Brad Little: Idaho “Very Competitive”

Last week the Governor’s Blue Ribbon Transportation Commission wrapped up its work. The work was trying to figure out how to pay for the massive transportation infrastructure investment needed in Idaho. Betsy Russell at the Spokesman wrote a GREAT series of posts on the work of the Commission. I encourage you to get the details there.

In short, the Commission decided to recommend the Governor do nothing. In order to maintain and improve our existing road and bridge network, Idaho needs to spend more than a half billion dollars per year. And revenue enhancements are not forthcoming.

Lt. Governor Brad Little in response to the Committee’s work said this:

“One of the things that makes Idaho a great state and makes us very competitive is how hard it is to raise taxes.”

First a comment, then I’ll ask the questions that are begged here. To illustrate the flawed thinking in this statement, let me translate it into private sector language (since the Guvs want to run ID like a business):

“One of the things that makes ACME a great company and makes us very competitive is how few capital expenditures we make.”

Any CEO that said they were successful because they didn’t invest in their physical plant would be deemed insane by the Board of Directors and fired. But our leaders say exactly the same thing - we’re not going to invest in Idaho and that’s what makes us competitive - and we send them right back to office with high marks.

So - on to the questions. I want to know who told the Lt. Governor that Idaho is competitive, in what, and compared to whom? As I have argued over, and over, and over if a site selector has Boise and Salt Lake on his list, there is simply no way Boise wins. Not ever. Boise is absolutely not even in that league, and that should concern private and public sector leadership here, but it does not.

There’s a nifty new tool out there that Dr. Brian Greber over at the BSU College of Business and Economics developed that shows detailed cost of living comparisons between metro regions in the U.S. Soon, he’ll be unveiling dashboards that will allow public and private sector leaders real time economic indicators. Maybe that will scare ‘em finally. We’ll see. Anyway, quickly - here’s the comparison of SLC and BOI:

This tool is mostly relevant for employees as opposed to employers. And remember, it’s employers that decide where plants are located. Generally, employers don’t care about quality of life issues. They care about costs, connectivity, infrastructure, and quality of workforce among other things. So employers don’t care if a t-bone costs more in Vegas than it does in Des Moines. But three things that they will definitely care about are utility costs, local transportation costs, and the cost of health care. And, as Dr. Greber’s nifty tool shows us, the cost of living differential between BOI and SLC is minimal except in the areas that business cares about.

So maybe Brad Little is right in one regard. We’re competitive because you can pay low wages in Idaho, because cost of living is relatively low. But the lack of economic development in this region relative to the BOOM in economic development just south of the Idaho border, is prima facie evidence that those low wages aren’t offsetting the costs of doing business here.

Allred’s Transportation Plan: Huh?

I’ve always pledged to be an equal opportunity critic, and I’ve given Butch plenty of hell for ignoring the financial meltdown in the state, so now it’s time to ask Dr. Allred about his transportation stance.

Following the report that showed truckers aren’t paying their fair share of road costs, Allred conceived the following, according to reports in the Statesman:

Democratic gubernatorial candidate Keith Allred aims to cut Idaho’s gas tax by 3 cents and says Gov. C.L. “Butch” Otter’s push to raise more money for roads is misguided.

Allred would cut the tax to 22 cents per gallon, from 25 cents per gallon now, to save drivers $19.2 million annually.

He’d boost fees paid by heavy trucks by an equal amount to make up the difference.

Ok. This is nice populist rhetoric, but here’s the reality. First, there is universal agreement that no drivers are paying their fare share of transportation costs. I.W.H. Parry and K.A. Small argue in a 2005 article in the American Economic Review, i.e., the top journal in the field of economics, that gas taxes in the United States would need to rise to $1.01 per gallon (from around $.40 per gallon today) in order to cover the externalities created by accidents, pollution, and congestion. So reducing fuel taxes, as nice as that sounds, moves us in the opposite direction of optimal policy. Further, it’s totally unsustainable - we cannot finance our infrastructure needs with the current level of taxation - we certainly can’t reduce that rate.

So Allred proposes to raise taxes on truckers. Sounds like a great idea - stick it to the man. Let me just ask all you legislative observers this question: how many people think a bill that raises the gas tax on truckers would ever get out of committee? Exactly.

What we have so far in this governor’s race is no transportation solution from either candidate. Allred’s plan has no chance of becoming reality, and shouldn’t become reality - it moves Idaho away from good policy, not toward it. And after making transportation a centerpiece of his first campaign, the Governor has all but given up, his task force offering a mealy-mouthed plan to increase the gas tax by a penny in order to fund the billions of dollars in maintenance, safety, and infrastructure needs of the transportation system. That isn’t going to work either.

What’s that sound you hear? That would be legislators in Utah, Nevada, and Arizona - three of our regional competitors - getting a good chuckle as they watch themselves pull away in the transportation game.

Airport to Get Bonding Power? Some Urban Legislators Balk

Any day now my good friend Dave Frazier will be going ballistic over on the Guardian Blog about HOUSE JOINT RESOLUTION 5, which passed the House 57-12-1, and the Senate 34-1. This resolution which will go to a vote of the people this fall would amend Idaho’s Constitution so that Airports can issue bonds without having to get a vote of the people. This is an idea whose time has come as evidenced by the vote. Good on you Senator Stegner for finally designating some authority to jurisdictions other than the state. With luck, this is the start of a new trend.

But there are those who still don’t see the need to devolve power to local governments and other jursdictions. Idaho’s cities and counties (and airports and public hospitals, etc.) have less authority than do the cities and counties in any state west of the Mississippi (see: D, Krane, Rigos N, and Hill M. Home Rule in America : A Fifty-State Handbook. CQ Press, 2000.). Of the 12 Representatives that voted against this measure, half are from urban areas, the other half rural. Thus, the urban rural divide is still in full effect.

I think it is somewhat amazing that anyone from an urban district would vote against this, thus some of these legislators’ votes deserve special attention. Clifford Bayer (R), Boise casts a vote that puzzles me. His district is part of the economic engine of the Valley. The Boise-Nampa MSA is responsible for 50% of state’s GDP. Voting to hamper the airport is no help to this economy or the citizens in his district.

Representative Hartgen (R), Twin Falls is the other mystery here. His vote is interesting first because his own district struggles with urban problems such as providing public transit - so he should be well aware of the need to start devolving authority to the governmental units that can actually solve his people’s problems. Secondly he is a professional economic development consultant. Voting against the public’s ability to provide infrastructure isn’t in any of the textbooks I had on economic development.

Several of the delegation from the CDA area voted against this measure as well, showing that they too do not yet grasp that their region is an urbanized area and also very much needs to have some flexibility to solve regional issues such as the traffic between CDA and Spokane, and also the border crossing to the north. No longer are CDA and Hayden sleepy little mountain towns on the way to nowhere.

Full details on the bill are available over at the Statesman.

Will Boise Lose Hawks Stadium?

There’s been a lot of hullabaloo surrounding Hawks stadium recently, mostly coming from Meridian. I have to hand it to Mayor DeWeerd and the Meridian Development Corporation: they have a vision, and a mission and they are going after it.

This morning the Boise Hawks unveiled a survey that showed a vast majority (75%+) of the 300 people surveyed, favored construction of a new multi-purpose sports facility somewhere in the Valley. It turns out that a plurality of people also identified MERIDIAN as the favored location for a new sports facility. I am guessing that this will have a few people at the City of Boise upset.

In January 2007, a design charrette for the 30th District Master Plan in Boise, revealed that the 200 people in attendance hoped that a new Hawks stadium would be built in downtown Boise. The photo below appears on page 185 of the 30th Street Master Plan, available on the City’s website.

Hawks Stadium envisioned as part of the 30th Street Neighborhood

So what say you, City of Boise officials? Are you working up a deal to make the stadium a centerpiece of a new 30th Street Neighborhood? The implementation plan for 30th Street says that within 1-3 years Boise City and CCDC will:

Identify where land assembly, land acquisition and/or development partnerships would help implement the development concept for each subdistrict. Initiate conversations with property owners to determine their level of interest in selling property, land assembly and/or development.

Where are we on this project? Granted the plan only went forward in June 2009, but with Meridian breathing down your necks, it might be time to kick this project into high gear - unless you really like the sound of “MERIDIAN HAWKS.”

PDX: $613 Million for new Bike Lanes

Saw a story last week that said Portland just passed a $613 plan to improve bike infrastructure over the next 20 years. I know it’s apples and oranges, but $60 million for a streetcar downtown seems like a bargain by comparison. Full story in the Portland Business Journal.

Building Idaho’s Human Capital

(H/T to Tim Merrick for sending me the data that I used in this post. You can read the whole publication of the Science and Engineering Indicators, published by the National Science Board, at the National Science Foundation’s website: http://www.nsf.gov/statistics/seind10/start.htm The data in this post comes from Chapter 8, the state indicators.)

This is a follow on to the previous post where I tried to illustrate the financial strength of Idaho’s universities relative to regional and national competitors. This was in direct response to the formation of the new lobbying group, the Idaho Technology Council. The Council and its supporters, as you recall, are huge proponents of increasing Idaho’s human capital, especially in relation to the development of Idaho’s technology-based economy. My next post will deal with the technology side of this discussion, today we’ll start with the higher ed component.

I hate always seeming like the bad guy here. I am not. I sincerely hope that the Technology Council is a success, and I would love to live to see the day that Boise State University, my alma mater, actually morphed into a “metropolitan research university of distinction.” However, I have consistently maintained that almost every premise from which we operate in this state, is false. We have lots of grand plans for spinning off university technology, and growing this booming tech sector, but folks, that just isn’t to be Idaho’s lot in life. This state simply cannot be competitive in those areas. It is time to rip out our pre-conceived notions by the roots, and get a new plan. Every economic development plan in this state needs to be scrapped and thought anew.

Mark Rivers has some good insights, here. SPORTS. We can do that. Recreational technology businesses and tourism. We can do that. We’re not doing them very well, but we could. But we cannot and should not expect our universities and state to do is become a sophisticated research hub that will one day cure cancer or even launch an important disruptive technology. Won’t happen. Here’s the evidence:

Academic R&D Output, United States, 2006

Academic Article Output in Science and Engineering, U.S., 2006

The research and development spending at Idaho’s universities is woefully inadequate - that is what the top graph shows. Idaho is at the bottom of the heap when it comes to basic R & D spending at the university level. The bottom graph shows the research output of science and engineering articles among the scientific community. Again, same story. There just isn’t any output here, folks, and there isn’t going to be, because Idaho and Idahoans are not going to make, in fact do not have the capacity to make, the necessary investment of billions of dollars into the state’s universities. Development of widely dispersed and marketable technologies will probably never happen here. Having a more educated local workforce can happen here; we can certainly graduate more bachelor’s degree holders that we currently do.

I would argue that Idaho’s economic development has become “path dependent.” The social and historic conventions established long ago, and chronic underinvestment in education and infrastructure (to name just a couple things) has placed us upon a path from which we cannot escape.

That isn’t to say that there aren’t pockets of hope, areas for growth and opportunity. As noted I think sports, sports marketing, professional services related to sports, etc., is a great place to start and to FOCUS. What will not work is a blanket strategy of “increasing human capital” and targeting the “information technology” sector. That is destined to fail. If the universities in this state are to be called upon to be a part of the economic engine here, they are going to need small, clearly defined, narrow targets that are directly applicable to very specific capacities in the private sector. “Nanotechnology” is not specific. “Green energy” is not specific. Those are HUGE fields dominated by the biggest players.

The longer we maintain the facade that we have at our fingertips all the tools we need to be the next SLC or the next Denver, the more economically and psychologically painful reality becomes. The sooner we replace grand visions, i.e., fantasies, with small victories, the better.

You say you want a research institution, eh?

The buzz this week in Idaho Economic Development land is the newly formed Idaho Technology Council. You can read all about it at the Idaho Business Review.

This is a great and welcome effort, and desperately needed in our state. The only thing that immediately concerns me is that the players in this effort do not seem to understand the price of the things they hope to achieve. What is it that they are asking for? Here’s some snippets from the IBR’s reporting:

“Idaho’s growth as a technology center has cooled, and the Idaho economy cannot afford that,” stated ITC Chairman Rich Raimondi, a recently retired vice president at Hewlett-Packard. “We know the priorities to re-energize growth in this critical sector are human capital, public policy, financial capital and research and development, and we have formed committees with leaders from across the state to work those issues.”

and

“Growing an innovation economy starts with the government, whether it’s federal or state; then it’s research institutions; then it goes to the commercialization of intellectual property. From there you get industry, access to capital and the last part is quality work force.”

Human capital. Research and development. Research institutions. That’s what they want.

And that IS what will work to drive the economy here.

But does anyone realize what this will cost? I do. Here’s the current (at least as of 2007) financial capacity of the WAC and Mountain West Universities as measured by endowments:

1. Hawaii - $ 3 billion
2. Texas Christian University - $1.1 billion
3. BYU $1 billion
4. San Diego State - ($115/ but shares Cal State pool of $875 mm)
5. University of Utah - $700 million
6. La. Tech - ($656 shared)
7. UNLV - $500 million
8. University of New Mexico - $385 million
9. University of Wyoming - $304 million
10. Reno - $240 million
11. Colorado State - $193 million
12. U of Idaho - $188 million
13. New Mexico State - $175 million
14. Utah State - $130 million
15. Fresno State - $113million
16. Boise State - $74 million
17. San Jose State - $50 million
18. Air Force - $15 million (only has a 2 yr old endowment)

So - the picture here is pretty clear. BSU is at the bottom of the pack when it comes to having a big pot of money to fund world-class faculty, graduate students, and lab space. U of I isn’t much better. In this group, the University of Utah is clearly the research powerhouse - but look what they have to operate with: a $700 million endowment.

Don’t get me wrong - in a perfect world we’d do what was necessary to achieve the vision of the Technology Council. However, as I have noted before, there certainly isn’t the private capacity in Idaho to do what this group hopes. If there was sufficient private ability to fund Idaho’s universities at the level of say, the University of Utah, then the “Destination Distinction” capital campaign at Boise State would have a far bigger goal than $175 million. But that goal is the realistic capacity of the private sector in this state.

So that leaves government (and research grants which is another topic entirely) to make up the difference. But with current state support of Boise State running about 22% of BSU’s budget, it’s pretty clear that the requisite financial support of Idaho’s universities is not going to come from the public sector.

Mind you, the Mountain West and the WAC are two of the poorer conference in academe. What if we wanted Idaho’s Universities to be competitive with say, the PAC TEN (which is every Bronco fan’s dream conference) or the Big-10. Well here’s what the financial picture looks like for those schools:

PAC 10

1. Stanford University - $17.2 billion
2. University of Southern California - $3.7 billion
3. University of Washington - $3.2 billion
4. University of California - $2.8 billion
5. University of California, Los Angeles - $2.6 billion
6. Washington State University - $678 million
7. The University of Arizona - $519 million
8. University of Oregon - $498 million
9. Oregon State University - $476 million
10. Arizona State University - $407 million

Wanna be a player in Stanford’s league? Never gonna happen. Even if Boise State is successful in its capital campaign, it still won’t even have half the endowment of ASU. In fact, BSU and U of I combined don’t have the money that ASU has.

What about the Big-10?

Michigan - $7.1 billion
Northwestern - $6.5 billion
Minnesota - $2.8 billion
Ohio State - $2.3 billion
Purdue - $1.8 billion
Penn State - $1.6 billion
Wisconsin - $1.6 billion
Indiana - $1.6 billion
Illinois - $1.5 billion
Michigan State - $1.2 billion
Iowa - $1.0 billion

There is a reason that Michigan, Northwestern, Minnesota, and Wisconsin have world renowned schools of business and/or economics. There is a reason that Illinois has a legendary super computer center. There is a reason that Indiana graduates armies of engineers. MONEY. These schools are rich, rich, rich and can attract the best faculty in the world to their ranks. That is another reason that even the “poorest” school on this list, Iowa, attracts TEN TIMES the research grants of Boise State (Iowa hauls in about $400 million ANNUALLY in research grants and contracts; Boise State is nearing $40 million). They have a lot of money to hire killer faculty that do cutting edge research.

So. You say you want a research institution, eh? Now at least, you know what it’s gonna cost.

Infra what? Infrastructure.

Economic developers are really a hoot. They cook up all these complicated plans for tax cuts, hold “innovation summits,” create “enterprise zones” and all other manner of schemes to attract business to their city/state/region. But you know what business can’t live without? Power. Yeah, reliable power. As our good friends over at KBCI reported:

Squirrels take down 30 city blocks of power

By Alana Brophy

BOISE - A blackout in downtown Boise knocked out power for almost three hours Friday night.

The first power outage happened around 5 p.m., and then again just after midnight, Saturday morning.

The city went black from 4th to 24th, covering Main to State street cutting power to businesses and residents.

Power crews and firefighters say two squirrels shorted a power line which then caught fire.

The general manager of Mazzah Mediterranean Grill says this is the third time this has happened this year.

“That’s very ridiculous, if two squirrels can cause all this trouble they should find another way to deal with this problem,” said Sam Bataineh.

His employees ended up transporting food to different locations in their personal vehicles.

Natalie Rhodes, a manager at Mazzah’s says the outage cost them big bucks.

“It’s unfortunate that it happened on a Friday night, when it’s our busiest night,” Rhodes said. “But there’s really nothing you can do about squirrels.”

Numerous fender benders occurred at intersections as well. Initially 1900 Idaho Power customers lost service for nearly three hours. As of Friday night, 640 were still waiting on service.

Blackouts in the central business district are a bad thing. A very bad thing. If you are in economic development hear these words I say: Infrastructure. Human capital. Lather. Rinse. Repeat. That’s really all there is to developing an economy. Instead, look for some new wildlife management policy to keep those rascally squirrels away from downtown.

Time to get real about education in Idaho

If there is one precept in social science that can be taken as absolute gospel, it is this: your income potential is largely dependent upon your level of education. That is, more education leads to higher income potential. So a couple of trends that I see happening around the intermountain west cause me some concern. Let’s start with the work world.

In case you did not know it, the largest private employer in the State of Idaho is Wal Mart.

In case you are skimming this post, let me type that again: the largest private employer in the state of Idaho is Wal Mart.

Micron was formerly the top private employer in the state, but no more. Those jobs are now in China where they make stuff that they sell at Wal Mart. But I digress.

So as we have lost high-wage jobs in the private sector, we’ve also frankly just sat idle on education. And, no, not everyone has. In fact, the news today if you dig deep enough was actually quite revealing. Late today, this story hit the wire:

Faculty at ID universities decry policy changes
The Associated Press
Published: 12/15/09

BOISE, Idaho — Faculty representatives at Idaho’s public universities say proposed changes to state Board of Education policies would give presidents of the institutions broad power to make salary cuts during tough times.

Faculty say the revisions would allow university presidents to make permanent salary reductions - regardless of contracts with tenured and non-tenured professors and some staff members.

The proposed revisions, faculty say, would also allow the university presidents facing financial challenges to temporarily reduce wages through furloughs.

Board officials say the revisions aim to give presidents at the University of Idaho, Idaho State University, Boise State University and Lewis-Clark State College more authority and flexibility to make budget cuts amid state shortfalls.

Everyone is in crisis, though, so these budget cuts have to happen, right. Wrong.

If you read the Brookings Report that came out this week, which everyone has by now, you’ll note that the economic recovery (just as I said) is uneven all across the United States. And now, thanks to Brookings and its new Mountain West initiative, we can see exactly how Boise compares to its neighbors in the region. But the important part of the Brookings report for me was noting who wrote it. As it turns out, the Director of this new Brookings initiative is none other than Dr. Robert Lang, one of the nation’s most respected urbanists, and now a new faculty member at University Nevada Las Vegas.

This point is important: as Idaho looks to find ways to pay faculty less, UNLV is luring rock star faculty. Last year they hired noted historian Greg Hise away from USC. Faculty like that don’t come cheap - these guys make real money. And UNLV isn’t the only regional competitor to Boise State that has been hiring rock stars. Last year the University of Utah hired noted urban planning professor Chris Nelson, one of Lang’s colleagues at Virginia Tech.

Idaho is fast becoming a backwater. Our universities are not competitive, our people work at Wal Mart. Dear Legislature, are you listening?

Streetcar Conversations: I got nuthin.

Earlier in the week we had a bang-up Urban Lunch event and brought out Cece Gassner from the City of Boise to talk about the streetcar proposal. And I have to admit, I had a really unexpected bunch of comments and questions. I am really just confounded - I just want to throw my hands in the air and say I got nuthin’. But the public deserves to understand exactly HOW we go to this point - the point where we are potentially going to build a rail-based downtown circulator.

So to kick off the discussion, here’s the tweet stream that came from my good friend, Dr. Norris Krueger, just before Urban Lunch:

So Norris’s first question to me was, “Are you going to let someone from the other side present as well.” I said, no, this is just a representative from the City talking about the facts of the proposed project, there’s no rah-rah-go-vote-for-the-streetcar advocacy happening.

He then accused me of letting Cece present “her” facts, as if there was some kind of contestable scientific evidence being presented here, which he also accused me of. Now, Norris is a scholar, and I have a graduate level degree in social science, and I don’t understand how someone with a Ph.D. could question the veracity of a series of engineering reports and traffic studies - which is exactly what was presented.

Here’s the facts. In 2003, Valley Regional Transit launched a study called the “Downtown Mobility Study,” the purpose they stated,

. . . was to develop a comprehensive approach to mobility within downtown Boise and for people traveling from, to and through the downtown area.

The final report and implementation plan to improve mobility in DOWNTOWN was completed in the Fall of 2005 - OVER FOUR YEARS AGO. The results of that report were not exactly kept secret from the public. The Idaho Statesman published FIVE articles on the study in 2005, including these findings and recommendations printed in the January 12, 2005 edition, on the FRONT PAGE of the local section:

The Downtown Mobility Study recommends more than $100 million worth of improvements to prepare downtown for the next 20 years. The consultants who wrote the $600,000 study say Boise needs a downtown shuttle with buses or street cars, two transit centers to accommodate a variety of transportation uses, and a revamp for the I-184 Connector to make it more biker- and pedestrian-friendly.

So it wasn’t kept secret from the public - the Statesman alone has published 16 columns on the Downtown Mobility Study. So it must have been that the public had no input into the study, then?

Nope.

As that same Statesman article noted,

After this week’s open houses, officials will have a chance to revise their draft plan based on the feedback they hear. Then the study’s final recommendations go to local agencies for public hearings and final approval this spring or summer, said Pamela Sheldon, planning and development director for Capital City Development Corporation, Boise´s urban renewal agency.

Oh. Ok. So there was a great deal of media coverage and the people have all had input on this thing and the plan was adopted. So the people must have been hoodwinked by a bunch of lobbyists or a bunch of crooked, untrustworthy organizations with no experience in governance. That must be it.

The City of Boise, CCDC, ValleyRide, Ada County Highway District, Idaho Transportation Department, Community Planning Association of Southwestern Idaho and Boise State University joined together to oversee and fund the study.

Huh.

Ok. So the consulting report must have been prepared by a political hack with no experience in transportation planning looking to sell a bill of goods to the people of the Treasure Valley?

Well, here’s the text from the “About us” page from the world-renowned engineering firm, Arup, that did the study:

Founded in 1946 with an initial focus on structural engineering, Arup first came to the world’s attention with the structural design of the Sydney Opera House, followed by its work on the Centre Pompidou in Paris. Arup has since grown into a truly multidisciplinary organisation. Most recently, its work for the 2008 Olympics in Beijing has reaffirmed its reputation for delivering innovative and sustainable designs that reinvent the built environment.

Ok. So they aren’t a hack firm, but they don’t know anything about transportation, right?

Well, let’s see - they built the rail line between London and Paris, the airport railway in Hong Kong, the subway in New York, and the freight lines in Australia.

So here is where we are in 2009:

• We began with a goal of improving mobility downtown.
• A global engineering firm with an impeccable reputation as experts in mobility authored a now four year old study recommending a series of improvements including streetcar routes.
• The public gave its input at open houses, and in open testimony to the elected officials of the City Council, and the Ada County Highway District.
• The plan was widely covered in the most popular media.
• The plan was adopted.

So why now, when Mayor Bieter comes out and wants to actually do what he was elected to do - in fact directed by the public to do - are people acting like this idea was pulled out of someone’s backside? The next phase in the plan is IMPLEMENTATION.

There’s still more to this story - the “disconfirming evidence” as Norris puts it - disconfirming what exactly I don’t know, pending confusion on what a downtown circulator is for and what it isn’t for, but those are issues for another post.

The point of this post is to understand HOW we got to the current proposal to build a downtown circulator. It was through a rational planning process, conducted by experts, with input from the public, approval by elected officials, and coverage by the mainstream media. This isn’t some last-minute whim by a snake-oil politician as critics like failed city council candidate Dave Litster, and photographer turned municipal government gadfly Dave Frazier would have you believe.