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'Infra-stuck' in Indiana.

Infrastructure spending per capita ranks last in Midwest.

Infrastructure in Indiana is a lot like the weather. Everybody seems to talk about it, but they don't seem to do much about it.

Indiana lags all of its neighbors in the Midwest in spending for infrastructure--roads, streets, highways, bridges, wastewater-treatment facilities, airports and the like--and that fact continues to worry observers of the state's economic- development efforts.

"In infrastructure, we seem to be 'infra-stuck," notes Graham Toft, president of the Indiana Economic Development Council in Indianapolis.

The council, the state's think tank on economic development, was chartered by the legislature in 1985 to accomplish several key goals. Toft says the council does long-range strategic planning on economic development, evaluates economic- development programs and attempts to build collaboration across a wide range of Hoosier institutions, including labor, business, government and education.

"From the start, we identified two key elements to worry about: work-force development and infrastructure," Toft says. "We feel that the state has moved ahead on work-force development."

Toft isn't quite so sanguine in his assessment of the state's progress in meeting infrastructure needs. He readily ticks off statistics of areas where the state continues to come up short in infrastructure investment:

* More than 57 percent of the most heavily traveled roads in Indiana need improvement, ranging from repaving to total reconstruction.

* 40 percent of the bridges in the state are outmodeled or structurally deficient.

* Indiana would have to spend an additional $250 million a year, or $66 per vehicle, to bring its transportation infrastructure up to federal standards.

* Indiana's worn roads cost Hoosier motorists $470 million a year, or $124 per vehicle, in additional maintenance and operating costs.

* The state ranks last in the Midwest and 46th in the nation in terms of state and local infrastructure outlays per capita.

Toft has difficulty understanding why Indiana ranks so low in its infrastructure investment. "We were one of the first states in the nation to complete its interstate system," he says. "Since about the 1970s, we haven't kept pace."

Indiana has been a leader in the past in economic-development efforts, attracting such plums as the United Airlines maintenance center in Indianapolis, the Nucor steel minimill near Crawfordsville and the Subaru-Isuzu plant in the Lafayette area. Yet critics of its infrastructure spending believe more needs to be done to keep the state's winning streak intact.

"If I had to say one thing about infrastructure, it's critical to the economic well-being and industrial development of Indiana," says Terry Bowen, executive director of the Consulting Engineers of Indiana. "Indiana is way behind other states."

Bowen's trade association represents about 70 design and engineering firms in the Hoosier state. "A large percentage of my members design roads and highways," she says. "The needs are greater than ever, and the funding sources are down."

Bowen's comments are echoed by James A. Purucker, executive director of the Build Indiana Council in Indianapolis. The Build Indiana Council is a not-for-profit organization composed of engineers, contractors, equipment dealers and other firms engaged in the state's construction industry.

Purucker sees the state falling further and further behind in infrastructure development, partly because the pot of federal dollars that financed interstate highways and wastewater- treatment facilities here and across the nation continued to dry up during the 1980s. In 1981, 43 cents of every public works dollar came from the federal government; 10 years later, that federal share had shrunk to just over 25 cents.

That's reflected, Purucker says, in state plans for road building for the next two years. The Indiana Department of Transportation presented its road-building budget for the upcoming biennium in December, and the net result was a 34 percent decline this biennium versus the last biennium.

"InDOT has averaged 41 miles of construction each of the last nine years," Purucker says. "We're looking at 29 new miles in the next two years. There's a concern that exists in the construction industry."

Purucker notes that the cutbacks are coming at a time when there seems to be a resurgence of economic and industrial development in the Midwest, a situation which should be a natural for plant expansion here in Indiana. He points out that neighboring states are making infrastructure improvements, and that Illinois and Ohio have recently put a gas tax increase in effect to fund infrastructure expansion.

"They're out building roads, while we're promising roads," Purucker says. But the Build Indiana Council executive quickly adds that even if the federal government releases additional infrastructure dollars to the states, it's questionable whether or not Indiana would be able to take advantage of the federal largesse. Although he's skeptical of any big additional infrastructure spending from the Clinton administration, he notes that the state "has got problems matching it, even at an 80-20 match."

If Indiana is to go the route of state gas tax increases-- essentially a user fee for funding infrastructure development-- it better move fast, says Lloyd Bandy, executive director of the Asphalt Pavement Association of Indiana in Indianapolis.

Bandy reasons that the Clinton administration has talked about a federal gasoline tax increase as a deficit-reduction measure. "There's a gas tax bill in front of the General Assembly right now," he says. "Indiana must preempt Congress. Indiana voters just won't stand for an increase in the state gas tax on top of a federal gas tax increase. That in a capsule is it."

The Asphalt Pavement Association of Indiana represents 45 companies across the state, which themselves operate some 115 asphalt plants in Indiana. Bandy says he thinks that the infrastructure argument represents "a couple of larger-type issues. We look at roads, and they play a major part in economic-development activities. While they won't guarantee success of economic-development activities, you won't have it without them."

Bandy calls it "taking advantage of the Crossroads of America," and he says he thinks that Hoosier motorists will support an increase in the state gas tax if it means improvement to Indiana roads. "People can see their tax dollars at work in road and bridge improvement," he notes. "It's not like disappearing into the black hole of government."

Roads and transportation networks aren't the only infrastructure systems suffering from the drought of investment in Indiana. Often-overlooked components of infrastructure are the facilities that treat sewage and make water safe to drink. In an era of scarce resources, observers of the state's infrastructure wonder where Indiana will find the investment to bring the state's water and wastewater treatment facilities into compliance with federal law.

"There's been a decline in the funding sources for wastewater treatment," says Consulting Engineers of Indiana's Bowen. "The old grant programs are all gone."

She explains that grant programs for sewage-treatment facilities were one of the casualties of Reaganomics. "For years, the federal government provided free money," she says. "They changed that to a loan situation. Now, communities think twice about applying for loans" to upgrade sewage-treatment facilities.

Purucker of the Build Indiana Council notes that Indiana is 33rd in the nation in spending for wastewater and environmental infrastructure, and dead last in getting wastewater-treatment funding set up. The U.S. Environmental Protection Agency offers states a revolving loan fund for construction of sewage- treatment facilities.

"It's been a painful transition from the grant program to the revolving-loan program," Purucker says. "Communities are having to raise sewer fees to cover the cost of construction." Sewer line extensions have been "stop and start, stop and start," he adds. "It's been going on for four years."

Indiana is "woefully unprepared to meet the future" when it comes to sewer and water at the local level, says Rob Fowler, vice president for economic and business development at the Indiana Chamber of Commerce in Indianapolis. "From our perspective, sewer and water is a challenge."

Given the complaints about infrastructure investment in Indiana, there are a couple of bright spots that nearly all observers of the industry can agree on. Purucker notes that the Interstate 65 and Interstate 465 reconstruction projects in the Indianapolis metropolitan area the past two years have been major shots in the arm for construction companies locally. "Those are huge projects," he says.

Troy Comer, executive vice president of the Associated General Contractors of Indiana, points out that two of the major infrastructure bright spots in the state are currently under construction in Indianapolis. "The United Airlines maintenance base is significant to our industry for the next 10 years," says Comer, whose trade association represents 450 commercial and industrial contractors in Indiana. "And the Circle Centre Mall downtown is going to be a major investment."

The Indianapolis Airport Authority is scheduled to embark upon a five-year, $187 million capital-improvement program, beginning with construction of a new runway in the summer of 1993. The Hammond Sewer District is currently undergoing a $35 million improvement project, while LaGrange is spending $29 million to upgrade its sewage-treatment facilities. The City of Indianapolis plans to let $87.3 million in contracts during the first six months of 1993 as part of its three-year, $520 million infrastructure-improvement program. And one of the biggest potential infrastructure projects in the state, the extension of Interstate 69 from Indianapolis to Evansville, now seems as likely to happen as it ever has.

Still, the state's record of infrastructure investment raises questions about infrastructure improvements that will have to be made in the future. Fowler points out that the "next big challenge beyond water and wastewater treatment is environmental infrastructure, landfills and solid-waste disposal." Fowler also says he thinks the future holds real opportunity for privatization. "It's no panacea, but privatization can be a viable option in a number of situations, in a number of communities."

Toft of the Indiana Economic Development Council takes an even longer-term view. He talks of the inevitability of high-speed rail networks and of the necessity of 21st century airport construction.

"We had that imagination on infrastructure," he says. "We need to reinvigorate it. We have to look to our position in the world."
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Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Indiana's neglected infrastructure
Author:Beck, Bill
Publication:Indiana Business Magazine
Date:Mar 1, 1993
Previous Article:Office products update.
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