U researcher finds large return on transportation investments

by Brian Edwards

As legislators continue debating which transportation projects to fund this session, one University of Minnesota researcher is hoping to help solve their dilemmas.
The Center for Transportation Studies published a report this month that found investing in transportation yields a greater return than previously thought, and some say the results are the first step to providing concrete data on the benefits of offering additional funding to roads and highways in the state.
Jerry Zhao, the study’s lead researcher and an associate professor at the Humphrey School of Public Affairs, said the data are important because they show the value in improving transportation infrastructure.
For every dollar a county invests in local roads and highways, it could make back more than a dollar in property taxes, Zhao said.
Transportation studies typically focus on economic indicators such as job growth and salary increases in areas where there have been transportation investments, he said. But for his study, Zhao looked at the revenue increase through property tax growth in each of Minnesota’s 87 counties.
But the actual benefits counties gain from improving transportation are greatly affected by the type of roads — either highways or local roads — they invested in. 
“When we spent money on highways, that raised the overall economic activity,” Zhao said, adding that each county saw the most benefit from spending on local roads.
Kenneth Buckeye, a program manager with the Minnesota Department of Transportation who helped oversee the project, said county engineers are reviewing the research and finding the best way to use the data in their future projects.
Though increasing funds for local roads raise revenues for the county where the roads exist, the increase in revenue comes at the expense of neighboring 
“Some of the surrounding counties may suffer,” Zhao said. “They may see some of their economic activities being pulled into one county.”
However, the overall impact on all counties in the state is positive, he said, and knowing how neighboring counties are affected would help the government fairly redistribute gains in revenue.
Michael Iacono, a research fellow in the Department of Civil, Environmental, and Geo-Engineering said it’s difficult to determine if additional investment in transportation is causing higher property values or if it’s the other way around.
“Places that are growing tend to be spending more on roads,” Iacono said, adding that it’s important to note that property tax growth and transportation investments can have impacts in both directions. 
But Zhao said his data already accounts for this possibility because it addresses this chicken-or-egg problem by using historical data to track the cause of property tax growth.
Laurie McGinnis, CTS’s director, said members of the state’s Local Road Research Board, of which she is a member, are processing the newly released information to present to state officials.
“The board itself will look for ways to take [Zhao’s] research and make sure it is used as widely as possible,” she said, adding that that could include simplifying the results to explain these benefits to the general public.
Zhao said he plans on releasing his data to all of the state’s counties to be used as concrete data on the benefits of transportation projects.
“Hopefully, these results can be useful for policy engagement and can link to further questions that need to be studied,” he said.