Let’s brag that we use our surplus to do some good for ourselves and our children
STATEHOUSE – The open “letter to the editor” below was recently distributed to newspapers statewide:
To the Editor:
Indiana as the Crossroads of America is built around our geographical location and the ways to move about within and across our space.
This is where we invest our dollars, but Indiana’s policy on building roads, transit systems, sidewalks and bike-ways can be summarized in a sentence: Hoard our revenue to build a budget surplus and brag about our bond rating.
Well, you really can’t travel on bank deposits and praise from Standard & Poor’s. You need asphalt or rails. And if you resort to creative financing to do your building, you will pay more now and still more later.
Let’s start by bragging. Indiana is coming out of the Great Recession with $2 billion on hand and our credit unimpaired. Our Republican leaders love to contrast our positive financial posture with their caricature of Washington, D.C., or Illinois. Well, let’s have a big party and celebrate our success, but we need to get serious about our present and our future.
Our transportation situation is grim. The Toll Road windfall is behind us and its management structure is imploding. Gas tax revenues are in decline. Our city streets and rural roads are a mess. In the countryside, they are tearing up roads and returning to dirt. In our cities, we spend money on car repairs, not street repairs.
And how do we react to this? We fight over how to cut up a shrinking pie.
Some demand that all transportation dollars go for yet more concrete, with nothing for rails, sidewalks, or bikes.
Other so-called financial experts tell us that there is a way out. All we need to do is to invite private firms, frequently from abroad, to handle our transportation projects. All that our new partners want is fees (now) and guarantees (for later). The smart money folks have caught on to the risks in public-private partnerships and will make sure the public bears them. The bottom line is that our children may have some new roads, but at a high price now and a high risk later.
Indiana was able to borrow to build in the past. This was true when we had a modest surplus and interest rates were 5-6 percent, not around 1 or 2 percent. What we had then was common sense. We knew that when you have good credit you have choices. You can play games with financial engineering, you can fight over scraps or you can invest at reasonable rates, using your good credit.
Yes, invest. How’s that for an old-fashioned idea? Wouldn’t you like our children to help pay for roads they will use at today’s low rates? Or do you prefer to wait until interest rates return to more historically normal levels?
The State of Indiana could use our part of our surplus to create a revolving fund for infrastructure. It could make grants for innovative projects involving multiple government units. It could even make unrestricted revenue sharing available to local governments that work to meet financial goals.
I like bragging as much as the next person. Let’s brag that we use our surplus and our credit rating to do some good for ourselves and our children. Let us build roads, and transit and bikeways. Let’s do it while rates are low. And let us do it the old-fashioned way: borrow at low rates and pay off on time. We can even use our surplus to leverage this effort. And, if we create jobs and revive our cities and towns in the process, wouldn’t that be something to brag about?
Edward DeLaney
Indiana State Representative
House District 86