New Governors Eye Infrastructure as Trump's Plan Languishes

(Bloomberg) -- America’s newly-elected governors have their sights set on fixing roads and bridges in their states. And they may have better luck than President Donald Trump.

Whether it’s filling potholes in Wisconsin or expanding internet access into rural Tennessee, both Republican and Democratic candidates campaigned on promises to rebuild infrastructure, showing just how bipartisan the issue has become. Twenty new governors will take office in 2019.

States, which have seen tax revenue grow along with the economy, are in a good position to pour money into public works. Meanwhile, there might be little appetite for a big infrastructure bill in Washington, given the mounting federal budget deficit and split control of Congress. The country needs to increase its spending by $2 trillion through 2025 to get its roads, schools and other infrastructure in adequate shape, according to the American Society of Civil Engineers.

"It’s always easier to execute from the bottom up," said Adie Tomer, an infrastructure expert at the Brookings Institution. "At the federal level, they can debate in a circle for a long time. The locality or the state is the real major actor here. They have no choice but to actively govern."

That’s not to say there won’t be challenges when the new state leaders take charge next year. In some states, split political control could stall plans. Anti-tax sentiment is still rampant, which has already posed a barrier to Governor-elect Jared Polis in Colorado, where voters just rejected a ballot measure that would have financed billions in transportation projects with a sales-tax increase.

Thrust Into Spotlight

Flint, Michigan, where residents were exposed to corrosive drinking water for years, thrust aging water systems into the national spotlight. But it’s not the only city in Michigan in need of aid: the Detroit Public Schools Community District had to turn off the water in some of its schools this fall after finding "higher than acceptable" levels of lead and copper.

Michigan Governor-elect Gretchen Whitmer, a Democrat, emphasized the importance of investing in infrastructure during her campaign, saying that 70 communities now have water systems with higher lead levels than Flint did. She said the state is under-funding its water and sewer system by $800 million annually.

Whitmer, who released a 9-page plan on infrastructure during her campaign, said she wants to rebuild a state bank that can provide low interest rate loans to finance projects. An existing state infrastructure bank had an outstanding balance of just $18.6 million in 2017. If lawmakers don’t agree to fund it, she has pledged to go to voters with a bond proposal.

A commission of experts formed by outgoing Republican Governor Rick Snyder backed the idea of a bank or bond plan to help tackle infrastructure spending.

Roads and Bridges

Minnesota Governor-elect Tim Walz is one of the few incoming governors that has specifically said he wants to raise the state’s gas tax to pay for transportation improvements. The state hasn’t enacted an increase to its gas tax since 2008, a year after the Mississippi River bridge in Minneapolis collapsed and killed 13 people.

Infrastructure is a "statewide issue" that affects transit agencies like the Metro Transit in Minneapolis, which has faced budget shortfalls, said Katie Hatt, the executive director of the North Star Policy Institute, a left-leaning think tank in the state. It could be easier to pass such a tax increase given that the Minnesota House of Representatives flipped to Democratic control and the GOP’s senate majority is small, she added.

South Dakota Governor-elect Kristi Noem, a Republican, also made road and bridge repairs a tenet of her platform, though she wants to do so without raising taxes and instead focus on competing for federal grants. Wisconsin Governor-elect Tony Evers, a Democrat who unseated Republican Governor Scott Walker, said he wants to ensure the state does its part to fund infrastructure. The burden has fallen on local governments, with five counties and 18 cities hiking vehicle taxes and fees since 2011 to pay for road repairs, he says.

But Evers doesn’t say how he plans to fund upgrades to everything from public transit to roads. It could be tough to get state lawmakers on board for any tax hike, given the legislature is controlled by the GOP. The state last hiked its gas tax in 2006, according to the state.

Faster Internet

Meanwhile, the GOP’s new crop of governors campaigned on seeking to close the divide between rural and urban communities’ access to Internet and mobile phone service. The new Republican leaders of Ohio, Tennessee, and South Dakota said they would make expanding broadband a priority.

Rural and tribal areas still lag behind cities in both fixed Internet speed and mobile services, according to the Federal Communications Commission. "Everybody needs it now," said Sharon Strover, a professor at the University of Texas at Austin who researches local and statewide broadband services. "Businesses don’t want to locate where there’s not access and people find it hard to go through daily life without decent and affordable broadband."

Telecommunication companies tend to focus their investments on highly populated areas and often neglect rural or mountainous areas where stringing the wiring needed for broadband is more expensive, she said.

Typically a bipartisan issue, Strover said Republicans might be focusing more on rural broadband because many Democratic-leaning states already have it. "Some of the other states may be playing catch-up a bit."

©2018 Bloomberg L.P.