The new totally GOP-controlled Congress appears poised tocontinue the course for infrastructure policy set by the Houseduring the last two sessions— in the politest terms that amounts tobenign neglect. In fairness, most Democrats have been reluctant toraise the federal gas tax too or find other funding sources for thenation's rapidly deteriorating roads, bridges and tunnels, not tomention rusting water lines and overtaxed sewage treatment systemsas well as crumbling dams. Forget about major infusions to providefor mass transit to relieve congested roads and for airports, whichstill operate using 1940s era radar technologies. Politicians ofall stripes seem to really believe their palaver about how the U.S.is exceptional and the greatest country on earth… Well ladies andgentlemen not when it comes to infrastructure.

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According to Ken Orski, who follows transportation policy inInnovation News Briefs, “A six-year (federal) surfacetransportation measure would require roughly $330 billion tomaintain current (FY 2014) spending levels. But (Highway) TrustFund revenue and interest (from the gas tax) over the same periodare projected by the Congressional Budget Office to bring in only$230 billion—leaving a truly staggering funding gap of $100billion.”

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A country which once built the Erie Canal and the Interstatesystem to power economic growth, now takes a pass—the gas tax waslast increased more than 20 years ago. Without finding moredollars, there is no chance to construct regional high speed raillines and states are increasingly on their own when it comes toreplacing bridges or building tunnels. Light rail, subway and busrapid transit projects become heavily dependent on local budgets,which are already stretched.

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There is also no chance of a second generation Clean Water Billto help upgrade or build new sewage treatment plants.Municipalities and towns cannot count on much federal help eitherfor upgrading their water mains, many of which were originallysubsidized by large federal outlays.

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This significant transfer of fiscal responsibility to the statesand locals either means higher sales and property taxes as well asnew tolls and hidden fees (which amount to higher taxes) or moredelays in necessary improvements, because of taxpayer resistance orpolitician fear of voter retribution at the next election.

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Some states necessarily rely more on private public partnershipschemes—selling off franchises in various infrastructure systemsand projects to attract investors and operators with the idea ofprivate sector management making these systems more efficient andbuilding new projects with fewer cost overruns. Instead of thestate DOT, a private company manages a one-off toll road or bridge,and secures a major share of toll revenues or payments from bondissues. But private operators are in the game for profit andinvestors may rely on leverage or complex financial structures tofund their participation. What happens if they cut corners or tollrevenues do not meet forecasts? Ask the State of Indiana—their oncehighly touted private operator for the east-west toll roadconnecting the Chicago suburbs to the Ohio state line, just filedfor bankruptcy.(http://online.wsj.com/articles/indiana-toll-road-operator-files-for-bankruptcy-1411395866)

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But the real problem with PPPs and the abrogation of greaterfederal involvement is in a failure to come up with integratedcross-state infrastructure plans that can benefit regions and tietogether cities for national economic benefit. Piecemeal funding oflocal one-off projects can waste un-tolled dollars as states andlocalities compete against one another for precious funding insteadof collaborating. PPP operators will lobby against competing roador transit systems that could reduce their volumes; while governorswill concentrate funding to shore up their budgets rather thansupport plans with interstate impact.

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In New Jersey, Gov. Chris Christie blocked plans with New Yorkto collaborate in building a transit/rail tunnel into Manhattan torelieve pressure on congested bridge and tunnel crossings in orderto redirect monies into shoring up in-state repair programs. Thatway he could delay raising his state's paltry gasoline tax andavoid taking heat from voters. Meanwhile, existing tunnels underthe Hudson require multi-billion overhauling from Hurricane Sandydamage. But where's the money?

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At some point, the nation's leaders will come to realizescrimping on infrastructure is a zero sum game. The Feds, thestates, and all of us will need to spend more.

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Jonathan D. Miller

A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for GlobeStreet.com, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.