Why Michigan’s Plan to Improve Its Infrastructure May Be the Pace Car for the Country
Michigan may be accomplishing something for its long-term development and economic competitiveness that this country has yet to do — meaningfully advance infrastructure.
On the surface, creating an infrastructure council as the state did in July this year to help put infrastructure projects in motion, may not seem like much but Michigan has actually taken a pivotal step in the right direction.
In my article earlier this year, The Infrastructure Footrace: Why is the US Stuck in Reverse, the need for better governance over US infrastructure was raised as the primary reason for “the lack of good policy decisions at a national and strategic level”. This has morphed into a very large and difficult problem to solve. It will require far more than just throwing money at it. The second critical reason identified was “the lack of clear national priorities” and the need first for “a comprehensive, national needs-and-priorities assessment based on economic impact and social importance.”
Michigan Infrastructure Council
Michigan seems to have laid the foundation through bi-partisan legislation earlier this year under Act 323. Almost all Democrats voting with the Republican state legislative house, senate majority and the Republican governor to approve a bold infrastructure governance plan. The executive body through which the state will act is the newly created Michigan Infrastructure Council. Promising structural features include:
1. Broad scope — all water, transportation, energy and telecommunications-related infrastructure.
2. Constructive governance structure — placed in the department of treasury and not in any individual infrastructure department. Voting members include private and public sector experts, representative appointments by the governor, and majority and minority ranking legislative leaders. All key infrastructure-related department heads are involved but as non-voting members.
3. Creation of a statewide asset management database — giving both public and private entities the ability to coordinate the state’s infrastructure assets, including below-ground structures such as drainage pipes, gas mains, and broadband cables.
4. Annual statewide asset management assessment — to document needs and help determine priorities.
5. Comprehensive planning and implementation responsibility — annual, medium and long-term asset management plans, funding recommendations, and coordination and integration across asset classes and regions.
6. Annual reporting requirement — tracking progress on established performance goals.
7. Advise and conduct research — in finance, technology, operations, delivery and best practices to better align state incentives to infrastructure improvement.
UK Provides an Example
In the aforementioned Infrastructure Footrace article, I also referenced the United Kingdom’s National Infrastructure Council (UK NIC) which is the prototype for the Michigan Infrastructure Council. The UK NIC was set up to provide impartial, expert advice on the UK’s major long-term infrastructure challenges. In July 2018 it came out with its long-term strategic objectives.
Long-term strategic objectives
· €6 billion of new infrastructure needed each year for the next 30 years
· Funding through both taxes and user fees
Core medium-term proposals
· Nationwide full fiber broadband by 2033
· 50% goal for renewable power by 2030
· 75% recycling of packaged products by 2030
· Stable long-term transport funding for regional cities
· Ensuring resilience to extreme drought and floods
Importantly these recommendations are taken seriously by the UK government, are debated, and historically in large implemented. While the purse strings are ultimately in parliament’s hands, the acceptance of the NIC as being the nation’s non-partisan expert on infrastructure makes for a more constructive dialogue. Current economic and political events will inevitably skew final policy and funding decisions, as highlighted in my colleague, Ian Dixon’s, article The Infrastructure Footrace: Why is Europe Stuck in Neutral, but at least the discussion is based on a tangible and largely accepted set of facts.
Baby Steps in the US
There are no other examples of US states making such changes to effect better infrastructure governance. Interestingly enough, it was the state of Michigan that created a precursor to this infrastructure council with their Transportation Asset Management Council (TAMC) in 2002 to “provide a coordinated, unified effort by the various roadway agencies within the state”. It was charged with advising on a statewide asset management strategy and its implementation in a cost-effective and efficient manner. TAMC has now been placed under the aegis of the new infrastructure council, moving it from the Michigan department of transportation to the department of treasury. TAMC recently produced its own ambitious plan for managing and improving Michigan’s roadways and other transport assets. Historically Michigan and other US states lack adequate funding which has been the main barrier to improving the States’ infrastructure. The reaffirmation of the state’s commitment to infrastructure and governance structure under the treasury department may well be positive signs for better funding in the future.
Another meaningful recent US example of a step in this direction is that of the District of Colombia moving towards better infrastructure management from a law enacted in 2015. This statute required a full assessment of the district’s capital assets (from fire trucks to office buildings) including their current condition, useful life, maintenance and replacement costs so that the district had a better handle on its multi-year, capital investment and funding needs. In addition to building a comprehensive capital asset management system, the district also developed a financial forecasting model to figure out the best way to fund its anticipated infrastructure needs — and they have begun using it to scope out their capital spending, beyond their standard six-year capital improvement plan. While a positive step for its infrastructure the plan’s sustainability is dependent on management and legislative reinforcement over time. Importantly, the responsibility for this long-range capital plan rests with the district’s independent chief financial officer rather than the mayor or city council.
Success in Michigan
While Michigan has taken some very positive steps, success will ultimately depend on its implementation, as in the UK:
· As a first step, the council needs to be institutionalization as a qualified and independent body free of political interference — this falls on the governor and legislative leadership. Reducing the governor’s appointees to four vs five would have been a good way to send that signal. With four appointees, the governor would have still retained considerable influence over decision-making while instilling the need for collaboration, consensus and stability for effective long-term decision-making. Regardless, it will be important for these leaders to set the tone that any infrastructure agenda that is agreed to will need to survive political cycles and gubernatorial administrations to have the greatest impact. There will be a near-term test of the efficacy of the council as the current governor’s term expires at the end of this year and being subject to term limits there will be a new administration in 2019.
· Secondly, the active involvement of key members of the governor’s executive leadership team and their constructive policy input in prioritizing needs and financial support will be critical in creating a workable framework to facilitate short and long-term planning and implementation.
Putting together a body free of political interference with constructive policy and financial support to address infrastructure needs is one thing, seeing it through successfully is an entirely different matter. Time will tell if Michigan’s new infrastructure council will be a success. It will also require patience and a willingness to work through inevitable mistakes that will occur as the new council finds its footing.
Patience and Perseverance
It is also important to remember that meaningful changes to infrastructure do not happen in a year or two. Implementing strategies of this magnitude requires a multi-year agenda that extends over multiple political cycles and gubernatorial administrations. This means tabling the desire to make rash changes to the long-term strategy because they are not facilitating change quickly enough. Acting on that impulse will only result in more inefficient investment. Even the best long term strategies have their shortcomings. It’s the ability to work through them that make them successful.
For decades, the root of the broader US infrastructure problem lies in the lack of good policy decisions both nationally and strategically. Solid, strategic decision-making over time will go a long way towards accomplishing that goal. I have said that the solution for advancing infrastructure in the United States could rest with non-partisan, truly-independent commissions at the federal and regional levels with the authority to make all decisions related to national infrastructure.
While states taking the initiative such as Michigan will help, the US infrastructure deficit is too large for most states to handle on their own. Plus there are regional and national priorities that demand a broader level of participation and commitment. Maybe the rest of the US could learn from Michigan, DC and the UK.
If Michigan’s newly created infrastructure council can see its ‘forest through the trees’ vision all the way through, in spite of the pesky branches that will inevitably get in its way, the state’s water, transportation, power and telecommunications infrastructure could receive a real boost. If successful over time, this plan could very well turn out to be the blueprint that the rest of the country follows in meaningfully advancing US infrastructure.
Note: An abbreviated version of this article was first published on www.forbes.com