Economic Impacts of Transportation Investment Alison Premo Black, - PowerPoint PPT Presentation

Economic Impacts of Transportation Investment Alison Premo Black, PhD Senior VP & Chief Economist, ARTBA North Carolina FIRST Commission August 30, 2019

Transportation Investment Grows the Economy Short Run Impacts Long Run Benefits • Increase Demand • GDP Growth • Jobs • Increase Competitiveness • Output • Productivity Gains • Wages • Raise Standard of Living • Value Added • Grow Income & Profits Source: ARTBA Economic Analysis & State Economic Impact Studies

Transportation Investment Grows the Economy Opportunity Cost • Loss of potential economic activity • Increased Cost for Businesses • Potential Deteriorating Conditions • Fewer Improvements Made • Missed Business Opportunities Source: ARTBA Economic Analysis & State Economic Impact Studies

Transportation Investment Improves Safety North Carolina Highway fatalities per 100 million VMT 1.8 1.66 1.6 About 2/3 of 1.4 highway fatalities 1.18 1.2 due to roadway 1.0 conditions and 0.8 related factors 0.6 0.4 NC Highway fatalities 0.2 per 100 million VMT 0.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: NHTSA Fatality Analysis Reporting System, Pacific Institute for Research & Evaluation “On a Crash Course: The Dangers and Health Costs of Deficient Roadways.”

Economic Impact of Transportation Construction $7.4 Billion 2019 public and private transportation construction and maintenance investment in North Carolina Source: ARTBA estimates based on data from Federal Highway Administration, U.S. Census Bureau and U.S. Bureau of Economic Analysis

Economic Impact of U.S. Transportation Construction Transportation construction generates $15 billion in total annual economic activity in North Carolina Source: ARTBA 2015 U.S. Transportation Construction Profile

Economic Impact of Transportation Construction Transportation construction contributes $8 billion to state GDP … accounting for 1.4% of total GDP Source: ARTBA analysis and U.S. Bureau of Economic Analysis

Economic Impact of Transportation Construction Annual Industry Contributions to North Carolina GDP, 2018 $9.0 $7.9 $7.8 $8.0 $7.4 $7.0 $7.0 $5.6 $6.0 $5.1 In billions $4.6 $5.0 $4.0 $3.0 $2.0 $1.0 $0.0 Computer System Broadcasting and Transportation Educational services Natural resources Machinery Arts, entertainment, Design telecommunications Capital Outlays & and mining Manufacturing and recreation Maintenance Source: U.S. Bureau of Economic Analysis, ARTBA calculations

Economic Impact of U.S. Transportation Construction Transportation Construction supports over 110,000 jobs in North Carolina Source: ARTBA analysis, U.S. Bureau of Labor Statistics and U.S. Bureau of Economic Analysis

Wage & Tax Impacts of Transportation Construction Direct & Indirect Wages: $4.2B State & Local Tax Contribution Transportation Investment

Additional Employment Impacts Over 2 million jobs in tourism, manufacturing, agriculture, mining, retailing and other industries are dependent on North Carolina’s infrastructure network. Source: Bureau of Labor Statistics July 2019 seasonally adjusted employment information for mining and logging, construction, manufacturing, trade, transportation and utilities and leisure & hospitality employment.

Transportation Investment - Long Run Benefits – Creates tangible assets that are long-lived – Access to jobs – Market access for businesses – Reduced operating and production costs – Agglomeration Economies

Benefits for Businesses, Employees and Consumers Source: Definitive Guide to Transportation, The Principles, Strategies and Decisions for the Effective Flow of Goods, FT Press

U.S. Businesses Spend $1.6 trillion on Logistics U.S. Logistics Costs 2018, in billions Water & Port Administration, Transportation, $91, 6% $48, 3% Other Transportation Costs, $218, Inventory- 13% carrying cost, $494, 30% Truck Transportation, $774, 48% Source: The 30 th Annual State of Logistics Report , CSCMP 2019

Opportunity Costs - North Carolina Percent of Total Travel on Deficient Highways 35% 31.3% 30% 25% Percent of Travel 20% 15% 10% 5.5% 5% 0% Initial Value Year Five Year Ten Investment to Support All Cost-Beneficial Projects Current Investment Levels Source: ARTBA analysis based on U.S. Department of Transportation HERS model. Actual results depend on selection of projects within the model, based on cost-benefit ratio, which will likely be different from actual project selection. Does not include local spending.

North Carolina – Transportation Challenges • 6,248 bridges with identified repair at a cost of $1.9 billion • 10% of bridges are structurally deficient in poor condition • 12% of highways need repair • Growing cost of congestion • Increasing projections for freight shipments • Changes in technology and fleet dynamics

Vehicle Miles Traveled in North Carolina 130 120 110 Billions of miles traveled 100 90 80 70 60 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Federal Highway Administration, Highway Statistics Table VM-2

Cost of Congestion in Major Urban Areas 1,800 $1.7B $2,000 $1,800 1,600 $1,600 1,400 Total Annual Cost, in millions$ $1,400 1,200 Cost per Driver $1,200 1,000 $1,000 800 $727 $800 $568M 600 $600 $483 400 $400 200 $200 0 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Texas Transportation Institute, Urban Mobility Report data for Charlotte, Greensboro, Raleigh and Winston-Salem.

The Value of North Carolina Truck Freight Shipments $600 $546.5 $511.7 $486.6 $500 $460.4 $428.2 $381.5 $400 Billions $300 $200 $100 $0 2015 2020 2025 2030 2035 2040 Source: U.S. Department of Transportation Freight Analysis Framework

North Carolina Household Expenditures AVERAGE MONTHLY HOUSEHOLD EXPENDITURES Landlines Road and Transit Improvements $57.48 Cell phones Television and Internet $65.44 $88.17 Cable Internet Electricity and Gas $151.26 Electricity and gas Motor fuel taxes (state and federal), Phone Services $61.88 $91.33 registrations, fees & tolls $0 $50 $100 $150 $200 Source: FHWA Highway Statistics, Bureau of Economic Analysis

Future Trends: Share of New Sales of Alternative-Fuel Light-Duty Vehicles Will At Least Double 43% 36% % of New Light Duty Vehicle Sales in U.S. 32% 27% 21% 24% 12% 11% 0% 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 Low Oil Prices High Oil Prices Reference Case Source: ARTBA analysis of U.S. Energy Information Administration, Annual Energy Outlook 2018. Three scenarios are reference case, low oil prices and high oil prices with clean power plan.

Future Trends: Total Stock of Alternative-Fuel Light-Duty Vehicles Will Continue to Grow 43% 31% 32% % of Total Light Duty Vehicle in U.S. 25% 21% 22% 10% 11% 0% 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 Low Oil Prices High Oil Prices Reference Case Source: ARTBA analysis of U.S. Energy Information Administration, Annual Energy Outlook 2018. Three scenarios are reference case, low oil prices and high oil prices with clean power plan.

Future Trends: Number of Gasoline Internal Combustion Engine Light-Duty Vehicles 250 240 230 236.2 Millions of Light Duty Vehicle in U.S. 214.9 220 206.3 210 200 190 180 168.6 170 160 150 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 Low Oil Prices High Oil Prices Reference Case Source: ARTBA analysis of U.S. Energy Information Administration, Annual Energy Outlook 2018. Three scenarios are reference case, low oil prices and high oil prices with clean power plan.

Federal funds, on average, provide 51% of annual State DOT capital outlays for highway & bridge projects Over 69% of state highway 50 to 69% of state highway 28 to 49% of state highway & bridge capital outlays & bridge capital outlays & bridge capital outlays NH 34% 52%* 49% 91%* 61%* VT * 80% 65% 52% 68%* 51% 49% MA 70% 42% 72% 41% 44% 56% 42% CT RI 58%* 43% 67% 97%* 58% 63% 39% 63%* 74%* 60%* 71% 49% DE NJ 71% 42%* 48%* 28%* 47%* 68% MD DC 57%* 61%* 86%* 60%* 41%* 54%* 78% 71% 71%* 65% * * 34% 51% 81%* 36% HI 80% Source: ARTBA analysis of FHWA Highway Statistics data, total ten year average 2006-2015 from tables SF-1 and SF-2. The percent is the ratio of federal aid reimbursements to the state and total state capital outlays and is indicative of the importance of the federal aid program to state capital spending for highways and bridges. Does not include local capital spending. Federal highway reimbursements are primarily used for capital outlays, including construction, right of way and engineering, but are also used for debt service for GARVEE bonds. * States that have issued GARVEE bonds before 2014.