Restoration of Transportation Funding Would Benefit Economy

By Bill Hauck

The California Infrastructure Coalition has just issued a report saying that restoring California's transportation funding would substantially increase employment and spending and ultimately would impact a wide variety of sectors in the California economy.

Investment in California's transportation is a wise investment in the state's infrastructure and its economy that will pay enormous dividends today and for generations to come. Not only will increased transportation spending rebuild a decaying infrastructure that is in desperate need of renewal, it will create jobs in California and encourage vital business investment to ignite the state's economic recovery.

Economic impacts cited in the report include:

• For every state dollar spent on transportation projects, the state will see an additional $.97 in indirect and induced spending in the economy. Many of these additional transactions result in sales tax revenues and additional income for taxpayers in the state, creating additional revenue not only for the state but local governments as well.
• Every $1 billion of transportation spending in California creates approximately 18,000 new jobs in the state (net of procurement).
• Project expenditures will improve California's transportation infrastructure and business environment resulting in ongoing general economic benefit.

Based on the CIC report, increased funding for California's transportation infrastructure benefits a wide array of segments in the economy. Roadway and transit construction and associated procurement activities directly create employment and influence the purchase of goods and services across the state. These activities also affect linked industries throughout California with direct, indirect and induced benefits. Construction projects require architectural and engineering services, tools, supplies and other services directly tied to the projects.

Additionally, construction employees purchase various items from groceries and household goods to services from family physicians, insurance, hospitals and banks. The comprehensive economic impact resulting from the actual construction of the projects and the employment of thousands of construction workers is broad reaching.

Since fiscal year 2001-02, the state General Fund has borrowed substantial amounts of monies from various transportation funds. During the May-revised state budget for 2004-05, the Schwarzenegger Administration proposed to provide $383 million to the Traffic Congestion Relief Fund. Most recently, the administration has indicated it would repay the remaining one billion dollars still owed to the TCRf by the General Fund by allocating any potential one-time revenue from the renegotiation of the tribal gaming compacts.

The complete report, which was commissioned by the California Business Roundtable, a founding member of CIC, in partnership with the California Alliance for Jobs and Transportation California, can be viewed at www.calinfrastructure.org.

Hauck is president of the California Business Roundtable and vice chair of the California Infrastructure Coalition.