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Study Shows Extra Investment in Infrastructure Would Lead to Huge Increases in Revenue

Heather Stewart

June 25, 2013

Funding for Utah’s transportation infrastructure is going to fall short of existing revenue over the next three decades—to the tune of $11 billion. But if the state can drum up that revenue, the economic payoff will be enormous, according to a new study released by the Salt Lake Chamber.

The chamber commissioned the study to quantify the economic impact of fully implementing Utah’s 2040 Unified Transportation Plan, a long-range transportation blueprint developed collaboratively by the Utah Department of Transportation, Utah Transit Authority, state and local governments, and regional planning agencies.

The Unified Plan addresses the 30-year transportation needs of communities throughout the state, said David Golden, executive vice president of Wells Fargo Commercial Banking’s Mountain Division and co-chair of the chamber’s new Transportation Coalition.

Over the next 30 years, the state’s population is projected to grow by 60 percent.

The Unified Plan calls for $54.7 billion in “critical investments,” said Golden, while current revenue sources will only provide $43.4 billion in funding. The chamber’s Transportation Coalition is appealing to the State Legislature to find a way to make up the $11 billion shortfall.

The chamber’s study, conducted by the Economic Development Research Group of Boston, Mass., found that if Utah can fully fund and implement its Unified Plan, the state will reap an additional $183.6 billion in GDP, $130.5 billion in household income and $22.2 billion in tax revenue.

According to Natalie Gochnour, chief economist for the chamber, the researchers examined two scenarios: first, a “business as usual” scenario that assumes no additional funding, and second, fully funding the comprehensive plan.

Gochnour noted that the study looked at the total economic impact of increased transportation efficiency—not just construction spending and savings from reduced congestion. The study also examined benefits from transportation efficiency in reducing expenses for businesses and residents, improved goods movement and market access, and increased business creation and attraction.

But gaining the additional $11 billion in funding will likely require the legislature to increase taxes, said Golden. “The revenue sources that exist today would fall short,” he said.

The gasoline tax, for example, is a fixed 24.5 cents per gallon—a tax rate that hasn’t changed since 1997. “Part of the challenge with the gas tax is that it has never been indexed [to inflation],” said Golden. “It’s static.”

So increasing the fuel tax, or simply letting it rise with inflation, would be one way of raising funds for transportation. Many states are looking at ways to tax compressed natural gas or electric vehicles, as they use roadways but pay no gasoline tax.

“It could really be a combination of things,” said H. David Burton, former presiding bishop of the Church of Jesus Christ of Latter-day Saints and co-chair of the chamber’s Transportation Coalition.

Burton said there are several avenues to explore, and the Transportation Coalition will be working to educate lawmakers and residents about Utah’s infrastructure needs. The coalition was created “to unite various segments of the economy…to advocate and support investment in Utah’s transportation,” said Burton.

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