediate job opportunities.
  • Today’s historically low interest rates are especially favorable to borrowing − a sound practice for financing infrastructure that can serve generations, and state and local debt is below pre-recession levels. But with the Federal Reserve raising interest rates, this opportunity may diminish soon.
  • While state revenue growth has slowed over the last year, the long recovery has improved state revenues significantly, better enabling states on average to afford infrastructure investments. (But in many states revenues remain insufficient to adequately cover the costs of needed services such as education and health care, and still make the necessary infrastructure investments. These states will need to consider tax increases to preserve public capital that is crucial to long-term economic growth while meeting other needs.)


Read the full report here.