THE AVENUE JANUARY 13, 2012
In light of last week’s job numbers, Wonkblog’s Ezra Klein asked what Washington should be doing to boost the economy. Infrastructure investment, he said, is the “obvious winner.” He is not alone. Economists, policy makers and politicians (on both sides of the aisle) agree that a pretty good bet for positive economic growth is investment in infrastructure. With all of this (rare) agreement on an investment target, what is Washington doing to encourage infrastructure investment?
So far, not much. With Washington mired in partisan nit-picking, states and metro areas are fulfilling their roles as centers of economic and policy innovation by experimenting with investment agendas for economic development. One recent example is in New York; in early December Governor Andrew Cuomo announced the creation the New York Works Infrastructure Fund, and last week a $1 billion investment in the revitalization of Buffalo.
Intended specifically to jumpstart the New York state economy, the New York Works Fund is a $1 billion fund that will leverage public and private dollars to create $10 billion in direct capital investment and create thousands of jobs through building and maintenance of a variety of infrastructure projects. The fund will raise $1 billion from pension funds and private investors. In addition, the state will frontload capital investment, moving $700 million from projects planned for 2013 to 2012, and $300 million from the Port Authority directed to infrastructure projects in New York City.
In addition to the financial contribution, Cuomo is working with the state assembly to pass legislation that would permit the fund to bid the design and construction of projects as a single contract, reducing costs and saving nine to 12 months of construction time. The fund would also consolidate permitting and regulatory processes across state agencies, speeding along projects and saving precious time and money.
The $1 billion in economic incentives for Buffalo is intended to lure private and non-profit employers to the long-neglected region, as was done to attract technology firms to Albany. As the Buffalo News editorial commented, it’s “a remarkable moment in Buffalo’s history.” The money comes at a time at a time when the city’s waterfront is being redeveloped and the University of Buffalo Medical School is moving to their growing downtown campus. Last year, the Western New York Regional Economic Development Council--led by a Buffalo developer and University of Buffalo president --won a $100 million state grant. These overlapping affirmative events are a sign of big things to come from the state’s second most populous city.
These proposals aren’t perfect; details around how projects will chosen by the fund, and what the $1 billion will go to exactly in Buffalo are still vague. What is important is that this a clear sign that while Washington dithers, states are willing to take risks and put forth the challenge to public, private, and non-profit actors to support innovation and capital projects designed intentionally to have positive economic growth.
Ideally, the federal government would also deliver this message at the national level. It will be interesting to see if the presidential candidates can rise to the challenge of encouraging and fostering a series of intentionally transformative investments across the United States.