Op-Ed

Freight rail key to Ky.’s growing economy

Hal B. Goode
Hal B. Goode

Kentucky’s economic growth has come a long way since 2008, when the recession cut development and jobs across the country. Just last month, Area Development magazine named the state one of its 2016 Silver Shovel recipients for launching 460 new development projects in 2015 slated to bring 16,000 jobs and $5.1 billion in investment.

These projects saw new and expanded sites for a range of industries, including manufacturers and automobile parts producers.

But whatever the industry, this growth has a common thread: our state’s efficient, reliable transportation network. A web of trucks, trains, barges and planes keeps Kentucky’s economy moving — bringing finished goods for customers, raw materials for manufacturers, and everything in between.

Among this crucial network, freight railroads stand out as leaders because of their ongoing commitment to building, maintaining and enhancing their infrastructure without help from taxpayers. This commitment is to the tune of $600 billion since 1980 — roughly $25 billion annually over the last several years.

These figures might not mean much to the average reader, but freight rail’s private investments are a boon for our state economy and stand in stark contrast to local and federal struggles to find funding for the upkeep of our highways.

In fact, a recently released study from the Regional Economic Studies Institute at Towson University concludes that spending by the largest U.S. railroads created $274 billion in economic activity and generated nearly $33 billion in total tax revenues in 2014.

Freight rail access, for example, is critical to supporting Kentucky’s four auto-assembly plants. Not only are raw product and parts brought in on rail, but 70 percent of automobiles are distributed across the globe by freight rail.

You can also see the ripple effect of freight rail investments in the 1.5 million jobs supported by the industry nationwide. That figure translates to an impressive fact highlighted in Towson’s study: every rail job supports nine more jobs across the economy.

But freight railroads weren’t always able to invest in their infrastructure, leading to the near collapse of the industry prior to 1980. That year, the passage of the Staggers Rail Act relieved the tight bureaucratic controls that had prevented railroads from operating like businesses. Now, while still regulated, they are able to earn enough to reinvest in the network that powers so much of our economy.

Thanks to smart government policy like the Staggers Act, America has the safest, most efficient and most affordable freight rail system in the world today. The heart of that system runs through the commonwealth and will continue to define and enhance our quality of life for generations to come.

Hal B. Goode is president of the Kentucky Association for Economic Development in Frankfort.

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