TEMPE - The state and local governments must address a projected gap of $288 billion to develop transportation and water systems, education and other critical infrastructure needed to support the 10 million people expected to call Arizona home by 2030, researchers said at a conference Nov. 17.
Arizona State University economists participating in "Arizona 2030," a conference held at ASU, released a report pointing to a deficit between spending needs over the next two-plus decades and anticipated revenues available to governments.
"Arizona wasn't thinking seriously enough about its infrastructure. How was it going to afford it?" said Timothy James, a research professor of economics in ASU's W.P. Carey School of Business.
The report projected a gap of $150 billion between now in 2030 for state and local governments to provide for the transportation needs of 10 million people, followed by a $41 billion gap for education.
It said that failing to adequately invest in infrastructure would eventually lower the quality of life for Arizonans, hurt the economy and stifle growth.
Norman Mineta, who served as U.S. secretary of transportation earlier in President George W. Bush's administration, opened the conference by noting that drivers in Maricopa County lose 50 hours per year in traffic due to congestion and poor planning, up from 18 hours during the 1980s.
"Just think of the productivity losses," Mineta said.
But he said transportation is only part of preparing for long-term growth.
"It's not just transportation; it's health care, it's energy, it's education, it's everything," Mineta said.
Mineta said he drew upon his experience as a city council member and mayor in San Jose, Calif., as it grew during the late 1960s and early '70s.
"The issues of tremendous growth had to be dealt with," Mineta said. "Now here in 2008 Arizona finds itself in the same position."
The report also said consumers likely will have to pay more for electricity, health care and other services provided by private entities.
In a panel discussion, Matthew Croucher, an economist with the Carey School's L. William Seidman Research Institute, noted that utilities face a gap of $109 billion to provide the electricity the state will need in 2030.
"And that that gap has to be financed somehow," Croucher said.
The report said governments face a $24 billion gap and private entities face a $6 billion gap in providing the water that will be needed when Arizona's population reaches 10 million.
"The era of cheap water in Arizona has passed," Molly Castelazo, an associate consultant for the L. William Seidman Research Institute, said during the panel discussion.
She said Coconino, Gila, Yavapai and Cochise counties faced the most serious challenges through 2030, while water supplies in Maricopa, Pinal and Pima counties are considered adequate given anticipated population growth there during that period.
The report said infrastructure expenses account for approximately 25 percent of Arizona's gross domestic product. It said that proportion may need to rise to around 30 percent to meet Arizona's infrastructure needs though 2030.
The report suggested easing the burden on current taxpayers by using long-term debt to fund investments in physical infrastructure.
The conference was organized by the Arizona Investment Council with assistance from the Thomas R. Brown Foundations and The Communications Institute, a Los Angeles-based nonprofit organization dedicated discussion about critical issues in society.

©WMICentral 2008  To subscribe or visit go to:  http://www.wmicentral.com