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The Infrastructure Conundrum

In a recent program presented to the Northwest Community Development Institute, I noted that the public infrastructure across the U.S. was deteriorating at 8 to 12 percent faster that it can be rebuilt. When considering all the pipe, drainage systems, roads, bridges, ports, airports, canals, etc. across the land, the amount of infrastructure is staggering. Since the 1950’s the country has experienced virtually non-stop building. For most of this 60-year period, times have been good. But can it last? The simple answer is No.

Infrastructure Decline

The National Surface Transportation Policy and Revenue Commission has stated that 25 percent of all bridges in the U.S. are functionally obsolete. According to the American Society of Civil Engineers, it will take at least $1.6 trillion to return all roads, bridges, and tunnels to acceptable standards. And this number doesn’t properly address the remaining elements of the American infrastructure – all those pipes, ports, dikes, drainage systems, etc. that are experiencing decline through the rational world of budget-dictated deferred maintenance. The level of decay is appalling. Public works officials and engineering professionals have been raising the alarm for years. If anything, numbers stated by elected officials understate the scope and depth of the problem. Trillions rather than billions will probably be required to update bridges alone. Similar to roads, once they deteriorate past a certain point, rebuilding is the only alternative. Stop-gap repair will not return structures to required safety standards. It can help for a while, but it only delays the inevitable.

Pay Now or Pay a LOT Later

When federal and state deficits are calculated, few politicians include all infrastructure requirements. Most include very few of the real costs of renovating the broad spectrum of projects now languishing on deferred project lists in state and local transportation and public works departments. And, without a basic and safe infrastructure, what is left? How will the economy suffer? How are communities impacted? What does business need to be successful OR to be attracted to a city or state? Old, declining infrastructure is NOT a viable element of the ‘New Economy.’  It is a massive Catch-22.

If, as Christopher Steiner notes in his great new book, the federal gasoline tax of 18.4 cents per gallon cannot possibly generate enough revenue to rebuild the road and bridge infrastructure, much less the remaining and very expensive portions not covered by the gas tax. ($20 Per Gallon Gasoline – How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better, Grand Central Publishing 2009). As the cost of gasoline rises people will drive less (with gas prices reaching around $4 per gallon, Americans drove 100 billion miles less in 2008 than they did in 2007), which reduces gas usage, tax revenue per gallon, and ultimately, funds dedicated to the national road system.  According to Richard Wallace, a senior project manager at the Center for Automotive Research, as gasoline prices grow to $6 per gallon decreased driving will reduce state road funds by 25% to 30%, accelerating the decline of the entire system. 

Confronting Reality

As I noted in my Institute program, these are realities that must be faced and addressed through funded programs. It will take enormous political will to seek hard data, share it with every community and begin preparing sensible action plans. Many public works and transportation professionals and their various associations have been relegated to a sideline position due to their insistence that infrastructure issues are in fact a huge portion of the national agenda. Infrastructure provides the basic internal framework of the American culture; it is elemental to economic growth, public health, quality of life, security, and National emergency response capability. Gasoline prices will increase as oil supplies decline – and this is well-documented. Even if, as some predict, new automobile technology soon achieves 100 miles to a gallon, vehicles still need decent roads. Smaller vehicles tend to be lighter and will wear out faster. With smaller, lighter cars and trucks, good roads become even more essential.

It is time we directly faced the facts at the local, state and federal level. Whether we move to toll roads, a higher gas tax, use taxes, or some other mechanism, funds must be dedicated to infrastructure. Unfortunately, merely dealing with roads and bridges will not get us very far. Infrastructure issues are MUCH larger. Can we face reality? Can we deal with the facts? And, can we make a plan that can achieve long-term success?  Time will tell. Again, is your organization Prepared For Challenge??

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges. He holds both the MPH and MPA degrees as well as a doctorate in education.

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Defining the (Stable) New City

I had the great pleasure of having lunch with futurist Glen Hiemstra (www.futurist.com) yesterday. The evening before, we were joined at dinner by Phil Kushlan, former city manager and well known urban planner. Both have experience with and an innate feel for cities of the future and the conversation was, to say the least, extraordinary.  At one point during lunch, I shared my prediction with Glen that the most ‘magnetic’ cities, regions, and organizations would be those providing some level of stability. I explained that, while most pundits believe that future societies will be highly mobile and individuals will have many jobs and even careers during a lifetime, I believe that challenges of the future will bring about a new appreciation for stability. But, in my view, stability not only pertains to the number of jobs and careers, it includes factors associated with the environment, water, weather, taxes, transportation, housing, education, and the availability of financing.

Richard Florida (www.creativeclass.com) implies some of these elements in his book, Who’s Your City (Basic Books, 2008). While his earlier book The Rise of the Creative Class focused on his belief that cities offering the best environments for creativity, latitude and opportunity would be the most successful, Who’s Your City dives deeper into the creative economy and how it will attract the type of commerce needed to fuel new age sustainable economic development.  Too much to review here, but I encourage you to read the book.

Maslow Reference

Of particular note is the Chapter 10 reference to Abraham Maslow, the eminent psychologist who originated the theory of self-actualization. In this chapter, Florida reviews the survey conducted by his Creative Class Group, through which five major categories of community attributes were identified – Physical and economic security (crime rates, safety, direction of the economy), basic services (schools, healthcare, affordable housing, roads, public transportation), leadership (quality and collaboration among civic and business leaders), openness (tolerance/ acceptance), and aesthetics (cultural offerings and beauty). As I read this chapter, one conclusion was apparent to me. A primary outcome of all of these desirable community attributes distills down to broad-based stability. Especially in these challenging times, people don’t want to worry about and deal with escalating crime, poor leadership, high housing costs, poor roads, crummy schools, declining water supplies, rising energy costs, and intolerant neighbors.

The Self-Actualizing Community

Available research seems to reach similar conclusions through various convolutions. Whether communities can reach a level of ‘transcendence’ after satisfying each requirement of the ‘hierarchy of need’ is a matter of perspective. For those of us who work in the arena and focus on practical implementation more than theory, a lot of work must be done to create new equations that are practical, workable, and affordable. I love the new age of community planning. My concern is not ‘What’ we need to aspire toward, but ‘How’ we get there from here with myriad new challenges and costs appearing every quarter.  Most public leaders know what should be done; the dilemma is how to accomplish various tasks with limited funds, disenchanted citizens, frustrated employees, and a struggling economy. Thoughts and suggestions?

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges. He holds both the MPH and MPA degrees as well as a doctorate in education.

Building a Long-Term Economy

Some time ago, I and others predicted that the unemployment rate would soar to 9.5% or even higher, although I felt it might drop after hitting the mid 9s. This may or may not come true, but it is clear that unemployment in many communities is now well above 10 percent and in some it is painfully above 20 percent. The best estimates now see the peak in Q1 2010 at over 10 percent before beginning to decline.

Combined forces are at work here. All generations are reeling from job contraction and are transitioning to a more conservative approach to life. There is a prevalent ‘wait and see’ attitude among consumers and, coupled with the emerging ‘do we really need that?’ mentality, consumption will continue to lag. Over the long term, this is not bad and in fact should strengthen and stabilize national and local economies. In the short term however, it retards growth, promotes fear of the future, and raises questions about the wisdom of public leaders. 

Some analysts predict a mild short-term recovery in 2010-2011 followed by a drift back into recession. Growth will be predictably slow – far below the growth rate experienced after several deep recessions occurring since WWII. There are now discussions about the value of another stimulus, with strong arguments brewing on both sides. History tells us that if private sector market forces cannot recharge quickly enough, the government can play a valuable role as stimulator, but certainly, it is a slippery slope. As with any crises (even one that was predicted in many quarters) decisive action is essential. Franklin Roosevelt demonstrated the value of action in his first 105 days, with the passage of 15 major bills through Congress. Most of those bills provided relief for citizens and sustained business through a slow economic recovery. Above all, he concentrated on what was in the best interest of the Nation, regardless of theory or historic precedent. Mostly, it was Roosevelt’s intuitive leadership that prevailed during the economic crisis of the 1930s and it continued through WWII. 

Mark Zandi, the celebrated chief economist for Moody’s Economy.com is forecasting that unemployment will remain at current or higher levels until sometime in 2011 due to slow job growth. This, very predictably, is due to the time required for the economy to re-center itself. Alan Levenson, chief economist for investment manager T. Rowe Price, terms this lethargic rebound “dyna-minimalism.” Very simply, this means that debt has been reduced and savings have been regenerated to the point there is ample fuel for an economic rebound, but the timidity of lending institutions is inhibiting business growth opportunities. Coupled with more selective consumer spending, this will slow the normal cycle of consumerism that reduces inventories and generates new production cycles.

Guests on Face the Nation and other Sunday TV news programs yammer about the poorly performing stimulus and accompanying deficit. What many either don’t admit or understand is that the world’s leading economists believe the current crises will correct slowly and may not return to robust levels for many years. After the stimulus, the economy must regenerate on its own and be driven by consumer spending. If this lags, stimulus funds may not last long enough to get communities through to the next natural cycle. The government cannot continue to artificially stimulate spending. This reduces consumer confidence and encourages people (as well as banks and business) to continue hoarding – thus extending the unnatural cycle of government assistance and creating the potential for a much longer recession – one that could last a decade. Clearly, we are at a tipping point. 

Confronting reality is never easy. However, if Marty Regalia, the chief economist for the US Chamber of Commerce, predicts unemployment at 9 percent or higher into 2011, attention must turn to a longer-term community vision and action plans that deal with that reality and not an expectation that good times are around the corner. Public leaders are in a tight spot. Blending optimism with factual assessment is an art. However, as I have stated before, our research has revealed that in times of crisis citizens and communities respond to and need four things: Clarity, Direction, Truth, and a Dignified, Harmonious Style. Elected officials and professional public managers are in a tough position. Providing these essential elements will help communities work through what promises to be a protracted re-centering of the culture and economy. Are you Prepared For Challenge?

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges. He holds both the MPH and MPA degrees as well as a doctorate in education.

Visit www.futurescorp.com and click on Public Futures.

Wisdom of the Founding Fathers

Rarely is there a YouTube video that truly captures the spirit of America while providing more clarity about this Country’s true nature. The video produced this week for YouTube by The Common Interest and narrated by Keith Allred reviews, in less than 10 minutes, the most fundamental element of the Constitution. That element, most eloquently expressed in Federalist Paper #10, examines man’s inexorable tendency to form factions. Understanding the nature of man, factions are inevitable, so the challenge typically drifts toward control rather than moderation. The beauty of the Constitution is that it established a government capable of controlling the scope and potential harm that can be caused by any single faction without attempting to control its formation. 

James Madison’s Vision

Even more remarkable, James Madison carried to the Philadelphia Convention a vision of social and constitutional mechanics that would protect liberty while promoting the right to form parties of common and special interests. Demonstrating his understanding of human nature, Madison stated,  “A zeal for different opinions concerning religion, concerning government, and many other points, as well of speculation as of practice; an attachment to different leaders ambitiously contending for pre-eminence and power; or to persons of other descriptions whose fortunes have been interesting to the human passions, have, in turn, divided mankind into parties, inflamed them with mutual animosity, and rendered them much more disposed to vex ad oppress each other than to co-operate for their common good.”    

As the United States has grown the number of factions has also grown. But it is this Nation’s very size and diversity that moderates the impact of any one faction or party. So, what is the message for this 4th of July? Very simply, every society has special interests that promote the value of their position, perspective, and contribution. But it is the Common Interest that matters most. When all is said and done, there are two essential questions for elected officials, public managers, and citizens – ‘What is best for the community and the Country? And, given the realities of our time ‘What is in the best common interest of all citizens?’

I encourage you to view the video and share it with colleagues.  It is worth archiving as a key element of new employee orientation.

 

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. An innovative and dynamic presenter, John frequently speaks and consults on how to prepare public organizations and communities for emerging challenges.  See www.futurescorp.com and select PublicFutures.