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Failure to address transportation infrastructure will cost billions, thousands of jobs statewide

Date: January 23, 2013

Research highlights economic cost of rising congestion, falling reliability, higher operating costs caused by deterioration

Boston – A new report finds that failing to address needed transportation repairs and upgrades will cost Massachusetts between $17.7 and $26 billion by 2030, while reduced productivity and higher costs would result in the loss of as many as 15,000 jobs.

The report, titled The Cost of Doing Nothing: The Economic Case for Transportation Investment In Massachusetts, was prepared by AECOM, a global provider of professional technical and management support services to a broad range of markets, including transportation, facilities, environmental, energy, water and government. It examines the potential costs to the Massachusetts economy of failing to invest in repairs, upgrades and expansions of state’s transportation network to address critical needs. The report was commissioned by the Boston Foundation and the Massachusetts Competitive Partnership, a non-profit, non-partisan, public policy group comprised of chief executive officers of some of Massachusetts’ largest businesses to promote job growth and competitiveness in the Commonwealth.

“Massachusetts is at a crossroads in transportation. If we fail to act, and act soon, to address the critical infrastructure needs we face, this report shows that the consequences for our economy and our communities would be devastating,” said Paul S. Grogan, President and CEO of the Boston Foundation. “It will weaken our productivity and economic competitiveness, and force communities to divert dollars from other needs to address increased congestion and higher operating costs.”

The report finds that by 2030, losses in highway system performance alone are expected to cost the Massachusetts economy between $11.1 and $14.9 billion (in discounted 2008 dollars) in lost travel time alone. Another $6.6 to $11.1 billion would be spent in vehicle operating costs and safety benefits, which would reduce household budgets for other types of spending, such as education and health-related purchases, and recreational spending.

That diversion of funds to transportation-related expenses, the report finds, would also reduce productivity and force the elimination of between 12,300 and 15,600 jobs by 2030, the equivalent of losing a major employer each year. The report also illustrates the areas in each region of the state that might be most vulnerable to transportation deficiencies, underscoring the need for a statewide plan to address the state’s long-term transportation needs. It notes that of the state’s major regions, only Greater Boston employs less than 30% of its workforce in “freight dependent” jobs.

“While Massachusetts has weathered the recession better than most states, it is crucial that we continue to provide the climate for businesses to expand and help grow jobs and the economy,” said Dan O’Connell, President and CEO of the Massachusetts Competitive Partnership.  “A modern and well maintained transportation infrastructure is one of the important factors that employers consider when locating or expanding operations.”

Researchers also highlight the power of investing in transportation – citing a return of $2.04 for each dollar of investment in transportation, and noting that capital expenditures by MassDOT and the MBTA over the past five years have created or supported nearly 25,000 jobs and over $1.2 billion in worker earnings.

Rising burdens: Debt and use

As the report notes, current investments fall short of the level needed to keep the system in a state of good repair. MassDOT has shown that $1 billion is needed annually for the Metropolitan Highway System Capital Maintenance Program, but only $400 million is currently spent. Meanwhile, cities and towns are receiving just over a third of the estimated $562 million they need annually for local streets and bridges, and the MBTA faces a well-publicized backlog of at least $3 billion in needed projects, while managing outstanding debt of $8.6 billion.

But even as repairs go unmade, there is a significant projected increase in the burden that this aging transportation infrastructure must handle. By 2040, trucks are expected to ship 82.6 billion ton-miles of freight on Massachusetts roads, a 128% increase over current levels, with a value $663.8 billion (in 2007 dollars). Overall freight volumes are projected to rise by 70% in the next twenty years. Meanwhile, both the MBTA and the statewide network of regional transit authorities (RTAs) will face a wave of needed equipment replacement to maintain even current service. Additional investments will be needed to relieve congestion on the state’s roads by giving commuters additional public transit options.

Statewide problem

The report points out that while much of the public attention has been centered on congestion in Eastern Massachusetts and the MBTA’s fiscal challenges, the eroding transportation infrastructure affects the entire state across multiple economic sectors. In central Massachusetts, for example, transportation investments such as the $32 million renovation of the intermodal Union Station building improve the multimodal connections between Worcester and Greater Boston – strengthening the complementary resources that are critical to the ability of the state to compete in a global economy.

In Western Massachusetts, transportation investments such as the restoration of Amtrak’s Vermonter service investments along the I-91 corridor expand the diversity of economic opportunity within the entire region, connecting it not just to other Massachusetts cities, but also to other states. This access is critical to reverse an outmigration of younger workers who are forced to leave the “Knowledge Corridor” to seek job opportunities elsewhere.

Statewide, transportation issues that undermine the state’s high level of productivity put the future economic growth of our relatively high-cost region at risk. Businesses in Massachusetts pay some of the highest labor and energy costs in the country – costs which are offset by a high level of productivity. If the benefits of high productivity are reduced by infrastructure limitations, the authors note, the impact on earnings will lead current and future employers to seek lower cost alternatives elsewhere for expansion or relocation.

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The Boston Foundation, Greater Boston’s community foundation, is one of the oldest and largest community foundations in the nation, with net assets of more than $800 million.  In 2012, the Foundation and its donors made $88 million in grants to nonprofit organizations and received gifts of close to $60 million. The Foundation is a partner in philanthropy, with some 900 separate charitable funds established by donors either for the general benefit of the community or for special purposes.  The Boston Foundation also serves as a major civic leader, provider of information, convener and sponsor of special initiatives that address the region’s most pressing challenges.  The Philanthropic Initiative (TPI), an operating unit of the Foundation, offers special consulting services to philanthropists.  Through its services and its work to advance the broader field of strategic philanthropy, TPI has influenced billions of dollars of giving worldwide. For more information about the Boston Foundation and TPI, visit www.tbf.org or call 617-338-1700.

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