New York’s Gov. Andrew Cuomo came out earlier this month with a proposal for a bridge connecting Nassau County to both Westchester County and the Bronx. The bridge would let residents and businesses drive between Long Island and the northern New York suburbs while bypassing New York City, saving time, as well as cutting down on, or at least not adding to, New York City congestion.
This is not the first time this specific project has been proposed, having been defeated in the 1970s due to fierce opposition and a lack of funds. Similar pushback is likely with the current proposal, as well as other planned state infrastructure projects, due to the common NIMBY – or “not in my back yard” -- opposition to such projects and the projected cost. Estimates for the bridge are roughly $10 billion, with the Governor currently allotting $5 million for a feasibility study of the project.
The state will also need to balance the political and monetary capital needed to complete this project with other major “big vision” and big ticket projects. The governor announced a $100 billion capital program earlier this year, which includes plans to rebuild LaGuardia Airport, Penn Station, the Tappan Zee Bridge and considerable investment in the state’s network of existing roads and bridges. It will be difficult, timely and expensive to complete the major projects included in this plan, and some level of juggling these needs with the state’s debt capacity will be required.
We assume the people of New York will eventually come to an agreement on the infrastructure projects that are right for their state, and we have no opinion on what mix of these projects is optimal or appropriate. What we think is significant is the boldness of Cuomo’s infrastructure proposals, his willingness to lay his vision on the line, no matter how much the hue and cry, and the fact that he is one of the very few governors in the nation who understands how critical infrastructure is to long-run economic development. No other governor is tackling the issue on the same grand scope, with many neglecting infrastructure needs entirely, while others concentrate on very specific areas, such as water and energy infrastructure needs.
Infrastructure, as a whole, is key to all states’ long-run competitiveness. States compete to offer the most productive environment for businesses and residents, which in turn create jobs and economic activity. Physical infrastructure, including roads, bridges, airports, and of increasing importance, broadband internet, are high quality business inputs that directly impact economic efficiencies. The state naturally benefits from its location on the East Coast, with easy access to several populous metropolitan areas, as well as international destinations through its air and sea ports. Continued investment in its physical infrastructure allows the state to more fully take advantage of its location. A failure to anticipate future needs would put the region at risk of grid-lock and capacity constraints. The future of New York State, as with other states, depends on moving more, faster and safer, with fewer variations in time.
Many of the state’s key infrastructure programs seemed daunting at the time, from the construction of the Erie Canal in the early 1800s to the opening of the New York City subway system in 1904. The Brooklyn Bridge provides a notable example of this. Completed in 1883 at a cost of $ 15.5 million, equal to roughly $380 million in today’s dollars, it was the longest suspension bridge in the world at the time. The bridge allowed residents and businesses to move themselves and goods between Brooklyn and Manhattan by foot or car, which were much more efficient and economical than the prior options of transportation by boat across the East River. This connection to Manhattan was a major driver in the development of Brooklyn as a borough.
As a whole, increasing capacity and efficiency in the state’s infrastructure network will aid its ability to grow the economy, increasing and improving the overall transportation grid with lower transportation costs in the long-run and boosting productivity. This is particularly important as enhanced productivity is the only way to increase jobs and wealth in the long run. New York’s proposed plan is among the most extensive seen among states, addressing a vital need given the state and nation’s current infrastructure needs. While funding sources, and their impact on debt levels and general government financial flexibility, need to be considered, this is overall a positive and commendable step by the governor. This may also prove to be a bellwether for the nation, as states across the country struggle to address their growing infrastructure needs, with other states potentially developing multi-layered master infrastructure plans. In an era of fiscal constraints, and considerable more talk than action on the crucial topic of infrastructure, it is refreshing to see such bold vision.
Rachel Barkley is a vice president in the analytical services division at Loop Capital Markets. Loop has acted as a senior manager to numerous New York State and New York City debt issuing entities.