The North Carolina House of Representatives just passed a bill that would have the state spend an extra $3.1 billion on infrastructure, financed through bonds. While the bill received broad bipartisan support in the House, it must still pass the Senate and governor before coming to the voters in November.
The proposal includes just under $2 billion for school construction, $600 million of which goes to the UNC System, as well as over $1 billion for transportation infrastructure. Each of these areas is a key component of robust long-term economic growth, with education infrastructure advancing our human capital while well-maintained roads grease the wheels of our economy.
Combined with the dire need to pump money into the economy to compensate for low consumer spending during the pandemic, this bill provides a powerful way to protect our state’s economy in the long run. For this reason, students at NC State as well as those in the workforce should support the referendum should it make it on the ballot in November.
A 2019 report from the Center on Budget and Policy Priorities suggested that infrastructure spending was a good way for states to shake off remaining economic trouble from the Great Recession. The primary reason for this is simply dire need. America’s infrastructure was largely constructed in the mid-20th century and has not received substantial upgrades since then, leading to many roads and bridges being in a state of disrepair.
Another issue is the additional wear and tear caused by climate-related natural disasters. Some places are still rebuilding from Hurricane Matthew in 2016, and it’s clear that more infrastructure spending is hardly optional.
The report also notes that interest rates are at an all time low, a trend that has only continued during the current economic downturn, meaning that the state will be able to fund this spending more cheaply than ever. Recessions are harmful for the state budget’s bottom line, so it may seem counterintuitive to start a large funding project right now, but in healthier economic times it can be much more expensive to take on debt, meaning this project may end up better for the state’s financial health.
North Carolina has a lot of choices when it comes to how to spend its money, including tax cuts to try and stimulate growth or increasing unemployment benefits. However, in addition to being more politically feasible than either of these options, infrastructure spending has the benefit of a generally large return on investment.
According to the Economic Policy Institute, infrastructure is one of the most rewarding ways for a government to spend its money economy-wise, as its “multiplier” is high: Each dollar spent produces more than a dollar’s worth of GDP growth, and the excess on this is larger for infrastructure spending than other fiscal policies.
The COVID-19 pandemic has caused many people physical and economic hardship over the last few months, and it’s the job of our state to reduce economic harms without compromising the public’s health. Infrastructure spending is a solid way of spurring economic growth while improving the quality of life for everyone in the state. Meanwhile, increased funding for universities means that they will be better equipped to adapt to the current emergency and grow to better serve students in the future.
