TACIR: State will need $61.9 billion worth of infrastructure improvements by 2025

By KATE COIL
TML Communications Specialist

Tennessee will need at least $61.9 billion worth of public infrastructure improvements by June 2025 – a 5.7% increase from last year – according to a new report by the Tennessee Advisory Commission on Intergovernmental Relations (TACIR).

Of the $3.4 billion increase in infrastructure needs from last year, slightly more than $2 billion (60.2%) is attributable to transportation and utilities costs, the sixth year in a row that infrastructure needs in this category have increased.

Education and health, safety, and welfare costs were among the other two largest categories of need for the state. TACIR reported the state needs an estimated $978 million for education infrastructure and $575 million for healthy, safety, and welfare projects.

Information about funding for public infrastructure needs reported by officials indicates that 67.4% of the funds required to meet those needs was not available at the time the inventory was conducted—this was relatively unchanged from last year’s 65.1%. Excluding improvements needed at existing schools and those drawn from capital budget requests submitted by state agencies—neither of which includes funding information—only $15.1 billion in funding is available for the remaining $46.3 billion in needs.

Total estimated costs for current infrastructure needs fall into six general categories:

• Transportation and Utilities:  $34.7 billion
• Education:  $15.2 billion
• Health, Safety, and Welfare:  $8.3 billion
• Recreation and Culture:  $2.3 billion
• General Government:  $1.3 billion
• Economic Development:  $277 million

While the report found that there is still work to do to determine how the COVID-19 pandemic has impacted infrastructure needs in the state, there have been some results already showing the way infrastructure priorities have changed.

The shift to remote work and learning has highlighted both needed improvements in broadband infrastructure as well as technological infrastructure needs in public schools, particularly for computers and other devices. A survey of Tennessee local government officials found that 95.8% said the pandemic had a significant impact on their school system and every one cited an increased need for technology in schools.

The report also found that the pandemic may change the funds that pay for these projects are collected.

“While tax collections in Tennessee performed better than expected overall in 2020 (and continue to grow), some public infrastructure revenue streams— such as the taxes on gasoline and motor fuel that help fund Tennessee’s highway system and local roads—have not performed as well since the pandemic began,” the report said. “TACIR is currently conducting an analysis to compare and contrast the effects of COVID-19-induced disruptions by using historical trends to determine their effects on public infrastructure development or priorities. This is the second phase of the project that will utilize the existing public infrastructure data to identify trends and correlations with other variables, such as revenue, that affect the operations of state and local governments in Tennessee.”

The report also found that much of the funding for the state’s infrastructure comes from the local government level.

“The government that owns the infrastructure typically funds the bulk of its cost, and a variety of revenue sources are used,” the report said. “For example, the state collects taxes and appropriates funds to its own projects but also provides grants to local governments through programs in various state agencies. Even so, cities and counties fund most of their infrastructure improvements with their own property and sales tax revenues, while utility districts fund their improvements primarily with dedicated revenue sources in the form of user fees. Because most of the state’s infrastructure needs are not included in this analysis, local government sources—mainly counties and cities— provide most of the capital for all the fully-funded needs presented here.”

The federal government also funded the majority of projects in the transportation, broadband, recreation, stormwater, housing, library, museums, and historic site categories. While the state does fund the majority of education related projects, the report noted that education funds are not earmarked for specific purposes and therefore are often used not for infrastructure improvements but often to meet day-to-day operational needs.

TRANSPORTATION AND UTILITIES

Comprising more than 56% of the state’s infrastructure costs, the overall increase in transportation and utilities projects is larger than the cost of all needs in the five other categories studied. Transportation and utilities have always been the largest category based on total estimated cost with transportation alone needs at $34.1 billion of the total $34.7 billion in needs in the transportation and utilities category.

The rising cost of this inventory can be attributed to increases in the cost of road projects ($1.5 billion) and an increase in new road projects ($1.1 billion). Some of these costs were offset by $521 million in completed road projects. One major project contributing to the increase in statewide transportation costs is Nashville’s need for high-capacity bus rapid transit at a cost of $506 million.

Broadband infrastructure was the single portion of the utilities section of this category that reported an increase. Installation of gas lines and electrical cables decreased by $111 million (17.4%) year-over-year and now sit at $526 million. Meanwhile, local officials reported a need for $13.5 million in broadband infrastructure. This is only the fifth year that broadband infrastructure has been included in the report.

“Broadband development in the inventory only includes projects owned by government entities,” the report found. “Because the nature of broadband deployment in rural areas relies less on municipal utility districts, which are sub-entities of municipal governments, and more on privately-owned utility providers, very little is expected to be reflected in this category.”

EDUCATION

Of the $978 million increase in needed improvements for educational infrastructure, the majority ($1 billion) comes from improvements needed in post-secondary institutions while K-12 institutions reported an increase of $141 billion.

The increase in the estimated cost of needed improvements to post-secondary education stems mainly from $1.6 billion in new projects. The bulk of this increase on the secondary level ($431 million) can be attributed to four key projects: the construction of the University of Tennessee College of Medicine building in Shelby County ($200 million), an expansion of the University of Tennessee Knoxville Academic and Instructional Support Facility ($100 million), construction of a new health professions building at Austin Peay State University ($68 million), and a renovation of the University of Tennessee Knoxville nursing building ($63 million).

In K-12 schools, infrastructure needs are coinciding with increased technology needs and requirements to meet state public education laws that limit the number of students in classrooms. School systems with growing enrollment are often facing twin challenges of providing enough space for students. Other systems are dealing with the need to renovate or replace aging structures or issues surrounding restructuring and consolidation of schools. Both school systems that are growing and those that are consolidating are facing an increase in construction costs.

Approximately 11% of public schools – 182 facilities – in the state are ranked as being in fair or poor condition. The cost of needed educational infrastructure has increased largely because the rising cost of construction labor and materials. The U.S. Bureau of Labor Statistics’ New School Building Construction Price Index rose 33.3% in the past decade and the average newly completed school in Tennessee costs $18 million.

Likewise, many secondary educational institutions are finding they must replace aging facilities, classrooms, labs, and dormitories to meet typical market demands and modern health and safety protocols.

Technology infrastructure needs for K-12 public schools alone increased by $99 million (88.3%) over last year with the pandemic driving many technology needs.

HEALTH, SAFETY, AND WELLNESS

For the $575 million in needs for health, safety, and wellness, at least 42% is attributable to an increase in law enforcement projects ($601 million) while recreation and culture make up $7 million. Two categories reported a decrease in needs year-over-year: general government at $210 million and economic development at $9 million.

Three existing projects contributed to the large cost in law enforcement infrastructure: a $279 million multi-agency law enforcement training center in Nashville, a $37 million Criminal Justice Center Plaza in Nashville, and a $20 million new Davidson County Sheriff’s Administrative Office. There were also two major new projects accounting for $334 million of the overall law enforcement cost: the $80 million expansion of the Sullivan County Jail and the $30 million new Criminal Justice Center in Warren County. The remainder of law enforcement project needs fall below the $10 million mark.

The need for fire protection increased by $37 million (13.3%) with the largest projects attributed to Murfreesboro’s needs of three new fire stations at $21 million and replacing two existing fire stations at $13 million. Water and wastewater infrastructure needs decreased by $23 million to $4.9 billion with the American Rescue Plan (ARP) funds helping to complete previously unfunded projects. 

Recreation and cultural asset needs increased for the sixth straight year by $7 million for a total of $2.3 billion. The report found increases in estimated costs for libraries, museums, and historic sites; as well as for industrial sites and parks. Decreases were reported in categories including recreation infrastructure; public buildings; maintenance facilities; and infrastructure supporting business districts.

To view the full report, visit TACIR’s web site at https://www.tn.gov/tacir/infrastructure/infrastructure-reports-/buildin….