Governors' Speeches Show More Interest in Infrastructure

An analysis of state of the state speeches indicates that this year, 43% more governors are prioritizing infrastructure investment compared to last year.

In a report by Loop Capital Markets, vice president Ann Kibler found that in 2011, 21 governors mentioned investing in the state’s infrastructure as a priority. In 2012, 30 mentioned it as a priority.

The increase comes despite the fact that the Loop study found that only 43 governors delivered state of the state speeches in 2012, compared to 49 in 2011.

The report also indicates that 25% more governors mentioned investing in renewable energy compared to last year.

Using data provided by the Center on Budget and Policy Priorities in January, the Loop report shows that many states are facing substantial budget gaps in fiscal 2013, which for most states starts in July.

While 22 states do not have a projected gap, 13 had gaps of 10% or less, seven had gaps from 10.1% to 20%, three had gaps of 20.1% to 30%, and one state had a gap of more than 30%.

The states with the biggest gaps were Texas, with 20.4%, Washington, with 22.2%, Oregon, with 24%, and Nevada, with 34%.

No estimate of the size of the projected gap was available for Louisiana, Mississippi, Kentucky or Massachusetts.

At least 27 states have taken loans from the federal government to cover unemployment compensation fund insolvency. The budget “shortfalls will force states with outstanding loans from the federal government to impose higher payroll taxes on employers,” Kibler said.

The top themes of the speeches in 2012 were increasing job growth and-or increasing funding for job training, which was mentioned by 41 of 43 governors; education reform, mentioned by 39 governors; and investing in states’ infrastructure, mentioned by 30 governors.

Upon reviewing the report’s summary of the governors’ themes, William Pound, executive director of the National Conference of State Legislatures, said, “It appears the priorities of governors and state legislatures are not that far apart.”

Regarding transportation infrastructure, the conference noted: “A large gap still exists between available revenue and actual need for infrastructure maintenance and new transportation projects. … State lawmakers are considering a variety of funding, finance and efficiency measures to help provide much-needed transportation infrastructure.”

The Loop report shows that total state revenue has been up from the same quarter a year earlier since early 2010. However, this year-over-year increase has not yet been enough to bring revenues up to pre-recession levels.

Fitch Ratings and Standard & Poor’s have stable outlooks for states in 2012. Moody’s Investor Services has a negative outlook.

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