I'm going to speak briefly on why the subject of infrastructure commands attention this year in Minnesota. And what are some things that Minnesota should be doing this year about its long-term problems and infrastructure second my colleague George Peterson the director of Public Finance at the urban Institute in Washington DC will bring a national perspective to developments in the field of infrastructure how to paraphrase the jelly manufacturer with a name like infrastructure. It better be good infrastructure has become something of a buzzword in the last year or two of the term was originally invented in England to describe airfields and other military installations Winston Churchill put the term the bed for about 20 years by treating it somewhat scornfully, but it does emerged in full bloom in recent years and it is now on magazine covers newspaper articles and so forth the term describes a variety ofProblems facing government topics include roads roads Bridges sewer and water systems public buildings transit systems. Sometimes it's used to describe rail systems Solid Waste Disposal facilities Hospital Sports airports, and so on in short the physical capital plant of the public sector In recent years there has been much talk about the Staggering scale of infrastructure problems. The amount of 3 trillion dollars has been bandied about is the size of the investment that the American public faces to straighten out its infrastructure problems while the numbers are intimidating. What is clear is that than the total number of dollars required is not going to be forthcoming immediately and therefore careful planning is required to make sure that we get the most for the dollars that are available. What about Minnesota? Minnesota problems are not as bad as many states now face especially states in the Northeast and Midwest my problems are serious and neglect is expensive action is required. Now if Minnesota is going to avoid the physical Decay the plagues the infrastructure of many states, for example by 1990. Minnesota will have almost 8,000 miles of State Highway in need of repaving because they are more than 35 years old 6500 miles. will require total resurfacing the state has estimated the 4,500 of the bridges of the state are now currently listed as deficient of the states 110 solid waste disposal sites, 33 of them have less than 5 years of capacity left replacing each one cost between 10 and 15 million dollars on the average. About a hundred million dollars will probably be needed to rehabilitate buses in the metropolitan area. Is that are more than 12 years old. The only alternative is replacing them. That would cost about $159. Minnesota's rail system is shrinking rapidly a problem in many rural areas about 20% of Minnesota's track mileage has been abandoned in The Last 5 Years. Federal Water and Sewer grants, the primary means used by local communities to comply with state and federal water standards will dry to a trickle compared to the past decade but the standards remain and must be complied with Despite its good track record of investment. Minnesota does face a major investment in infrastructure over the next 20 years. The total surely will be in the billions. That's the first reason that infrastructure should be included on a list of the states major priorities. It's an extremely costly aspect of government. It affects all units of government and all residents of the state. The second reason infrastructure is important is its relationship to the economy of the state long-term economic growth requires a viable public Capital plant grain and lumber must be moved clean water must be available products must be shipped to Consumers here and around and around the world people must be mobile information must flow. A healthy public infrastructure is a necessary but not sufficient condition for strong for a strong economy and without an economy, as you know, unemployment will resist and give Minnesota's Reliance on elastic state taxes the struggle to balance the state budget will become a permanent fixture of life in Minnesota. The Publix the private sector simply must have confidence in the public sector infrastructure are private Capital, which is portable will go elsewhere. Third reason the infrastructure is a critical policy issue for Minnesota. Is it the rules of the game or changing the federal government can't be any more to provide a large share of the cost of fixing and replacing infrastructure notwithstanding. The recently adopted 5 sent as text other developments that are changing the rules of the game include the shrinking physical capacity of state and local governments the disenchantment of taxpayers and financial markets with increased state and local debt offerings and last but not least experimentation with an increased role for the private sector in financing and Performing traditional public functions. All of these combine to form a dramatically different political and economic environment for infrastructure than the one that we were familiar with just five years ago change is upon us bringing new problems, but also new opportunities to summarize then there are three reasons why infrastructure must be an integral part of the deliberations of government this year first renewal and expansion of the state's economy will require a viable public infrastructure second maintenance of the infrastructure is going to cost a lot of money. inferred the rules of the game governing infrastructure Investments are dramatically changing placing an increasing burden on State and local governments and the private sector I'd like to turn now to four issues that should guide the state in developing its own infrastructure policy and programs. I'm going to leave few minutes then for my colleague George Peterson to describe efforts elsewhere in the country. First Minnesota needs a comprehensive inventory of its existing infrastructure and its impending needs there currently wide variations in the quality of information available to decision-makers the Garden State trunk Highway and interstate highways. We have good information forgot the local roads, not so good with regard to rural sewers bad information. The state needs a complete inventory of all of the elements for which it is responsible and simile local governments need a careful inventory of the elements for which local governments are responsible when these inventories are made in a regularly updated. They form the base line from which decision-making is made. Second Minnesota needs a coordinated planning process pertaining to infrastructure in order to make choices among competing investments in the tough fiscal environment today. Better planning is needed so that we can make farsighted decisions infrastructure is important in the long run but it does paradoxically vulnerable because the lack of spending on infrastructure in any single year is not as evident as in some other areas of government the infrastructure planning process at the state and local level should have five elements first the inventory that I described second estate should establish priorities link directly to the long-range economic needs of the state. Third these priorities should lead to an explicit long-term financing strategy for the most important Investments. Fourth state and local Capital budgets for infrastructure should be instituted looking at infrastructure as a whole and fifth the legislature should examine and reorganize its own policy making process so that a coordinated infrastructure policy can be adopted. Third state and federal design and construction standards should be examined for potential areas of cost savings and others have found ways in which federal and state design and construction standards could be modified with little or no loss and health or safety. What state and local governments should explore productive new relationships between the public and private sectors in the planning and implementation of infrastructure Investments throughout the nation the great potential of this approach is being proven. We have a strong base of public-private cooperation in Minnesota upon which to build we need to organize how to do that. New directions are needed in Minnesota in that regard and there isn't any simple easy answer. But without it no State like Minnesota can hope to succeed in the competitive economy of the future. Is there are some if there is one mediator step what the governor and the legislature I could take and that is to create a task force of government leaders and private-sector representatives to coordinate infrastructure planning along the lines that I have described current planning Tim's to be somewhat fragmented by the element of infrastructure and buy level of government Minnesota needed infrastructure plan for the year 2000, but it won't get one unless it reorganizes is planning process. A first step is under way in which two cities in Minnesota are playing a leadership role. I'm happy to say the Spring Hill Center. If I may be allowed to plug in the urban Institute are co-sponsors of a major national through your program to develop Solutions infrastructure problems, 10 cities for New York to San Jose or participating in this program. St. Paul's been a leader in organizing the program Minneapolis also participates private and public leaders for each City or form local infrastructure committees and will be convened in the Twin Cities semi-annually in the meantime research and technical assistance to each of the participating cities will be provided by the urban Institute. And that's a good lead in to introduce my colleague. Dr. George Peterson for the remainder of our discussion of infrastructure. Dr. Peterson is the director of Public Finance at the urban Institute a road scholar and one of the nation's recognize authorities on Urban public policy problems, especially at the financing of Public infrastructure George Peterson. Thank you. Minnesota is not the only state searching for an infrastructure plan. Other states are also searching. Some of already adopted their legislation and their experience can be of benefit designing a Minnesota program. Let me drive 3 brief lessons from the record today. Birthday of Jim Kelly is indicated an effective Capital plan requires a good inventory of capital facilities. What other states experience shows that the first attempts to Statewide inventory are almost always too ambitious they found her because they attempt to collect too much information. The New York State Legislature last year established a voluntary structure for local government reporting on Capital condition all local facilities detail performance monitoring their survey was exhausted but it was unrelated to decision that the legislature was going to make and only 6% of local governments even bother to respond. The federal capital budgeting bill now being debated in Congress is another illustration of excessive ambition. It would require that states and localities take a complete inventory the condition of everything. They own the entire nation America Works to canals and water lines to health clinics and have the results ready for incorporation in the president's budget 15 months after the legislation is passed. How do I very few certainties in government, but one certainty is that that type of inventory is impossible to carry out? So the lessons are simplify the inventory simplify at The crucial point with a steak plan extends to locally owned facilities design the inventory in collaboration with local governments. So the information gathered will serve their planning purposes as well and a capture the attention of local officials overhaul the capital Aid System to local governments. So that uses the capital information at the state says it is necessary to have for good at planning. That's the approach to Colorado for example is using to Kia's many elements as possible for the capital inventory to new formulas for local capitalist systems. That money goes where it goes urgently needed and localities can see the rewards were accurate condition assessment. Second Spin the fate of infrastructure planning in several states to find Midway through their work that they do not have the right information to support the choices. They need to make What you going to a Statewide inventory condition assessment? Yes, but not nearly a one-time inventory critical as that may be the goal must be to believe behind a regular routine system for monitoring the condition of public facilities the station know you're in you're out there wearing out and how rapidly information to support Economic Development. Yes, but specific information where does the state have excess capacity of public facilities that are in good condition? Public facilities in general and specialized requirements by toxic waste dumps and treatment plants that handle specialized discharges and where are the current capacity? So strange that it can accommodate grow. State has an economic development plan. We should calculate the special infrastructure demands of the Industrial Age that is targeted for growth and make sure that the inventory reveals the adequacy of public facilities to support that private Economic Development in Minnesota. I'm fine with the legislature may want to consider a new capital financing institution to accompany a new infrastructure plan. Let me come into your consideration the infrastructure bank that is under discussion in New Jersey the state of Washington and elsewhere. What is distinctive about a bank into the funding goes combined Capital financing of proceeds and bond issues from federal grants from fees and charges set aside for Capital purposes General budget support in from the bank close loans. usually subsidized loans at low interest rates to underwrite though local infrastructure investment by loans and why a bank loan stress care dollars loans must be repaid in Volvo cavities in the car sharing that is appropriate for tight budgets. It stretched finances than most States water pollution Investments that will have to be carried out over the next year's. Can I possibly be Finance in federal grants are the traditional matching sources loans can reach more projects. overtime the dollar is going into that bank become more and more flexible resources received as Federal grant started to Water treatment facilities in the first sentence upon repayment can be recycled for general purposes of the what's necessary at the moment that money as we paid and most important of the infrastructure bank or the institutional guarantee approval and general attention to Minnesota's Capital financing choices initial Capital loan to be repaid in the 1990s and Beyond and the bank would have to be there to receive those monies and make recycle the payments for new purposes. The bank would cut across functional areas to finance Rose Bridges sewer lines and water lines have cooled financing would require the state to continually make choices as to where its public investment dollars are best in infrastructure bank and help ensure that today is concerned about the infrastructure gives rise to a long-term Solutions of a guide public capital of rebuilding throughout the rest of the century. Thank you.