The Road to Recovery

Smart transportation investments critical to state’s economic future

By Bill DeRosa

It’s 10 am. You’re stuck in a 10-mile backup on I-95, trying to make a 1 pm flight out of JFK: because Bradley had no direct flights to your European destination.

Sound familiar? Traveling in Connecticut can often be frustrating, but when you consider the broader economic implications of an inefficient transportation infrastructure, the impact goes well beyond inconvenience.

“As our state’s economic interests become increasingly dependent on global markets, and competition from other states heats up, our transportation shortcomings get magnified,” says John Rathgeber, CBIA’s president and CEO. “Transportation infrastructure is part of the basic framework within which economic development takes place. A transportation system that can’t move people, goods, and services easily and cost-effectively becomes a major barrier to economic growth and competitiveness.”

A Business Matter

Sen. Andrew Maynard (D-Stonington), chair of the Senate Transportation Committee, knows that employers throughout Connecticut have run up against that barrier.

“In discussions I’ve had with business leaders,” he says, “transportation frequently ranks above even taxes in terms of people’s concerns, because of the congestion on I-95, particularly in the southwestern part of the state, and what they feel is just an inadequate transportation infrastructure.”

Meredith Reuben, CEO of Eastern Bag & Paper Group in Milford, shares those concerns. Reuben served on Gov. Rell’s 2007 Commission on the Reform of the Connecticut Department of Transportation.

“Our company has many drivers on the road, including more than 70 salespeople,” she says. “We have a computerized routing system and activity-based costing when it comes to our accounts. Although we try to optimize our routing, traffic delays are extremely costly and make servicing our customers much more difficult.”

Two recent surveys conducted by CBIA also suggest that employers are seeing the need for infrastructure improvements. Nearly 20% of respondents to the 2011 Fairfield County Business Survey (see Page 7) identified problems with the region’s transportation infrastructure as the single greatest challenge to operating a business over the next five years. Similarly, when asked what single government action or investment would be most effective at spurring long-term economic growth in Connecticut, 14% of respondents to the 2011 CBIA-BlumShapiro Survey of Connecticut Businesses said, “improve the transportation infrastructure.”

“Considering all the other obstacles Connecticut firms face, those results are significant,” says Rathgeber. “They should send a strong message to policymakers that strategic investments in transportation will have to be part of any plan to create sustainable economic growth.”

Two Objectives: Restore and Enhance

To provide a transportation system that will keep Connecticut economically competitive, the state must meet two critical objectives: restore its current infrastructure and strategically enhance its multimodal transportation network in a way that links transportation planning with economic growth. Neither will be easy or cheap.

Just before it was disbanded by the legislature this summer, the state’s Transportation Strategy Board (TSB) released a draft report that put the price tag for accomplishing just the most critical restoration and enhancement projects at $7.5 billion over 10 years. The TSB recommended that $3 billion go to making economically strategic enhancements, including:

• Improving bus service by extending coverage areas and providing connecting services among cities
• Improving and expanding rail service along the state’s major transportation corridors
• Creating more intermodal connectivity to provide more opportunities to transfer between different modes of transportation

On the restoration side, highway reconstruction, rail bridge replacement, and the general maintenance and repair of existing roads, bridges, rail track, equipment, and facilities accounts for 60%, or $4.5 billion, of the 10-year cost. If that seems like a lot of money, consider this:

• The state owns approximately 3,700 miles of highways, 3,900 highway bridges, 230 miles of rail track, 200 railroad bridges, 270 rail cars, 650 buses, and six airports.
• Most of Connecticut’s highways and bridges were built in the 1950s and 1960s and are nearing the end of their life span. Five of the state’s major rail bridges are more than 100 years old.
• Many of our highways: I-95, I-91, I-84: serve between 100,000 and 170,000 vehicles per day.
• The New Haven Line is one of the country’s busiest rail lines, carrying more than 36 million riders per year.

In addition, harsh winters, freeze-thaw cycles, and salt applications cause pavement and structures to deteriorate faster here than they would in more forgiving climates.

Taking some of the pressure off our roadways would help solve the problem, says Ray Oneglia, vice chairman of O&G Industries, a construction firm in Torrington that includes road and bridge construction among its specialties. Oneglia advocates “utilizing our ports in Bridgeport, New Haven, and New London and finding ways to move freight via rail” as ways of extending the life of our road surfaces.

Keeping transportation infrastructure in a state of good repair is difficult not only for Connecticut, but for the entire Northeast, says state Transportation Commissioner Jim Redeker.

“We have the oldest infrastructure and some of the most difficult seasons in weather to deal with, so it’s a challenge to keep up,” he says. “I think generally our system is in pretty good shape, but we want to make sure we don’t fall behind.”

Three Steps: Prioritize, Fund, Expedite

CBIA Associate Counsel Eric Brown, an expert in transportation policy, argues that to meet its transportation objectives, the state will need to:

• Prioritize capital improvement projects by giving more weight to those with the greatest potential to advance economic development
• Develop sustainable sources of transportation funds and prohibit their use for purposes other than capital expenditures for high-priority transportation projects
• Streamline bidding and other processes to ensure that priority projects are completed on time and on budget

The state must take a strategic approach to identifying the highest-priority projects, says Brown, giving preference to projects that can do the most to enhance Connecticut’s economic competitiveness.

“Before a capital improvement project is adopted, it should be subject to rigorous cost-benefit analysis using objective economic impact tools,” he says.

Brown points out that historically, the state Department of Transportation (DOT) was known for its emphasis on roads and that its investments were driven largely by federal priorities and local politics.

In 1999, however, a report prepared by consultant Michael Gallis for the Connecticut Regional Institute for the 21st Century warned that inadequacies in our transportation infrastructure and lack of strategic planning threatened to cut off Connecticut’s economy from regional, national, and global markets. The report urged that the state take an “immediate set of actions,” including the adoption of a “multimodal transportation strategy,” moving beyond its traditional emphasis on road improvements.

“Twelve years later,” says Brown, “despite the good work of the legislature and various administrations, it’s still easy to look at a northeast regional infrastructure map and see the potential isolation of Connecticut, as highways with three or more lanes, high-speed and long-range passenger and freight rail lines, and deepwater ports provide opportunities for all varieties of commerce to enter and move through the region without ever coming through Connecticut. If our state doesn’t act boldly and strategically, our connection to regional, national, and international corridors of commerce could become cumbersome to a point where jobs and wealth literally pass us by.”

The Gallis report prompted the creation of the 15-member TSB in 2001 to ensure that strategic planning plays a greater role in transportation decision-making.

Although the TSB’s draft report recommends a stronger focus on a multimodal transportation infrastructure and connectivity among transportation modes, as well as the integration of economic assessment tools into the planning process, “the state has never fully embraced a true cost-benefit approach to prioritizing myriad transportation projects,” says Brown.

Safety and Economics

Under Redeker’s leadership, the DOT places high importance on the potential of infrastructure projects to advance economic development, although Redeker is quick to point out that safety is his department’s number-one consideration when it comes to creating a to-do list.

“Our first priority is obviously safety and making sure that our infrastructure, as it exists, is in good shape,” he says. Much of the money for that: about $650 million a year: comes from federal formula-based funding.

To finance new, large-scale, strategic initiatives, Connecticut relies, in part, on special federal funding programs, or discretionary money, which typically involves applying for federal grants.

“That’s where we get into the major new things, like [improvement and expansion of] New Haven-Hartford-Springfield rail service, which really at its core is a project that will rejuvenate and spark an economic corridor along I-91,” says Redeker. “So this is an economic investment that we’re able to make because it’s a discretionary program. We look to those programs, because they enable the state to leverage a lot of federal dollars that otherwise would not flow to Connecticut.”

In terms of highways, Redeker says the state has several opportunities for improvements that will have a positive economic impact, including finishing Rt. 11 and, eventually, widening I-95 and replacing the Aetna viaduct in Hartford. “It’s those big projects that we prioritize first on safety and second on economic impact,” says Redeker.

Highways, of course, are vital to commerce in Connecticut, especially considering that up to 98% of our freight: consumer goods and materials used by industry: moves by truck. So, when it comes to prioritizing projects and spurring economic growth, Michael Riley, president of the Motor Transport Association of Connecticut, Inc., would like to see the state take care of some unfinished business: namely the completion of several highway projects, including Rt. 11 and Rt. 25. Not doing so, he says, is “having an impact on our attractiveness as a place to do business.”

New Initiatives Reflect Strategic Thinking

Recognition of the link between a modern, multimodal transportation infrastructure and economic growth has driven several recent state transportation initiatives, notably the creation of the Connecticut Airport Authority (CAA) and the launch of a study to analyze the economic development potential of our deepwater ports.

The CAA is a new governing body that will oversee the operation of the six state-owned airports. The group will focus on Bradley in particular, making it part of the state’s overall economic development and growth strategy and freeing it from the bureaucracy that has been so slow to react to economic opportunities in the past. In doing so, the new governance structure will allow the airport to better compete in the international airline industry for both passenger and freight business.

“The Connecticut Airport Authority Board can be agile in responding to economic opportunities for Bradley International Airport and Connecticut’s other five airport facilities,” says Mary Ellen Jones, CAA chair. “Our initial focus will be to set priorities that will enable us to maximize the untapped potential of Connecticut’s airports.”

State Senator L. Scott Frantz (R-Greenwich), a member of the Senate Transportation Committee, says that the creation of the CAA was the culmination of an eight-year effort to give more independence to Bradley’s management and governance.

“The thinking behind the bill is to allow the airport”_to reach its full potential as a transportation center as well as a major driver of economic development,” says Frantz. “This means that the entire organization needs to function like a normal business entity.”

Frantz explains that the new governance structure will allow airport management to hire and fire much more quickly and enable faster, smarter decision-making when it comes to contracting for projects and business development on and around airport grounds.

“Importantly,” he adds, “it will allow the airport to be much more flexible and tactical in its approach to securing more domestic and international flights.”

The state has also begun plans for a study to determine strategies for economic development of its deepwater ports in New London, New Haven, and Bridgeport.

“We already know that our maritime industry is a large and critical component of the state’s economy,” says Catherine Smith, commissioner of the Department of Economic and Community Development, one of four state agencies involved in the port project. “What’s been missing is a solid understanding of the market in which our ports operate and a detailed strategy for how the state can best partner with and support the ports within that marketplace. The study will use a market-based analysis to guide public and private infrastructure investments.”

Alternative Funding Options Needed

“More than any other factor, funding defines Connecticut’s ability to respond to its transportation challenges,” says Brown, “particularly when it comes to major projects designed to ensure that our infrastructure can support a growing economy.”

In addition to federal dollars, which may be harder to come by going forward, Connecticut relies on a gasoline tax (currently 25 cents per gallon) for a significant chunk of its transportation funding: about $375 million annually. Redeker cautions, however, that the gas tax will become less reliable as time goes on.

“As you look toward more efficient fuel use, other transportation options, electric cars, and all of those things, how do you sustain that funding source?”

Another transportation funding challenge facing the state is self-inflicted: the diversion of money from the Special Transportation Fund (STF) to the General Fund to cover other expenses: a practice that needs to stop, says Rep. Anthony Guerrera (D-Rocky Hill), chair of the House Transportation Committee. Guerrera would support a constitutional amendment to prevent the use of transportation funds for non-transportation purposes, a move the governor has said he would consider.

“We used to have a lockbox in the state where all the money: the gas tax money, the toll money: all went to the STF,” says Guerrera. “That money was used to keep rebuilding our roads and even expanding our infrastructure. Today, in bad economic times, the state looks for places that have a little jackpot of money, and I think the transportation fund was one of them.”

Sen. Toni Boucher (R-Wilton), ranking member on the Senate Transportation Committee, agrees with Guerrera, arguing that “transportation funds must be secured and not raided for other expenses.”

So how will the state fund its current and future transportation needs? Guerrera, along with many other legislators, is a strong proponent of electronic tolling. Earlier this year, a bill authorizing electronic tolls for a limited time to fund the completion of Rt. 11 passed the House but died in the Senate.

Currently, the DOT is exploring the feasibility of tolling on Rt. 11 to fund the highway’s completion.

“What we’re trying to do is investigate how tolling can be done and what [level of funding] can be generated,” says Redeker. “We’re collecting data on where people travel and what happens if we toll a road. Where do they divert to? You have to understand all the impacts. How much could you collect, and what are the impacts on communities and congestion on the roads? We want to go into it with our eyes open.”

The DOT has also applied for federal money to study the viability of tolling on I-95 and I-84.

Meredith Reuben favors electronic tolling, provided the money collected is reserved for transportation projects.

“If you look around at all our neighboring states, that’s how they’re paying for their infrastructure improvements,” she says. “But we would need assurances that the money would be put only toward transportation infrastructure.”

Another funding option Redeker thinks has potential is the cultivation of public-private partnerships to finance big strategic transportation projects.

“There are very few states in the country really aggressively doing that,” he says, “but it’s another tool. Monies that exist in the private sector could be applied to up-front construction costs. And they could be repaid many ways, including bonding. So it’s a different way to pay for and maybe deliver projects more cost-effectively.”

Streamlining the Process

Assuming the state can raise the revenue to pay for its highest-priority transportation projects, the final challenge will be to consistently complete them efficiently.

“One area that Connecticut needs to continue to focus on is streamlining the process of moving transportation projects from the drawing board to fruition on time and on budget,” says Brown, pointing out that in some cases, state rules on bidding and permitting can cause time delays that also cost money.

“New strategies such as design-build contracts, where both design and construction are performed under one contract, can save significant time and money,” he says.

Although Redeker is not keen on applying the design-build model in all cases, he does see its value when the state is vying for federal funding for shovel-ready projects.

“I see [design-build] as particularly helpful, for example, in a lot of the latest programs for funding: federal stimulus and so forth: where it’s new money and you have to get projects ready overnight,” he says.

In general, Redeker agrees on the need for streamlining but points out that the DOT has already made significant improvements in the “up-front part” of transportation projects: RFP, bidding, selection, and award.

“We’ve shortened the time it takes to award an agreement significantly,” he says, “from well over 100 days in most cases to an average of 45. So we’re taking pieces of this and cutting them up and making sure we’re doing things most efficiently.”

That’s good news for a state whose economic future will depend increasingly on having a world-class, well-managed transportation infrastructure to help Connecticut businesses unlock vast national and global markets.

Bill DeRosa is editor of CBIA News. He can be reached at bill.derosa@cbia.com.