Investment in transport benefits entire US economy

Federal highway and transit investment has far-reaching benefits for all sectors of the US economy – not just construction – a new IHS report has found.

Aside from the construction industry, two-thirds of the economic benefits and jobs created as a result of federal highway and transit investment are in non-construction sectors, such as business, education, health/leisure and hospitality, a new report commissioned by the Transportation Construction Coalition (TCC) and conducted by global information provider IHS, found.

The study also found that every dollar invested through the federal Highway Trust Fund (HTF) in state highway, bridge and public transit infrastructure programmes returns 74 cents in tax revenue.

“At the current levels of funding in federal highway and mass transit programmes, we find that this enables higher productivity, more business activity, higher personal income and so […] there’s a growth dividend for both the federal government and state and local taxes by increasing that tax base,” IHS senior consultant Karen Campbell, who co-authored the report along with IHS transportation expert and senior manager Bob Brodesky, said during a conference call.

“So without an increase in the tax rate, but an increase in the tax base, more revenue comes into the government,” she added, noting that the federal government collects an additional $31 billion to $37 billion from corporate and personal income taxes on average per year.

According to the statement announcing the findings, TCC members said they would send the report, titled “Transportation Infrastructure Investment: Macroeconomic and Industry Contribution of Federal Highway and Mass Transit Programme,” to all Congressional offices to help them better understand the urgency for a permanent solution for the Highway Trust Fund well before May 2015, when funding for the highway and transit programme will once again be in jeopardy for the sixth time since 2008.

Asked whether Congress is likely to adopt a long-term solution rather than the short-term fixes it has been applying so far to the HTF despite the existence of several reports already underscoring the importance of investing in the country’s transportation infrastructure, Pete Ruane, TCC co-chair and president and chief executive of the American Road & Transportation Builders Association (ARTB) replied: “While there have been several other studies recently, this [study] is unique in the sense that it isolates the federal programme. […] What was so resounding is that it’s showing that two-thirds of the beneficiaries are non-construction, I really want to emphasize that. […] It destroys the myth, among some politicians, that this only benefits the construction or engineering sector.”

“This is about our whole US economy; this study is just more ammunition to make the case for them [Congress] to do their bloody job,” he added.

In addition to exploring the impact current levels of federal spending on infrastructure has on the economy, IHS also looked at the potential impact if federal highway and transit investment were to increase by five percent annually from 2014 to 2019. IHS found that by 2019 this would result in an additional 78,000 to 122,000 new jobs, an additional $9.6 billion in real GDP for the US economy and an additional $4.9 billion on average per year in federal, state and local government revenue.

Established in 1996, the Transportation Construction Coalition is a partnership of 31 national associations and construction unions. Co-chaired by the American Road & Transportation Builders Association and the Associated General Contractors (AGC) of America , the TCC focuses on federal budget and surface transportation programme policy issues.