NewGeography.com blogs

If there’s one place in America most likely to adopt congestion pricing, you would think it would be San Francisco. The combination of affluence, deep-seated environmentalism and a tradition of progressive politics would lend itself to adopting the program. But even residents there are skeptical.

Congestion pricing is the practice of charging commuters a fee for driving through a congested downtown area during peak commute times. In San Francisco, they are discussing a payment of between 50 cents and $5 to be assessed to drivers who commute between 6–9 a.m. and 3–6 p.m. The argument is that by doing so, you reduce congestion and raise public coffers to be poured into public transportation. In London, traffic was reduced 21% and public transit increased 36% when congestion pricing was adopted (it’s also been adopted in Singapore and Stockholm).

But SF is no London when it comes to public transportation. Anyone who has ever stuffed themselves into a city bus headed for points westward after work knows it is not nearly as reliable or as comfortable as “the tube.” It seems like there would have to be a rise in the standards of public transportation there to really make it effective – and money for that would not be available for some time given California’s budget circumstances.

Today's latest release of the Standard and Poor's Case-Shiller Housing Price Index indicates a continued price free fall across the board. Hyper-inflated markets such as Miami, Los Angeles, Washington, DC, San Diego, and Las Vegas continue to come back to earth. Check out the chart.

Even Charlotte, Denver, Dallas, and Atlanta, which seemed to be holding their own after never seeing a huge price escalation, seem to be sliding again since July. Cleveland seems to have stabilized, but Detroit continues its drop into a black hole. Home prices in Detroit have fallen to almost 14% below levels in early 2000.

Follow this link for a bigger version of the chart.

A new report from the Center on Budget and Policy Priorities highlights the increasingly precarious fiscal situation faced by state governments confronting the ongoing economic downturn. According to CBPP, "at least 44 states faced or are facing shortfalls in their budgets for this and/or next year, and severe fiscal problems are highly likely to continue into the following year as well."

The scope of these emerging deficits varies greatly. Mississippi currently has a budget deficit of around $33 million, which "could reach as high as $70 million-$80 million by the end of the fiscal year." On the high end of the spectrum, California faces the daunting prospect of a $15 Billion deficit for the fiscal year ending June 30, with the potential for "another $25-billion-plus for the next fiscal year," if nothing is done to bring the shortfall under control.

The process of bringing budgets into balance should be the source of much political turmoil over the next year. In Minnesota, which has a predicted two-year deficit of $6 Billion, legislators are beginning to spar over the potential tax increases and budget cuts. On Dec. 26, Gov. Tim Pawlenty announced $271 million in "emergency cuts," with a large share coming from aid payments to local governments. Legally required to have a balanced budget, as are many states, legislative leaders in Minnesota face the prospect of a challenge "so ugly that a special summer session will be needed to finish the budget." In New York, which faces the "largest deficit in state history," Governor David Patterson recently presented an "austerity budget," calling for cuts in state aid to local governments, education funding, and property tax rebate programs. Looking at all potential options to fill the gap, Patterson has also "appointed a commission to look into leasing state assets," including bridges, roads, and parks. The privatization of state assets and infrastructure as a means to raise funds is also being considered in Minnesota and Massachusetts, which faces a FY2009 deficit of over $2 billion.

With states potentially facing a combined deficit of $350 billion through FY2011, the pressure to make difficult policy decisions is sure to increase, as are requests for outside aid. Already, there are calls for the federal government to step into the fray, with governments across the nation "lining up to ask President-elect Barack Obama and the new Congress for hundreds of billions of dollars to plug holes in their budgets". Gov. Ted Strickland of Ohio, facing a two-year deficit of $7.3 billion, is "preparing a pitch for three chunks of money," to be delivered to the states to support education, infrastructure, and aid to the poor. CBPP also argues that there is a need for federal assistance, in order to "lessen the extent to which states take pro-cyclical actions that can further harm the economy." Facing an increasingly challenging economic situation which may limit the options at their disposal, it appears that states will look to the incoming Obama administration to find ways to stop "the bleeding."

With the nation locked in the firm grips of recession, one indicator of our country’s import demand and manufacturing capacity is being stockpiled in Montana. Just south of Great Falls, along the Missouri River, Burlington Northern Santa Fe (BNSF) Railway Co. is stockpiling flatbed container cars – a lot of flatbed cars. By some accounts, there are about 1,500 railcars, or 1.5 percent of the North American flatbed fleet and roughly 5 percent of the BNSF fleet, parked between Great Falls and Helena suggesting that Americans are buying and importing less from foreign manufacturers and manufacturing less for foreign consumption. If and when they are brought back into rotation will depend on freight demand – driven by American consumption.

Infrastructure investment has been a key driver of economic development throughout American history. In our country’s earliest days, the building of canals and turnpikes, followed by construction of railroads, greatly catalyzed expansion and development. Later, investment in electricity and telephone networks facilitated the development of vast expanses of the American landscape. More recently, the national interstate highway system and now the continuing build-out of broadband telecommunications networks have democratized the geography of business endeavors that were once confined to large metropolitan centers.

Highways, airports, harbors, utility distribution systems, railways, water and sewer systems, and communications networks remain critical elements in economic development. But in today’s globally competitive, net-centric economy a great advantage will accrue to regions and industries that develop sophisticated "infrasystems” including such innovation infrastructure such as university and lab facilities, technology and training centers, export processing facilities, and research parks.

These infrasystems – integrating facilities, technology and advanced socio-technical capabilities – have emerged as key drivers of innovation and the locus of future higher-value industries and higher-paying jobs.

Infrasystems differ by region. For some communities they can be constructed around a key asset such as a local hospital, equipped with medical technology and operated by a highly skilled staff of health care professionals. For a place like Wenatchee, Washington where Internet giant Yahoo decided to locate a data center, the key infrasystems asset lay in a highly aggressive economic development community and low cost, clean energy.

Wenatchee represents a classic success story for an infrasystems approach. They took many of the right steps including a $12 million investment by the Port of Chelan County and others in the Confluence Technology Center, a state‐of‐the art facility built specifically to attract information technology companies to the area. Another factor in this success is $50 million investment by the Chelan County Public Utility District (PUD) in laying fiber‐optic cable to homes and businesses.

If our infrastructure policy and financing debate is going to center around miles of paved road, number of bridges or even the number of construction jobs – certainly all worthy objectives – we could still miss the key target of creating long-term employment and making our country, and regions, more competitive. Advanced infrasystems represent the cutting edge economic tool of the 21st Century.