Smart investment helps states to reinvent economies

Smart state transportation investments can help reinvigorate economies. (Image Credit: EPA Smart Growth)

A multi-disciplinary panel at the Brookings Institution on February 25, 2011 called for states to invest in infrastructure to reinvent their economies. Bruce Katz, Vice President and Director of the Metropolitan Policy Program at Brookings, emphasized the states’ critical role as investors in education, innovation and infrastructure and as the “laboratories of democracy.” State and local governments are the primary investors in the cornerstones of economic growth, accounting for 80% of public spending on K-12 education and 74% of spending on both higher education and infrastructure.

Panelists Governor Ed Rendell (PA) and Mike Finney, CEO of Michigan Economic Development Corporation, emphasized the need for governors to get their own houses in order to effectively coordinate and focus investment. “Government that doesn’t invest in its own growth will wither and die.” Pennsylvania and Michigan each established an economic supra-cabinet to coordinate the efforts of the various agencies devoted to the development of the economy, transportation, workforce and communities. Through coordination and investment, Pennsylvania ranked 11th in the nation for job growth in 2010.

On transportation spending, Matt Kahn, Professor of Economics at UCLA, explained the need to “Fix it First, Expand it Second, Reward it Third – A New Strategy for America’s Highways.” Tyler Duvall, Associate Principal at McKinsey and Company, and Robert Puentes, Senior Fellow at Brookings, cited the need for states to upgrade their tool-kits to meet investment challenges by, for example, incorporating cost/benefit analysis into decision-making processes, implementing asset-pricing, and enacting state legislation to enable public/private partnerships. He observed that “government will help those who help themselves, like going directly to the voters and not waiting for Federal funds or an increase in gas tax.”

The Governors’ Institute on Community Design is developing state workshops to: prioritize transportation spending, develop strategic approaches to state economic development, channel investment to infrastructure-rich redevelopment areas and adopt new design approaches for communities hit hard by foreclosures and vacancies. States will need these and other sound strategic and programmatic approaches to fulfill their destiny as laboratories of democracy and effective stewards of infrastructure funds.

See also: “New report from Brookings Institution advocates for road repair and maintenance” (Smart Growth America)