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State’s capital needs estimated at $21 billion PER YEAR

Wednesday, May 2, 2018

* Press release…

The deteriorating condition of Illinois’ transportation systems, state owned facilities, education buildings, and veterans’ homes have resulted in residents across the state experiencing pothole filled roads, overcrowded schools, and poorly maintained university buildings and state facilities. The annual cost of needed repairs and investment currently stands at $21 billion per year, according to a new study released today by the Illinois Economic Policy Institute (ILEPI).

ILEPI’s board is filled with contractors, trade unions and their allies, so keep that in mind here. I’m not saying they’re wrong, I’m just saying they’ve got their own motivations here.

* The full report is here. From its executive summary

Illinois is due for new capital funding.

    ▪ Historically, transportation, education, and public service agencies throughout Illinois could depend on a capital bill approximately every 10 years.
    ▪ A capital bill has not been passed since the 2008 bill known as “Illinois Jobs Now!”
    ▪ The federal infrastructure plan depends largely on state and local governments and private organizations for funding, thus Illinois lawmakers should be motivated to supply their own capital funding.

State buildings and facilities have significant maintenance and repair needs.

    ▪ Total deferred maintenance needs are over $7.3 billion for fiscal year 2019.
    ▪ Deferred maintenance needs have grown by $550 million per year.
    ▪ The Departments of Corrections and Health and Human Services alone account for over 50% of deferred maintenance needs, at over $2 billion and $1.9 billion, respectively.

Education facilities are also facing massive maintenance and repair needs.

    ▪ Higher education facilities, including public universities and community colleges, have additional deferred maintenance needs totaling more than $5.5 billion for fiscal year 2019.
    ▪ The two-year capital needs for P-12 education facilities in fiscal year 2017 were $7.5 billion, averaging approximately $18.5 million per district.

Additional investment is necessary to bring transportation systems into a state of good repair.

    ▪ IDOT requires an additional $11 billion through the year 2023 to bring all road miles into an acceptable condition and repair all backlog bridges.
    ▪ The Regional Transportation Authority’s current capital needs total $19.4 billion.
    ▪ Downstate transit systems require $2 billion in capital improvements to both urban and rural systems over the next 10 years.

Over $21 billion per year is necessary to address deferred building maintenance and bring the state’s transportation systems into a state of good repair.

    ▪ Building facilities needs account for over $16 billion per year, with state owned facilities accounting for 34% of total needs.
    ▪ Education needs stand at approximately $9 billion per year – 44% of total needs.
    ▪ Almost $5 billion per year is required just to address backlog on IDOT roads and bridges and statewide transit systems.

Thoughts?

- Posted by Rich Miller        

34 Comments
  1. - 32nd Ward Roscoe Village - Wednesday, May 2, 18 @ 10:17 am:

    “The two-year capital needs for P-12 education facilities in fiscal year 2017 were $7.5 billion, averaging approximately $18.5 million per district.”

    My son attends a very good CPS high school which is housed in a 100+ year old building. There are times they cannot drink from the drinking fountains because the water is so bad which may be lead or other issues. This is just one education facilities among thousands.


  2. - SSL - Wednesday, May 2, 18 @ 10:18 am:

    That top bracket of the progressive income tax everybody seems to want is going to need to be very high.

    Rome is burning. All we need is a fiddle player.


  3. - Casual observer - Wednesday, May 2, 18 @ 10:30 am:

    People have a right to know that the lockbox amendment was a sham and what they voted for was circumvented almost immediately. Politicians simply can’t be trusted to spend money for its intended purpose. Once you use road funds for roads then you can ask for more money where needed.


  4. - Sue - Wednesday, May 2, 18 @ 10:31 am:

    After you pay the pension and Medicaid tab there ain’t much left over for anything else even with taxes at 5 percent


  5. - Stuntman Bob's Brother - Wednesday, May 2, 18 @ 10:36 am:

    How much would it be if IL didn’t have a prevailing wage law, and had more favorable terms on Workman’s Comp? Just asking. Because something or somebody is going to get squeezed real hard in the next decade or two, and I’ve come to the conclusion that it ain’t gonna be me if I can help it. Multiply that sentiment by twelve million, and we go back to the idea that anything can happen in November. Maybe there’s some truth to that “Death Spiral” theory after all.


  6. - Lucky Pierre - Wednesday, May 2, 18 @ 10:38 am:

    The role of state government has evolved from serving the needs of Illinois residents to becoming almost exclusively a health insurance company and a retirement plan

    You can tell what politicians think is more important by what they gave constitutional protection to


  7. - Oswego Willy - Wednesday, May 2, 18 @ 10:42 am:

    ===How much would it be if IL didn’t have a prevailing wage law, and had more favorable terms on Workman’s Comp?===

    Given the numbers above, do the heavy lift yourself and tell us all the damage prevailing wage is causing, with about all dollar numbers.

    Thanks.


  8. - City Zen - Wednesday, May 2, 18 @ 10:43 am:

    ILEPI: Pulls #32 from ticket dispenser

    Sign reads: “Now Serving 6″


  9. - BlueDogDem - Wednesday, May 2, 18 @ 10:50 am:

    As MamaBlue always said. If your gonna dream. Dream big.


  10. - Reality - Wednesday, May 2, 18 @ 10:51 am:

    Looks like the board is Local 150 president, local 150 in-house lobbyist, local 150 contract lobbyist, and two friendly contractors.

    Is organized labor just local 150? What do the rest of the unions do with their members money???


  11. - cover - Wednesday, May 2, 18 @ 10:53 am:

    = ILEPI: Pulls #32 from ticket dispenser

    Sign reads: “Now Serving 6″ =

    How far into the double digits is the Quincy Veterans Home?


  12. - Stuntman Bob's Brother - Wednesday, May 2, 18 @ 10:55 am:

    ==do the heavy lift yourself and tell us all the damage prevailing wage is causing, with about all dollar numbers==
    That’s easy - one word - “Less”. and in a state where every extra dollar of revenue is going to be fought for tooth and nail in the coming years, literally “everything” that’s legal to do has to be on the table. Your point is taken, however, I don’t have the means necessary to provide an exact figure, that is too heavy a lift for one person without quitting my day job. But there are numerous organizations who can and will provide estimates, and policymakers need to consider all options seriously - and go where the money is. Even if it goes your ox.


  13. - ImNotTaylorSwift - Wednesday, May 2, 18 @ 10:55 am:

    This is another very weak analysis of the State’s capital needs for several reasons.

    First, the takeaway headline of “$21 billion per year” is alarmist and completely misleading. The report suggests that transportation backlogs be addressed over ten-year periods, while vertical construction needs be addressed in a one to two year period. The $21 billion per year is only for one year, which is further misleading because these projects couldn’t even be completed in a single year. If you spread the vertical construction the report lists over the same ten years that transportation is afforded, it’s closer to $6.7 billion.

    Second, the report ignores entire categories of infrastructure for no apparent reason. The report fails to identify any needs for navigable waterways, locks & dams, ports, airports, drinking water, and wastewater. The needs in all of those categories is significant as well. For a report that purports to summarize the State’s capital needs, it ignores an awful lot.

    Third, the report suggests that K-12 capital needs are the State’s responsibility. K-12 is the only local infrastructure included. If we include K-12, why not include other local infrastructure including, but not limited to, locally-owned vertical construction?

    Fourth, the deferred maintenance numbers provided for K-12 is understated and almost always will be. The survey used as a source is a voluntary survey administered by ISBE. The report briefly mentions that the response rate isn’t 100%, but doesn’t mention that of the approximately 850 school districts in the State, only 406 responded for the survey released in 2016. The needs could be double what is reported, but the figures relied upon are nonetheless unreliable.

    The report is so obviously insufficient that there is no takeaway of value here. The only real takeaway is that Illinois has a lot of capital needs. We all already knew that. If an organization wants to quantify how much “a lot” is, they should at least try to put some effort in. This report is functionally worthless.


  14. - DuPage - Wednesday, May 2, 18 @ 10:58 am:

    Community college buildings are maintained for the most part by local property taxes. New infrastructure is usually a state/local split cost. State universities are not supported by local property taxes.


  15. - anon2 - Wednesday, May 2, 18 @ 11:09 am:

    Everyone agrees on the need for a major new infrastructure program, including Gov. Rauner, but they can’t agree about how to pay for it. Few if any elected officials want to support higher gas taxes. At least JB gets points for creativity in suggesting revenue from legal cannabis as a funding source.


  16. - Wylie Coyote - Wednesday, May 2, 18 @ 11:21 am:

    wants vs needs


  17. - Give Me A Break - Wednesday, May 2, 18 @ 11:23 am:

    And some point, the State Fairgrounds in Springfield are either going to be improved via capital spending, or the place is going to literally fall down, even more so than it already is.


  18. - City Zen - Wednesday, May 2, 18 @ 11:42 am:

    ==What do the rest of the unions do with their members money???==

    Send it to CTBA.


  19. - Oswego Willy - Wednesday, May 2, 18 @ 12:00 pm:

    ===Your point is taken, however, I don’t have the means necessary to provide an exact figure, that is too heavy a lift for one person without quitting my day job.===

    So, the only way to really get to where prevailing wage is destroying and costing is for you to quit your day job?

    How about this.

    Whatever you make at your day job, whatever percentage you think is over-inflated by prevailing wage, you take that same cut?

    Hows about that, as you said…

    ===That’s easy - one word - “Less“===

    (Sigh)

    ===But there are numerous organizations who can and will provide estimates, and policymakers need to consider all options seriously - and go where the money is.===

    You admit you’re clueless to the actual numbers, but you “know” it’s prevailing wage.

    That’s fun.


  20. - Thomas Paine - Wednesday, May 2, 18 @ 12:17 pm:

    === less ===

    Wrong.

    https://www.epi.org/publication/new-yorks-prevailing-wage-law-a-cost-benefit-analysis/

    “State prevailing wage laws across the country have increasingly been assailed by those who appeal to lawmakers’ other responsibility—minimizing taxpayer costs—in an attempt to weaken or repeal these policies. These nationwide campaigns are built almost entirely upon a single argument: higher wages must equate to higher taxpayer costs. This narrative is simple, and its simplicity has made it a powerful political position…

    There’s one problem. According to the most advanced economic research on state prevailing wage laws, the simple narrative largely isn’t true.

    How could the simple narrative be so wrong?

    It turns out that the narrative relies on a subtle, yet egregious, logical fallacy that assumes that the only way that a contractor can minimize labor costs is by reducing the cost per hour of each worker. This is false. In any industry, an employer can also minimize labor costs by reducing turnover and/or the number of labor hours required. In construction, this would mean using higher wages to attract and hire the industry’s most productive workers and providing them with the most advanced equipment and technology. This high-wage, high-skill approach to minimizing cost is referred to as paying “efficiency wages,” a well-established strategy that is discussed in any introductory labor economics course. In the retail industry, this approach is what allows high-wage Costco and Wegmans to compete with low-wage Wal-Mart.”

    As almost every homeowner knows, experienced tradesmen with the right professional tools can complete most projects much faster with far less waste of time and materials than a DIYer. It is why I hired the pros to gut and redrywall my spare room. They tore the old walls down to the studs, had new drywall up, taped, mudded, primed, site cleaned in two days.


  21. - City Zen - Wednesday, May 2, 18 @ 12:33 pm:

    Thomas Paine - That you for providing that impressive union marketing brochure. DOL reports indicate the unions provided EPI with $1.3 million in funding last year alone, but it looks like money well spent.


  22. - Just Saying - Wednesday, May 2, 18 @ 12:44 pm:

    Lucky Pierre — You stated “You can tell what politicians think is more important by what they gave constitutional protection to”

    You do realize that the people of this state (the tax payers) voted on that constitution amendment back in the 1970’s don’t you?


  23. - Da Big Bad Wolf - Wednesday, May 2, 18 @ 1:04 pm:

    I didn’t have to quit my day job to find this. Getting rid of prevailing wage doesn’t save any money.
    An Analysis of Davis-Bacon Prevailing Wage Requirements: Evidence from Highway Resurfacing Projects in Colorado. http://www.bctd.org/BCTD/media/Files/Duncan,-Kevin-DB-Study-Highways_1.pdf


  24. - Stuntman Bob's Brother - Wednesday, May 2, 18 @ 1:07 pm:

    ==That’s fun==
    I’m certainly no expert, never claimed to be. But unlike some here, am willing to look at all options, and if they save significant dollars, will vote to implement them. My experience with prevailing wage is admittedly anecdotal, and don’t expect anyone to vote based on my personal experience (”Less” is an understatement in my experience). But as I said, all viable options need to be on the table, even if the guys claiming we need 21B per year in new dollars don’t like them. I’ve used union labor myself on projects where it makes sense, but also believe in a free market where I’m not locked into union labor costs - inflatable rubber rat or not. Sorry.


  25. - Da Big Bad Wolf - Wednesday, May 2, 18 @ 1:16 pm:

    Prevailing wage isn’t based on union costs. It is based on an average of ALL costs, union and non union, in the area, the free market rate. Hence the name. And here’s a study. Prevailing wage isn’t more expensive. An Analysis of Davis-Bacon Prevailing Wage Requirements: Evidence from Highway Resurfacing Projects in Colorado. http://www.bctd.org/BCTD/media/Files/Duncan,-Kevin-DB-Study-Highways_1.pdf


  26. - Jones - Wednesday, May 2, 18 @ 1:31 pm:

    Could get a lot more of this work done, particularly in rural areas if they weren’t tied to prevailing wage. And look at all of the people representing this organization. All tied into Local 150 or people that take money from it. Wouldn’t this be a conflict of interest anywhere else? By looking at those names alone there’s no way I would trust any number that came from this group.


  27. - Stuntman Bob's Brother - Wednesday, May 2, 18 @ 1:35 pm:

    Thanks for the link, Mr. Wolf, I’ll read that tonight. Again, I’m not advocating for the elimination of P.W., only saying that further analysis is needed and that it should be on the table, along with all kinds of other unpopular stuff. But also note that Colorado ain’t Illinois.


  28. - Da Big Bad Wolf - Wednesday, May 2, 18 @ 2:17 pm:

    You’re welcome. And it’s Ms. Wolf. For something more specific to Illinois Google “A Weakened State, the Economics and Social Impact of Repeal of the Prevailing Wage Law in Illinois.” 10/7/2013. Bob Bruno and Frank Manzo.


  29. - City Zen - Wednesday, May 2, 18 @ 3:16 pm:

    ==Bob Bruno and Frank Manzo==

    Frank Manzo works for IEPI, the same group that produced this report. Bob Bruno is co-chair of the Labor Education Advisory Board at UIUC, a between the Labor Education Program and the Illinois AFL-CIO.

    https://ler.illinois.edu/?page_id=1088

    As Rich said, motivations…


  30. - RNUG - Wednesday, May 2, 18 @ 3:17 pm:

    == You can tell what politicians think is more important by what they gave constitutional protection to ==

    It was a committee of citizens that drafted the 1970 Constitution and the citizens of the State that approved it.


  31. - Anonymous - Wednesday, May 2, 18 @ 5:24 pm:

    We need a capitol bill and another tax too pay for it. Entities that can get their own funding should not be a part of the program. Road tax revs long ago needed to be increased and left in the road fund(novel idea in Illinois) State parks need help state colleges need help state owned facilities need help…What we don’t need is member initiative dollars for a statue of someone or some other pet project when our infrastructure is literally collapsing.


  32. - Da Big Bad Wolf - Thursday, May 3, 18 @ 7:58 am:

    City Zen if you download the Dunkin paper or the Bruno/Manzo papers they footnote all the studies they looked at to support their conclusions.


  33. - Conventional Wisdom - Thursday, May 3, 18 @ 12:08 pm:

    This country’s infrastructure is a ticking time bomb because it’s in such bad condition and because the inflation of the cost of delayed maintenance each year is astronomical. If the fed govt and states don’t come up with a bunch of money for repairs very soon, they may literally not be able to afford the repairs later. Then we would simply have to let the infrastructure crumble and only make repairs in response collapses and catastrophes.


  34. - Da Big Bad Wolf - Thursday, May 3, 18 @ 12:09 pm:

    The papers by Bruno, and Dunkin etc. are PDF files and too long to post here. The basic ideas are 1. Lack of prevailing wage law (little Davis Bacon laws) indeed reduce wages of construction workers. 2. Lower wages means less tax revenues are collected.3.Fly by night contractors win bids by low wage schemes: misclassification of workers as independent contractors, using undocumented workers, and paying workers under the table. A study 2013 of Texas found that 41% of contractors used these schemes, leading to a 7 billion loss to its workers. It is hard to police all that. With prevailing wage laws there is less incentive for contractors to pursue illegal schemes 4.Underpaid workers are more likely to use taxpayer assistance programs. 5.Job related disabilities are 15% higher in states that got rid of local prevailing wage laws. (Peter Philips, Professor of Economics University of Utah, “Kentucky Prevailing Wage Laws Jan. 2014. If someone is disabled then they can’t work and they won’t pay much in taxes.


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