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Transportation and Economic Development - A Summary of Key Issues Being Explored on Transportation Options and Economic Development - Wisconsin TransLinks 21




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MISSION STATEMENT

TRANSLINKS21 --
Wisconsin's 21st century transportation plan -- will
outline a comprehensive transportation system that moves people
and goods efficiently, strengthens our economy, protects our 
environment, and supports our quality of life.  Working with
DOT, the public will identify Wisconsin's transportation
needs -- and help to make tomorrow's transportation choices.

Tommy G. Thompson
Governor

Charles H. Thompson
Secretary




                    Transportation Alternatives
                              for
                    Economic Development in Wisconsin








                         Prepared by the
              Wisconsin Department of Transportation
                      Economic Development Team




February, 1994





 
                         Acknowledgements

This report was prepared by the Wisconsin Department of
Transportation, Division of Planning and Budget, under the supervision
of Mark Wolfgram.  The primary authors are as follows:
     Chapter 1           Bob Russell and Andrew Richards
     Chapter 2           Bob Russell and Andrew Richards
     Chapter 3           Blair Kruger and Bob Russell
     Chapter 4           Blair Kruger and Bob Russell

Beneficial comments were provided by Terry Mulcahy and Tom Walker of
the Office of the Secretary; Roger Schrantz, Ken Leonard, Randy Wade,
Jane Carolla and Maile Pa'alani of the Division of Planning and
Budget; Paul Heitmann, Ellen Fisher, and Ron Adams of the Bureau of
Railroads and Harbors; Dan Finkelmeyer and Steven Coons of the Bureau
of Aeronautics; Toya Nelson and Dixon Nuber of the Bureau of Transit
and Local Transportation Aids; and Joe Dresser, Mark Morrison, Paul
Johnson, Lee Crook, Robert Wagner, Michael Rewey, and Thomas Batchelor
of the Division of Highways.





 
TABLE OF CONTENTS

EXECUTIVE SUMMARY.  .    .    .    .    .    .    .    .    .    1


CHAPTER 1: INTRODUCTION  .    .    .    .    .    .    .    .    7


CHAPTER 2: POTENTIAL ECONOMIC DEVELOPMENT STRATEGIES.  .    .    9
     ISSUE: Intermodal Freight Transfer Facilities     .    .    9
     ISSUE: Intermodal Passenger Service.    .    .    .    .    11
     ISSUE: Strategic Highway System Improvements .    .    .    13
          A Footnote: Longer Combination Vehicles (LCV's)   .    17
     ISSUE: Air Service  .    .    .    .    .    .    .    .    17
     ISSUE: Retention and Improvement of Port Service  .    .    20
     ISSUE: Retention and improvement of Freight Rail Service    22
     ISSUE: Direct Consideration of Tourism Benefits in 
               Transportation Projects. .    .    .    .    .    24


CHAPTER 3: TRANSPORTATION NEEDS AND DIRECT EMPLOYMENT
     OPPORTUNITIES. .    .    .    .    .    .    .    .    .    27
     ISSUE: Labor Market Mobility and Public Transit   .    .    29
     ISSUE: Transportation Economic Assistance (TEA) Program.    30



CHAPTER 4: ECONOMIC DEVELOPMENT ALTERNATIVES .    .    .    .    31
     INTRODUCTION   .    .    .    .    .    .    .    .    .    31
     RELATIONSHIP OF ISSUE AREAS TO THE ALTERNATIVE STRATEGY
          PACKAGES  .    .    .    .    .    .    .    .    .    31




  
                     EXECUTIVE SUMMARY


Economic development and transportation are closely linked.  Economic
development stimulates transportation demand by increasing the number
of workers commuting to and from work, customers traveling to and from
services areas, and products being shipped between producers and
consumers.  Additional demand can then trigger the need for
transportation improvements.  Improvements which decrease
transportation costs and increase safety may, in turn, stimulate
further economic development.

Transportation improvements do not guarantee increased economic
development.  To increase economic development, an improvement needs
to decrease transportation costs or make transportation more reliable. 
A proper economic climate must also exist, as well as other support
services.  With these factors in place, transportation improvements
can become catalysts for economic expansion.  While this issue paper
concentrates heavily on freight and passenger issues related to
economic development, WisDOT recognizes that economic development
cannot come at the expense of our environment or quality of life.

PROMOTING ECONOMIC DEVELOPMENT

The first chapter after the Introduction identifies some major
transportation issues facing Wisconsin in the upcoming decades, and
proposes alternative strategies for increasing transportation
efficiency.  The list of strategies is not meant to be all inclusive
but rather provides a flavor of some the potential strategies WisDOT
could consider in order to improve efficiency.  Most strategies have
effects which cut across two or more of the major economic sectors;
manufacturing, agriculture, tourism, and services.  Those multiple
effects will be identified in the discussion of each issue.

An additional chapter, titled "Transportation Needs and Direct
Employment Opportunities", analyzes WisDOT's Job Ride and
Transportation Economic Assistance (TEA) programs.  Job Ride provides
rides to work for transportation-disadvantaged workers and TEA
provides transportation improvements intended to induce job creation
or retention in Wisconsin.  The final chapter groups- the strategies
presented earlier into four alternative packages to promote economic
development through transportation initiatives.

MANUFACTURING

The health of Wisconsin's manufacturing businesses is closely tied to
overall economic development.  The transport of raw materials,
subcomponents, and finished products is a significant part of the
business costs borne by Wisconsin manufacturers.

This issue paper considers a wide range of strategies designed to aid
the further development of manufacturing in Wisconsin.  There are
five issue areas (and accompanying strategies) examined in Chapter 2
that most strongly impact manufacturing in Wisconsin.  They are:


                                                                 1





 
Transportation Options for Economic Development in Wisconsin

Intermodal Freight Transfer Facilities.  For maximum efficiency,
productivity, and choice, shippers will require facilities at which
cargoes can be readily transferred between modes.  Strategies that
WisDOT could follow to encourage intermodal facilities include:

1.   Letting the network evolve on its own
2.   Maintaining the existing infrastructure
3.   Guiding the growth of private facilities
4.    Guiding network growth with public facilities

Strategic Highway Improvements.  Highways link shippers and receivers
to the other three modes.  Goods are frequently moved from the shipper
to a rail, water, or air terminal by truck, and later to the ultimate
destination.  Alternative strategies which WisDOT could pursue in
order to optimize the highway system as one modal link in an overall
transportation network of all four modes include:

1.   Maximizing use of the existing highway system
2.   Extending or improving the multi-lane divided highway system,
     local roads, and connectors
3.   Continually improving the entire highway network in response to
     demand.

WisDOT is considering a number of actions, possible under any
strategy, that would improve the highway network in Wisconsin.  These
actions include: modernization to improve functionally obsolete
interchanges and other segments of the network; new designs to improve
the life and service of pavements; rebuilding certain roads in
northern Wisconsin to eliminate seasonal weight restrictions;
improving the functioning of the Milwaukee Freeway system through a
variety of techniques; and establishment of more specific rules for
the guidance of the @ Road Improvement Program.

Air Freight.  Today's competitive, technology driven economy requires
products and parts to move quickly and safely between diverse regions
of the nation and world.  Wisconsin businesses and consumers are
growing increasingly dependent on air freight movements to satisfy
their shipping needs.  Three strategies which WisDOT could pursue to
best meet air freight needs include:

1.   Funding navigational aids for small airports
2.   Focusing on the development of dedicated air cargo facilities
3.   Focusing on the expansion of combined passenger and air cargo
     services

Retention and Improvement of Freight Rail Service.  Rail service is
central to the efficient movement of both bulk commodities and
manufactured goods, particularly over long distances.  Strategies
which WisDOT could pursue to ensure adequate rail service throughout
the state include:

1.   Letting the rail system develop through private initiative
2.   Preserving existing rail infrastructure through WisDOT rail
     funding programs.


2





Transportation Options for Economic Development in Wisconsin

3.   Preserving and improving service through existing WisDOT rail
     funding programs.
4.   Preserving and expanding service through aggressive state
     acquisition of entire rail systems.

AGRICULTURE 

Agribusiness is a key sector of Wisconsin's economy, with vital
linkages to many other sectors.  Cash receipts from the sale of
agricultural products alone total over $5 billion annually, and sales
of implements and agricultural services to producers boost the total
value of agribusiness even higher.

The agricultural sector is characterized by many geographically
dispersed producers.  Unable to relocate closer to markets, these
producers rely on good transportation facilities.  Agricultural
shipments are generally large, frequently over medium to long
distance, and shipping needs center on the movement of bulk
commodities such as corn.

Rail and water modes are particularly important to this sector of the
economy, especially for exports from Wisconsin.  In addition,
agricultural producers rely upon local roads for shipments to and from
farms and forests.  Four major transportation issue areas most closely
associated with Wisconsin agriculture are examined in Chapter 2. They
are:

Retention and Improvement of Port Service.  Shipments of bulk
commodities such as coal, grain, salt, and fertilizer, and shipping of
steel and extremely large machinery, are particularly reliant on good
ports with efficient means for the loading and unloading of ships and
transfer of goods to railcars or trucks.  Strategies which WisDOT
could pursue to enhance ports include:

1.   Maintaining existing ports by expanding the scope of projects
     included in the current Harbor Assistance Program
2.   Expanding the Harbor Assistance Program and providing increased
     funding for projects consistent with WisDOT developed harbor
     plans
3.   Maintaining existing ports, and helping communities purchase and
     operate them.

The other three issues of importance to agriculture, (freight rail
service, strategic highway improvements, and intermodal transfer
facilities) were discussed in the previous section, "MANUFACTURING".)

TOURISM

Tourism will continue to be an important element in Wisconsin's
expanding economy.  Travelers in Wisconsin spent almost $5.5 billion
in 1992, creating over 150,000 jobs (full-time equivalent) and
generating close to $3 billion in income for state residents.

A circular relationship between transportation and tourism exists. 
Tourism, by its very nature, is heavily dependent on and influenced by
transportation networks.  Transportation networks are designed based
on expected traffic volumes.  Tourists increase network demand and
thereby

                                                             3





Transportation Options for Economic Development in Wisconsin


affect the size and design of the network.  TRANSLINKS 21 provides a
framework to discuss alternative methods for making transportation
less expensive and more enjoyable for tourists.  When tourists make
additional trips to Wisconsin, our economy expands.

This issue paper examines the degree to which economic. benefits from
tourism might be considered when transportation improvement projects
are being evaluated by the WisDOT.  The distinguishing factor
separating each strategy in the section of Chapter 2 titled "ISSUE:
Direct Consideration of Tourism Benefits" (pp. 24-25) is the level of
transportation benefits required for project implementation.  Those
strategies include:

1.   Pursuing tourism-enhancing projects that meet standard
     transportation efficiency criteria.
2.   Pursuing projects that do not meet standard transportation
     criteria unless tourism benefits are included.
3.   Pursuing projects which are transportation related, have limited
     direct transportation benefits, yet promote tourism.

In addition, transportation issues examined in this paper that are
relevant to the tourism industry in Wisconsin include Intermodal
Passenger Service (pp. 11-13) and Strategic Highway Improvements (pp.
13-17).

SERVICES

Wisconsin's service industries depend on effective and efficient
transportation to bring their customers and employees together. 
Service businesses which export their products to regions outside of
Wisconsin are often dependent on intermodal transportation. 
Strategies examined in Chapter 2 to address intermodal connectivity
for passenger services include:

1.   Maintaining and adding to current infrastructure, relying on the
     private sector to take initiatives in intermodal connectivity
2.   Maintaining and adding to current infrastructure while also
     coordinating connectivity between the modes.

Air Service and Strategic Highway Improvements are also issues
relevant to this economic sector.

EMPLOYMENT OPPORTUNITIES

For decades the nation's population and employment opportunities have
been migrating from cities to the suburbs.  In Chapter 3, this issue
paper examines strategies WisDOT could adopt in response to problems
created by the dispersion of population and employment to the outlying
portions of metropolitan areas and the increased competitiveness of
the US economy.  To the extent that labor markets operate more
efficiently and more jobs are created/retained in Wisconsin, our
economy can expand.  Proposed strategies appear below.
               

                                                                     4





 
Transportation Options for Economic Development in Wisconsin

Mobility initiatives.  The alternative strategies are designed to
promote economic development by increasing employment among
transportation disadvantaged individuals and to ameliorate labor
shortages.  Job Ride is one WisDOT public transit program currently
operating in the Milwaukee area which tries to meet the needs of
disadvantaged workers.  Alternative strategies are:

1.   Continuing the Job Ride program at its current funding level and
     focusing on inner-city unemployment in Milwaukee;
2.   Expanding Job Ride to metropolitan areas statewide;
3.   Developing more widely-focused labor transportation assistance.

Special Economic Development Programs.  The Transportation Economic
Assistance Program (TEA) is a WisDOT program designed to influence
firms to locate or expand in Wisconsin.  The alternative strategies
are as follows:

1.   Continuing stringent eligibility requirements where WisDOT
     participates only in very low-risk economic development projects;
2.   Implementing more flexible eligibility requirements.  Allow
     WisDOT to participate in higher risk projects in return for
     higher employment I gains.

CONCLUSION

WisDOT recognizes the relationship between transportation and economic
development.  This issue paper provides alternative strategies which
WisDOT could pursue to promote economic expansion.  The list of
strategies is not intended to be inclusive.  However, it does provide
a basis for discussion and subsequent planning efforts.  The issue
paper provides analysis of those strategies based on economic
efficiency, institutional concerns, and community and social effects. 
Recommendations are not included in this paper: rather,
recommendations will come from transportation users through the
TRANSLINKS 21 public participation process.



                                                            5





CHAPTER 1: INTRODUCTION

                Economic Development and Transportation

Economic development is a broad concept referring to the material
aspects of community welfare.  There are numerous facets of
development: growth in income and wealth, equitable distribution of
income, decreased infant mortality rates, increased literacy rates,
and other indicators of the "quality of life" in a community or a
state.  One consistent factor in any consideration of development is
economic growth, which is the sustainable increase in community income
and/or wealth. (Wealth is the set of resources that generate income). 
This paper will examine the link between transportation facilities and
economic growth.

Good transportation facilities support economic growth by lowering the
transport costs of users of the transportation network.  Direct user
benefits are reductions in travel. times and fuel consumption,
increased reliability, and increased safety in the movement of people
and goods.  As users' transportation costs are reduced, resources are
freed for other purposes.

Direct Transportation Benefits

Businesses directly benefit when goods can be shipped faster,or at
lower cost.  In addition, both businesses and individuals benefit when
their travel times and costs are lowered.  Besides the inherent value
of increased mobility, individuals can benefit from increased
employment options as their range of feasible commuting is expanded. 
At the same time, the supply of labor to area employers increases as
more potential employees fall within their commuting range.

Indirect Economic Benefits

There are also indirect effects of the transportation system on
economic growth.  These secondary effects may include the expansion of
existing businesses as reduced transport costs result in greater
profitability and/or increased market share.  This can lead to
increased employment and incomes as businesses grow.  Furthermore,
economic activity may expand as these growing.businesses in turn
demand more raw materials and components from their suppliers. 
Finally, retail and service businesses can grow as employees spend
their additional incomes.

It is widely recognized that wise transportation investments and
economic development are mutually reinforcing processes.  Good
transportation facilities support economic growth,.which then leads to
more travel and movements of goods, which in turn leads to an
increased demand for transportation facilities.  This dynamic process
of growth necessitates such planning efforts as TRANSLINKS 21.

Purpose and Organization of This Paper

This issue paper is designed to assist Wisconsin citizens and policy
makers in deciding which transportation initiatives in support of
economic development have sufficient merit to be
                                                                     7





Transportation Options for Economic Development in Wisconsin

considered more fully in the WisDOT's multimodal planning process. 
The paper is a tool for discussing economic development strategies,
and is not meant to be exhaustive.

Chapter 2 will enumerate some of the current and emerging
transportation issues that affect Wisconsin's economic growth and
suggest alternative strategies to address those issues.  The
importance of each issue to the four sectors of the Wisconsin
economy - manufacturing, agriculture, tourism, and services - will be
considered in this section.  Of course, many of the policies discussed
will have economy-wide impacts, although they would most strongly
affect specific sectors.

The manufacturing sector in Wisconsin will be impacted most strongly
by the following four issue areas examined in Chapter 2:
1)   Intermodal Freight Transfer Facilities (pp. 9-11)
2)   Strategic Highway System Improvements (pp. 13-17)
3)   Air Service (pp. 17-20)
4)   Retention and Improvement of Freight Rail Service (pp. 22-24)

The agricultural sector of the Wisconsin economy will be impacted most
strongly by the following four issue areas examined in Chapter 2:
1)   Intermodal Freight Transfer Facilities (pp. 9-11)
2)   Retention and Improvement of Port Service (pp. 20-22)
3)   Retention and Improvement of Freight Rail Service (pp. 22-24)
4)   Strategic Highway System Improvements (pp. 13-17)

The tourism sector of the economy will be affected most strongly by
the issue area in Chapter 2 entitled "Direct Consideration of Tourism
Benefits". (pp. 24-45). In addition, the tourism industry is affected
by the issue areas defined in Chapter 2 as "Intermodal Passenger
Service" (pp. 11-13) and "Strategic Highway System Improvements".

The services sector of the Wisconsin economy will be most strongly
impacted by the issue area of Intermodal Passenger Service (pp. 11-
13), discussed in Chapter 2. In addition, service sector businesses
are affected by the issue areas defined in Chapter 2 as Strategic
Highway System Improvements (pp. 13-17) and Air Service (pp. 17-20).

Chapter 3 will address the overall issue of employment opportunities
in Wisconsin and how they might be enhanced through transportation
policies of WisDOT.  That discussion will be structured similarly to
the discussions in Chapter 2.

The final chapter of this paper will group the various alternative
strategies enumerated under each policy area into four overall
planning visions that could guide WisDOT policies into the twenty-
first century.


8





     CHAPTER 2: POTENTIAL ECONOMIC DEVELOPMENT STRATEGIES

ISSUE:    Intermodal Freight Transfer Facilities

As the U.S. economy becomes increasingly interlinked and with the
rising importance of international trade, goods are being shipped over
longer distances, and shipping and logistics costs are an important
portion of overall production costs.  The seamless transfer of
components, finished products, and bulk commodities between ships,
railcars, airplanes, and trucks is key to minimizing those private
production costs.

However, the establishment of intermodal transfer hubs and smaller
facilities involves identifiable direct and indirect costs and
benefits - financial, environmental, and social.  The direct benefits
would be lower shipping costs to Wisconsin shippers that ship goods
over medium to long distances, and to Wisconsin recipients of long
distance shipments.  This could result in increased profitability,
increased market share, increased employment, or all three among those
shippers.  Indirect benefits could include increased business (income)
to suppliers of those direct beneficiaries when those beneficiaries
increase production and/or market share, as well as expanded
employment among those suppliers.  Induced benefits could arise from
the increased sales by various Wisconsin businesses to employees of
direct beneficiaries and their suppliers.  These would be similar
under all four alternative strategies to the extent that each strategy
could be expected to succeed.  However, the timing of costs and
benefits, and the degree of public control over intermodal facilities
would differ among the alternatives.  Although the ultimate effects of
establishing such facilities in Wisconsin would be similar under all
four strategies, each alternative would differ in certain respects. 
One of these areas of variation would be in the public costs of each
strategy.

Importance to Manufacturing
Much of the manufactured freight traffic is containerized, with
products being transferred from ship to railcar or truck, or from
airplane to truck, without handling the goods themselves.  The boxes
are simply lifted from one mode of conveyance to the next.  In
general, containerized shipments traveling over 400 miles may realize
substantial savings by moving by rail instead of by truck.  Freight
container loadings on railroads in Wisconsin increased by over 26%
between 1981 and 1991, from 27,059 containers to 34,185 containers. 
Shipments which are not time-sensitive may move more economically by
water over long distances.  In order for Wisconsin shippers of
manufactured goods to take advantage of the economies offered by
intermodal freight operations, there must be transfer facilities at
key points such as major rail corridors or on the peripheries of major
urban distribution centers.

Importance to Agriculture
The rail, water, and highway modes are important to agricultural
producers in Wisconsin.  Agricultural shipments are frequently large
lots of bulk commodities such as corn, and move most efficiently by
barge or railcar.  Of the 307 million bushels of corn produced in
Wisconsin in 1992, 42% - or 129 million bushels - were marketed out of
state, representing over $277 million in sales.  Most of it moved by
barge, with the remainder shipped by rail.  To get those commodities
from the producers to the water or rail terminals requires truck
transport.  Facilities

                                                                     9





 
Transportation Options for Economic Development in Wisconsin

where commodities can be easily transferred from truck or railcar to
barge or ship are necessary to minimize the overall costs of shipping
agricultural products from Wisconsin.

Importance to Tourism
This sector of the Wisconsin economy is not directly affected by this
issue.  However, to the extent that intermodal freight facilities
serve to channel freight traffic from highways onto water routes or
railroads, automobile and bus traffic will move more smoothly,
especially in urbanized regions such as southeastern Wisconsin.

Importance to Services
As with the tourism sector, this issue is only negligibly relevant to
the services sector of the Wisconsin economy.  Indirect impacts are
similar to those cited above for tourism.

With this issue, the question is: How might the Department best
encourage a seamless freight transportation network comprising all
modes? For maximum efficiency, productivity, and choice, shippers will
require facilities at which cargoes can be readily transferred between
water and rail, rail and truck, and water and truck.  Such intermodal
transfer facilities involve high up-front costs and often require
large tracts of land and highway connections that are adequate to
handle heavy truck traffic.

Alternative Strategy #1: Let the network evolve on its own

Private investors are often cited as being best-qualified to evaluate
the prospects for profitable investments in commercial facilities such
as intermodal transfer sites.  If there is sufficient freight traffic
and demand for intermodal transfer facilities in any given locale,
private firms in the marketplace will be motivated by the quest for
profits to provide the necessary facilities.  According to some
observers, government involvement amounts to "second-guessing" the
marketplace, and cannot be as efficient as the calculations of private
investors.

Alternative Strategy #2: Maintain existing infrastructure

This strategy is based on the assumption that the basic intermodal
infrastructure necessary for economic development is already in place:
rails, roads, harbors, airports, and transfer capabilities at those
facilities.  Further development of intermodal facilities can build
upon this foundation, and can be left to private investors responding
to market demand.  From. this perspective, what the WisDOT should do
is to maintain the existing public infrastructure through funding and
maintenance programs that respond to the needs of the individual modes
as they arise.  For example, when railroad tracks or bridges are
deteriorating, railroad operators, shippers, and local communities can
apply to the Department's Freight Rail Infrastructure Improvement
Program for funding of rehabilitation projects.  Similarly, when
dockwalls need rehabilitation, port operators can now apply to the
Department's Harbor Assistance Program for funds.  Under this
strategy, these and similar programs could continue to function as.
they do now.


10





Transportation Options for Economic Development in Wisconsin

Alternative Strategy #3: Guide network growth of private facilities

Under this strategy, the Department could foster the development of
intermodal transfer facilities through participation in public-private
partnerships by awarding grants and/or loans for construction.  This
approach could first involve analyzing freight movements in Wisconsin
to determine where such facilities might be most advantageously
located, and could also involve examining and promoting promising new
technologies.  A grant and/or loan program could be established to
respond to requests from the private sector for quick financing to
bridge the gap between private sector financing and the full needs of
such ventures as intermodal transfer hubs and facilities that the
Department assessed as promising.

Possible WisDOT actions under this strategy might include the
following:

 Provide a funding package for water-rail intermodal transfer
improvements at the Port of Milwaukee;

 Evaluate and help finance construction of a major rail-air-truck
intermodal transfer hub in southeastern Wisconsin.

Alternative Strategy #4: Guide network growth with public facilities

Under this most active strategy, the Department might analyze freight
movements and possible locations of facilities as above, and might
also construct and possibly operate the facilities as public works. 
This type of involvement could be similar to the state's current
highway program, in which the Department raises funds and allocates
them to investments that are entirely under state administration. 
This option would involve the largest outlay of public money and the
largest and most long-term commitment of public resources.

          Possible WisDOT action under this strategy might include:

 Construction of a major intermodal transfer hub in southeastern
Wisconsin, as above, and operation of the facility, collecting fees
for use by private firms.


ISSUE: Intermodal Passenger Service

Intermodal passenger trips - the use of more than one mode to complete
a trip - occur every day as people transfer back and forth between
personal automobiles, buses, airplanes, trains, bicycles, or walking. 
However, finding and using the modal connections, such as between an
airplane and a city bus, is often time-consuming and inconvenient.  At
other times, the desired connections may not even be available.  The
alternative strategies examined in this section will outline the level
of effort WisDOT should pursue to enhance modal connectivity for long
distance travel.
                                                                    11





Transportation Options for Economic Development in Wisconsin

Importance to Manufacturing
The issue of intermodal passenger service is not directly relevant to
the question of further development of the manufacturing sector in
Wisconsin.  However, air shipments of manufactured goods are
frequently and increasingly made in the cargo holds of passenger
aircraft.  In order for air freight services to expand in Wisconsin,
it may be necessary for air passenger service to expand in the state. 
To the extent that intermodal passenger connections at airports can
boost levels of demand for air passenger service, provision of those
connections could indirectly lead to expanded air cargo service for
Wisconsin manufacturers.

Importance to Agriculture
This issue is not of direct relevance to the agricultural sector in
Wisconsin.

Importance to Tourism
Tourists that do not travel solely by personal automobile must travel
by other modes; airplanes, trains, or busses.  For these travelers,
timely and convenient connections are important.  If travel in
Wisconsin is easy and reliable, and if the connections are seamless,
then tourists will be encouraged to travel more widely and to return
more often.  This would lead to more sales for tourism-related
businesses in the state, more employment opportunities in those
businesses, and more indirect economic benefits as those businesses
and their employees purchase other goods and services in Wisconsin.

Importance to Services
This issue area is directly relevant to the services sector. 
Businesses in this sector would benefit from policies that serve to
lower their travel times and costs through greater connectivity for
multimodal passenger and small package movements.

Service industry businesses vary by the type of transportation that
they require.  Those which serve customers outside the state or nation
are heavily dependent on the interstate highway system and on
airports.  Businesses servicing regional needs could also benefit from
passenger rail and intercity.bus service.  High speed rail, regular
passenger rail, air travel, and mass transit usually involve some form
of intermodalism to complete a trip.  For example, air travelers
usually rely on automobiles or mass transit to make airport
connections.

Alternative Strategy #1: Provide basic infrastructure and rely on the
private sector for intermodal connectivity.

This alternative focuses on the line-haul (long distance) portion of
trips.  Current WisDOT programs focus on the efficiency of passenger
and small shipment movements by each mode.  State funds support local
airports, roads, and transit in order to increase the efficiency,
safety, and reliability of each independent mode.  Individual
travelers and businesses are responsible for the coordination of
movements between modes.  This alternative is the continuation of
those practices.

WisDOT actions which could complement this strategy include: improving
highway networks to increase reliability and mobility by completing
the Corridors 2020 and Metro 2020 initiatives;


12




 
Transportation Options for Economic Development in Wisconsin

decreasing travel times and increasing reliability in urban and
suburban areas through congestion management and integrated signal
systems; helping to provide sufficient capacity at General Mitchell
International Airport to accommodate growth in air services, including
freight, package, and passenger movements; or extending AMTRAK service
from Milwaukee to Green Bay, and from Milwaukee to Madison.

Alternative Strategy #2: Maintain and improve current infrastructure
while coordinating intermodal connectivity.

Under this alternative, WisDOT would focus on total trip services. 
WisDOT would assist in providing and coordinating infrastructure and
intermodal connectivity at trip origin and destination (different from
station to station), enabling seamless, convenient, efficient
movements from origins to ultimate destinations.  Under this strategy,
WisDOT's role in high-speed rail and expanded Amtrak is extended
beyond station to station service.

WisDOT actions which could complement this strategy include: providing
additional funding to local governments for Park-N-Ride facilities and
insuring that the Park-N-Ride is adequately located and serviced by
mass transit; or ensuring convenient intermodal connectivity to high
speed rail, AMTRAK, bus, and airport facilities.


ISSUE: Strategic Highway System Improvements

Highways are an increasingly important mode of freight transportation. 
The intercity freight hauled by trucks in the U.S. increased by over
29% between 1980 and 1991, and the ton-miles of freight increased by
over 36%.  In Wisconsin, an estimated 78 million tons of intercity
freight moved over the highways in 1991, over 35% of total intercity
freight movements in the state.  There were over 28,000 commercial
truck tractors registered in Wisconsin in 1992, 33% more than a decade
ago.

Highways also link shippers and receivers to the other modes.  Goods
are frequently moved from the shipper to a rail, water, or air
terminal by truck, and later, from another terminal to the ultimate
destination.  The Department must optimize the highway system as one
modal link in an overall transportation network of all four modes,
while considering the environmental consequences and energy/fuel
usage.  This is the general planning perspective mandated by the 1991
Federal ISTEA legislation.  In the TRANSLINKS 21 process, highway
investments would be evaluated on the basis of the connectivity that
they provide to rail, water, and air terminals as well as on the basis
of current and projected traffic volumes.  Funding priority would go
to projects that provide intermodal connectivity and that optimize
specific highway modal characteristics (relative to other modes).  The
modal characteristics of trucking (highways) are high speed; high
average costs, especially over long distances; low capacity (per
vehicle); high levels of environmental impact (primarily air
pollution); high divisibility of capacity; and high reliability.

                                                                    13





Transportation Options for Economic Development in Wisconsin

The key policy issue is the extent to which the Department should be
actively involved in influencing the evolution of the highway network. 
The Department is considering a number of agendas aimed at increasing
the efficiency and reliability of the Wisconsin highway network while
minimizing costs to highway users.  The three strategic options
outlined in this section represent an escalating state involvement,
both in terms of.money and planning efforts, in the integration of the
highway system into Wisconsin's transportation network.  The first
option would seek to increase the usage and efficiency of the existing
highway system, while the remaining two options would extend or
improve the system.

Some highway improvement initiatives that would be consistent with any
strategy are discussed separately after the alternative strategies
have been presented.

Importance to Manufacturing
This issue is of direct importance to the manufacturing sector. 
Manufacturers who use Just In Time (JIT techniques to manage inventory
costs and to minimize overall logistics costs are particularly reliant
on trucking, both for the supplies they use and for outgoing shipments
of their products.  Intermodal movements that involve rail or water
usually involve drayage by truck at the origin or the destination - or
both - of the shipment.

Economic location theory indicates that, in general, a reduction in
long-distance transport costs relative to short-distance costs will
tend to centralize manufacturing activity.  This is because
manufacturers are better able to serve distant customers, thereby
freeing them to concentrate activities in a few key areas where, for
instance, raw materials or labor are abundant.  Highway policies that
tend to lower long-distance costs, such as those designed to link with
major rail corridors at intermodal transfer sites or development of
Interstate highways, will have a tendency to act against the economic
growth of regions that have no clear advantage in some productive
resource.

Importance to Agriculture
This issue is directly relevant to the agricultural sector in
Wisconsin.  Farmers in particular are heavily reliant upon the local,
County, and even State roads that link them with their suppliers and
with their customers At rail and water terminals and at food
processing plants.  The network of lower volume roads and highways
often suffers damage during spring thaws, forcing producers to either
delay shipments or to use more circuitous routes.  This, in turn,
increases their production costs and lowers their incomes. 
Conversely, a widespread and well-constructed network of roads and
bridges linking producers with their suppliers and customers will tend
to lower overall shipping and production costs, thereby boosting
incomes.

Importance to Tourism
Since a significant proportion of tourism in Wisconsin is by passenger
automobile, this issue is of direct importance to the tourism sector
of our economy.  Tourists use both higher volume Interstate and State
highways and lower volume roads as they travel to rural vacation
spots.  A highway network that minimizes travel times and costs will
not only make tourist travel easier and cheaper, thereby encouraging
more of it and freeing tourist dollars for other expenditures in the
state, but will also encourage return visits.


14




 
Transportation Options for Economic Development in Wisconsin

Importance to Services
This issue is of direct importance to the services sector as well. 
Businesses in this sector rely upon contact between customer and
provider.  Those which serve local community needs, such as
beauticians and restaurants, depend on customers who travel by
automobile and busses.  Businesses serving regional needs, such as
hospitals and health care services, are also reliant upon good highway
networks.  Firms serving national and international customers are also
reliant upon highways for trips between airports and rail stations to
the business.  WisDOT policies concerning highway improvements could
help to lower service industry travel times and costs.


Alternative Strategy #1: Maximize Use of Existing Highways

Under this strategy, the Department would strive to optimize use of
the existing infrastructure, keeping capital and maintenance costs low
while trying to maintain current levels of service.  There are several
possible actions available that could potentially increase the
efficiency of the existing highway network, particularly in urban
areas where congestion most directly diminishes economic efficiency. 
These could include Intelligent Vehicle & Highway Systems/Commercial
Vehicle Operations (IVHS/CVO) and Weigh-in-Motion technologies,
general purpose lanes, Traffic Demand Management (TDM) programs, or
evaluating the use of longer combination vehicles in selected areas
and applications (see the footnote concerning longer combination
vehicles at the end of this section).

Alternative Strategy #2: Extend or Improve Multilane Divided Highway
System, Local Roads, and Connectors

Under this strategy, the Department would extend the backbone
multilane divided highway system and the local road and connector
network that provides access to multilanes.  This alternative has been
examined and proposed by the WisDOT as the Corridors 2020 program.

The backbone system is an approximately 1,650-mile network of
interconnected high-volume highways, of which about 1, I 00 miles are
already completed.  The goal would be to complete a network of
multilane highways connecting the major population and manufacturing
centers of the state and to directly tie them to the national highway
transportation network of Interstate and multilane divided federal
highways.  This action would be primarily geared toward interregional
freight movements, facilitating export (from the state) and other
long-range shipments by truck.

In addition, the Department could improve and extend the local road
and connector network in the state in order to improve access to the
existing multilane divided highway system.  This network would be a
1,550-mile system of two and four-lane connector highways and local
roads, of which about 70% would be high quality two-lane highways. 
Some segments of this system could be expanded to four-lane divided
highways when traffic volumes warranted.  This approach could
initially involve upgrading about 350 miles of existing two-lane
facilities to multilane connector highways.  In addition, this
strategy could include improvements to the 1, 100-mile network of two-
lane connectors that would make up the largest part of this connector


                                                                 15   





Transportation Options for Economic Development in Wisconsin

system web.  The goal would be to connect metropolitan and regional
trade, agricultural, and manufacturing centers not currently served by
the backbone multilane corridor system to that system and to each
other.  Most of the highway development here would involve high-
quality two-lane facilities, with some four-lane divided highway
segments when traffic volumes warranted them.  This would facilitate
intra-regional and intrastate truck movements, and would also serve
longer range movements by improving access to the existing multilane
divided highway system and to rail terminals and port facilities.


Alternative Strategy #3: Continually Improve Entire Highway Network In
Response to Demand

The third alternative would go beyond Corridors 2020 on a selective
basis.  Additional highway capacity - in terms of expansions or new
routes - would be provided beyond what is currently planned as traffic
levels and economic activity increased.  Modernization of this sort
would anticipate development in urban and urbanizing areas,
emphasizing coordination with projected economic development and land
use plans; integration of freeway capacity strategies; timing and
design with regional transit operations and with traffic demand
management techniques; and a close cooperation with regional planning
authorities.

Highway Initiatives Possible Under Any Strategy:

Given the ubiquity of the personal automobile and the importance of
trucking in the modem economy, extensive, well-designed, and well-
maintained highways can contribute to overall economic development by
saving travel time and reducing costly wear and tear on motor
vehicles.  Policies that WisDOT might consider to improve the
functioning of the highway system include:

 modernization to improve functionally obsolete interchanges and
other segments of the network;

 new designs to improve the life and service of pavements;

 rebuilding certain roads in northern Wisconsin to eliminate seasonal
weight restrictions;

 improving the functioning of the Milwaukee Freeway system through a
variety of techniques, including traffic demand management (TDM), high
occupancy vehicle lanes, improved interchanges, and selective
increases in capacity.

In addition to the state highway system, Wisconsin is served by over
81,000 miles of local roads (County and town roads).  The WisDOT
funnels state dollars to these local facilities to support specific
local economic development needs through the Local Road Improvement
Program (LRIP).  Economic development objectives might be more fully
attained by establishing more specific rules for the use of these
funds by local units of government.  Such rules could specify


16




 
Transportation Options for Economic Development in Wisconsin

that improvement projects meet certain minimum economic development
criteria to qualify for funding.

A Footnote: Longer Combination Vehicles (LCV's)

Current federal laws establish a maximum weight of 80,000 lbs. for
tractor-trailer combinations, with a maximum trailer length of 53
feet, and a maximum overall vehicle length of 60 feet.  Longer and
heavier combination vehicles may offer significant fuel savings and
productivity gains in some applications by carrying larger payloads
per vehicle.  However, these larger vehicles also have highway safety
implications, could involve higher costs for highway and bridge
construction and maintenance, and could draw critical business away
from railroads, thereby threatening the viability of some railroads. 
Nonetheless, studies by the Transportation Research Board indicate
that the net effect of widespread usage of LCV's may be an increase in
productivity and a reduction in total shipping costs.  The issue,
however. is frozen at the federal level until Congress provides
further direction through legislation addressing the question of
widespread LCV usage.


ISSUE: Air Service

Wisconsin businesses and consumers are growing increasingly dependent
on air services for passenger movements and high-value, time sensitive
shipments.  In 1992, nearly 7 million scheduled passengers enplaned
(boarded) and deplaned at Wisconsin airports.  That represents a 9. 1
% increase in passenger traffic over 1991 levels and continues the
trend of increased air passenger movements.  Similarly, Wisconsin has
experienced steady growth in air freight movements, enplaning over
60,000 tons of cargo in 1991 and increasing air freight movements by
120% between 1985 and 1991.

Milwaukee's General Mitchell International Airport (GMIA) continues to
enplane the majority of Wisconsin's passengers and freight.  In 1992,
GMIA enplaned 62% of the states passengers and 86% of its cargo in
1991.

The transporting of air cargo in the underbellies of passenger
aircraft is a growing national trend which continues to influence the
profitability and expansion of services in both the air passenger and
freight industries.  The merging of the two functions has allowed
shippers and airlines to take advantage of shared fuel and facility
costs, thus enabling them to boost profits and to subsidize passenger
flights.

Nationally, over 50% of all air freight is carried by passenger
flights and that proportion is expected to increase.  Unfortunately,
due to insufficient volumes of passenger traffic, Wisconsin airports
are unable to provide the variety and quantity of national and
international flights that would be needed to carry this proportion of
the air freight originating in Wisconsin.  Only a small percentage of
the air freight leaving Wisconsin airports now moves by passenger
aircraft.

                                                                    17





Transportation Options for Economic Development in Wisconsin


Currently, Wisconsin lacks the necessary airport facilities and/or
flight links to ship the volume of air freight generated by Wisconsin
businesses.  Much of Wisconsin-originated air freight now moves
through Chicago's O'Hare Airport or the Minneapolis-St Paul
International Airport.  Wisconsin businesses are experiencing costly
shipping delays caused by highway and airport congestion, and higher
freight handling costs.  Eliminating those delays and high handling
costs could reduce these businesses' shipping costs.

Business and private passengers are hindered by the insufficient
quantities and destinations of flights originating in Wisconsin. 
Wisconsin airports outside of Milwaukee are more apt to experience low
service levels.  All Wisconsin fliers could benefit from additional
and more direct domestic and international flights.  Part of the
service shortfalls are due to ownership and operational changes by air
carriers.  Of particular concern is the practice of some airlines
using slots at Chicago's O'Hare Airport--the major national hub-- to
service long-distance routes, instead of serving feeder routes from
small Wisconsin airports and other regional airports.

Importance to Manufacturing
The air freight component of this issue is most directly relevant to
those manufacturing firms that ship high-value time-sensitive goods,
since those are.the types of shipments that most frequently move by
air.  More extensive air cargo service in Wisconsin could
significantly reduce shipping costs and transit times, making the
firms more competitive in their markets.  Likewise, their competitive
stance is enhanced by access to first class passenger air service
which efficiently and quickly links corporate representatives and
customers.

Importance to Agriculture
Although this issue is not, for the most part, of direct relevance to
most Wisconsin agricultural producers, expanded air cargo services
would benefit Wisconsin shippers of specialized agricultural products
such as bull semen, which moves exclusively by air.  In addition,
Wisconsin breeders of dairy cattle and bulls often ship cattle by air
to destinations in South America.  Currently, those shippers must
truck the cattle to Kansas for air freight service, and full air cargo
service in Wisconsin would significantly reduce their overall shipping
costs.

Importance to Tourism
The importance of air travel to the tourism industry is substantial. 
First class air service allows Wisconsin to draw more travelers to the
state, and that increases economic development.  Conversely, it may
also increase the number of state residents traveling outside of the
state, but expanded air service should make that travel more
convenient and less expensive.

Importance to Services
Just as with tourism, expanded air passenger and freight services
could reduce the travel times and costs of service industry businesses
that serve customers outside Wisconsin.  In addition, many service
sector businesses routinely use express package shipping services, and
those shipments usually move by air.  Expanded air cargo service might
marginally benefit those businesses by offering more frequent
shipments, but small express package service is not now a problem to
most Wisconsin firms.


18 





Transportation Options for Economic Development in Wisconsin           

Alternative Strategy #1: Navigational Aids to Enhance Cargo and
Passenger Movement

In 1992, Wisconsin had 142 airports which were open to the public. 
Many of those facilities lacked the navigational and weather reporting
equipment needed to ensure all-weather access.  Lacking these
facilities, passengers and shippers are unable to predict whether a
flight will be able to depart or land when needed.  For this reason,
passengers and freight travel greater distances to use reliable
airports.  This increases transportation costs.  This alternative
could entail providing smaller airports with the navigational and
weather reporting equipment necessary to ensure continuous, all-
weather access to cargo and passenger flights.  Approximately 100
Wisconsin airports would be eligible for this kind of program.

A potential WisDOT action which could facilitate the implementation of
this strategy is to revise WisDOT's Navigational Aids System Plan to
include freight transportation requirements in the list of criteria
used for ranking the funding needs of airports.

Alternative Strategy #2: Expand Both Passenger and Air Cargo Service

Air cargo is increasingly being transported in the underbellies of
passenger airlines in conjunction with passenger flights.  This
strategy recognizes that strong economic incentives are driving that
trend and focuses WisDOT resources on airport facilities that would
serve both cargo and passenger operations.  The low marginal costs
associated with shipping cargo on passenger flights makes the
promotion of combined-operation airports an attractive strategy.  This
strategy recognizes that a proactive approach by WisDOT to expand
passenger service at Wisconsin airports can concurrently serve the
state's air freight needs.

Possible WisDOT actions which would support this strategy include:
state involvement in obtaining additional slots at Chicago's O'Hare
Airport and additional direct, non-stop flights to General Mitchell
International Airport and other Wisconsin locations; assessing current
and future passenger service needs at critical airports and working
with carriers to provide improved service; assisting lo ' cal airports
with the construction of additional runways, terminals, and freight
storage and handling facilities; or assisting in the construction of a
new combined passenger and air cargo facility.

Alternative Strategy #3: Dedicated Air Cargo Facilities

Under this alternative, WisDOT focuses on the development of air cargo
airports which would not accommodate passenger air service. 
Responsibility for passenger air service expansion would be left to
the airline industry, which specializes in service demand analyses. 
Specialized air cargo facilities could take advantage of the
specialization of skills associated with a single function facility.

Possible WisDOT actions under this strategy could include: assisting
communities in transforming local airports into all-=go airports; or
assisting local communities or private sector investors in
constructing all-cargo airports.


19





Transportation Options for Economic Development in Wisconsin  

ISSUE: Retention and Improvement of Port Service

Shipping of bulk commodities, steel, and extremely large machinery out
of and into Wisconsin is particularly suited to water, both by barge
on the Mississippi River and by Great Lakes freighter and lake barge. 
More than 46 million tons of freight moved through all Wisconsin ports
in 1989.  Bulk commodities include grain, fertilizer, salt, and coal. 
Wisconsin's agricultural sector is reliant on Mississippi River
shipping for grain - primarily corn - that is exported.  Between 1989
and 1991, grain shipments from the Port of Prairie du Chien, a major
grain shipment point in Wisconsin, grew by 15% each year.

Great Lakes shipping has declined somewhat over the last decade, but
shipping on the Mississippi River has increased as grain exports have
risen.  Between 1979 and 1989, tonnage of all cargo shipped on the
Mississippi River increased by over 12%, but the ton-miles of cargo
increased by over 29%.  This reflects the fact that water shipping is
most efficient over longer distances: while the weight of water-borne
cargo has been increasing, the total distance moved by the cargo has
increased even more sharply.  Another development that presages even
greater levels of water-borne commerce in the years to come is the
recent opening of direct barge service from Milwaukee to the Gulf of
Mexico via the Illinois River.

Increased grain exports can be expected to continue, especially as the
North American Free Trade Agreement is implemented.  In addition, coal
is a particularly critical bulk commodity that can be shipped by water
because it is used to generate electricity, which is a basic cost of
any manufacturing process.  Any savings on coal transport could
eventually be realized as lower production costs across a broad
spectrum of industries.  How can the WisDOT best promote adequate port
facilities on the Great Lakes and Mississippi River?

Importance to Manufacturing
This issue is directly relevant to the manufacturing sector in two
ways.  First, those manufacturing firms that ship large machinery,
steel, or oversized paper rolls by water are dependent upon adequate
and efficient ports to handle their exports (from the state) as well
as their shipments of supplies from abroad.  Those firms are almost
exclusively export and high value-added businesses, and are important
to the economic health of Wisconsin.  Minimizing their overall
shipping costs allows them to increase profitability and sales, and/or
to expand their market shares.  This, in turn, could allow them to
expand employment and consequently, incomes in Wisconsin.

The second way in which this issue impacts upon manufacturing in the
state is due to the fact that coal is frequently shipped by water. 
This coal is used to generate electricity, both by Wisconsin utilities
and by large manufacturers with their own electrical generating
capacity.  Large quantities of coal are received, for instance, at the
ports of Green Bay and Milwaukee, as well as at other smaller
locations on Lake Michigan.  Reduced coal shipping costs can lead to
cheaper electrical power, which is a basic cost for nearly every
manufacturing operation.


20





Transportation Options for Economic Development in Wisconsin 

Importance to Agriculture
This issue is of great importance to the agricultural sector. 
Wisconsin agricultural producers are reliant upon Mississippi River
ports for barge shipping of grain, primarily corn, out of the state,
and for shipments of fertilizer into Wisconsin.  They also rely upon
port services at the Port of Milwaukee for exports of agricultural
products, again primarily corn.  Profit margins in this sector tend to
be slim, and reductions in shipping costs through improved port
services can be significant to the profitability of Wisconsin
agricultural producers.

Importance to Tourism
Although not nearly as important to the tourism sector as to the
agriculture sector, port services are important for tourist travel by
car ferries.  In addition, ferries and riverboats can themselves be
tourist attractions, and require adequate ports to service them.  In
this regard, port services would need to be adequate not only for
commercial freight and commodity shipping, but for passenger vessels
as well.

Importance to Services
This issue is not of direct importance to the services sector in
Wisconsin.

Alternative Strategy #1: Maintain the existing infrastructure

Under this strategy, the Department could continue the existing Harbor
Assistance Program, expanding it to include not only maintenance of
dockwalls, but also landside facilities such as access roads, rail
connections, and intermodal transfer improvements, with the goal of
preserving existing levels of service.  As it does currently, the
program could respond to applications from port operators for funding,
and improvements would be undertaken entirely at operators'
initiative.

Alternative Strategy #2: Guide the maintenance of existing
infrastructure

Under this strategy, the Department could expand the types of projects
eligible for the Harbor Assistance Program as above, and provide
higher priority and higher levels of funding for projects that are
consistent with the Department's harbor plan and Intermodal System
Plan.

Alternative Strategy #3: Maintain existing ports, and let communities
purchase & operate harbors.

This strategy would represent the greatest degree of public
involvement.  It could entail the expansion of the Harbor Assistance
Program as above, and also establish a program wherein communities
(such as counties, municipalities, or regional authorities) could
apply for funds to convert an entire harbor to public facilities for
commercial cargo operations.  This could help stem the tide of
conversions of harbors from cargo ports to purely recreational harbors
for pleasure craft.  It would enable communities to upgrade harbor
facilities and generate revenues from their commercial cargo
operations while retaining local control over the harbors.


21





Transportation Options for  Economic Development in Wisconsin

ISSUE: Retention and Improvement of Freight Rail Service

Rail freight service in Wisconsin is central to the efficient movement
of bulk commodities such as grain, coal, stone and clay, fertilizer,
and salt.  In addition, manufacturers can efficiently move
manufactured products over long distances by rail, particularly when
containerized rail service is integrated into intermodal movements
that combine it with truck drayage.  Total tonnage of freight moved by
rail into and out of Wisconsin increased by 39% between 1981 and 1991,
with over 59 million tons of freight moving by rail in 1991.

Coal is an important bulk commodity moved by rail (as well as by
water) because it is used to generate electricity, which constitutes a
basic production cost in virtually every manufacturing process. 
Consequently, any coal transport cost savings can be passed on and
realized as manufacturing cost savings.  During the same period noted
above, 1981-1991, coal tonnage shipped by rail more than doubled.

However, railroads are expensive to build and maintain, and they have
experienced fierce competition from trucking.  Between 1970 and 1990
over one-fifth of the total trackage that existed in Wisconsin was
abandoned as major carriers shed low-volume and unprofitable lines. 
In addition to this trend, the major railroads sold many marginal
lines to newly-formed regional and short-line railroads. 
Consequently, over half of Wisconsin's rail network is operated by
regional and short-line carriers.  How can the WisDOT ensure that
there are adequate levels of rail service throughout the state to
support exports, business growth, and economic development in
Wisconsin?

Importance to Manufacturing
This issue is of direct importance to the manufacturing sector in
Wisconsin.  Intermodal movements of manufactured products, both into
and out of the state, are increasingly important for shipments over
medium to long distances.  Those movements rely upon rail service for
the line haul portion of the trip, and the shipping cost savings are
derived from that line haul segment.  Many shipments go directly onto
rail cars at the point of origin (such as a manufacturing plant).  In
addition, some manufacturing firms are beginning to use rail service
in their Just In Time (JIT) manufacturing processes as rail service
improves, and rail facilities that are extensive and in good repair
are essential to those applications.  Finally, much coal is shipped to
electrical generating plants by railcar, and any reduction in coal
shipping costs can result in cheaper electrical power, which is a
basic cost of virtually all manufacturing processes.

Importance to Agriculture
This issue is also directly relevant to the transportation needs of
the agricultural sector in Wisconsin.  Bulk agricultural commodities
such as grain and fertilizer are often shipped by rail as well as by
water, and the transportation cost savings that rail offers over
trucking for those shipments are substantial.  Large shipments of
corn, for example, can be moved by train for about half the price it
might cost to ship by truck.  Intermodal connections between
waterborne agricultural shipments and railroads are common, as are
connections between truckloads of agricultural products and rail: rail
service is an integral link in these important intermodal movements.


22





Transportation Options for Economic Development in Wisconsin 

Importance to Tourism
This issue is not of direct relevance to the tourism sector.  However,
as was noted in the section of this paper on Intermodal Freight
Transfer Facilities, to the extent that freight traffic moves by rail
instead of by truck, highway congestion is alleviated, particularly in
urbanized regions such as southeastern Wisconsin.

Importance to Services
This issue is of negligible direct relevance to the services. sector
in Wisconsin.  Indirect relevance is the same as noted for tourism
above.


Alternative Strategy #1: Let the rail system develop through private
initiative

Under this strategy, the Department could leave line, routing,
investment, and service decisions to private rail operators following
the dictates of the marketplace.  So that those private decisions
might accurately reflect true social costs and tradeoffs between
different modes, the Department could take steps to ensure that all
highway users pay their full share of the cost of the public highways
that they use.

Alternative Strategy #2: Preserve existing rail infrastructure through
WisDOT rail funding programs

Under this strategy, the Department could administer rail programs
with a goal of preserving existing levels of service.  These programs
would allow the Department to loan funds directly to railroads, as
well as to acquire and preserve rail lines that might otherwise be
abandoned.

Alternative Strategy #3: Preserve and improve service through existing
WisDOT rail funding programs

Under this strategy, the Department could administer current rail
programs, the Freight Railroad Preservation Program and the new
Freight Railroad Infrastructure Improvement Program, with a goal of
preserving existing levels of service and increasing the level of
service on rail lines where warranted.

Alternative Strategy #4: Preserve and expand service through
aggressive state acquisition of entire rail systems

Under this most active strategy, the Department could aggressively
acquire all track and other fixed assets from freight railroads in the
state, and enter into non-exclusive leases or franchises with multiple
railroad companies to operate the systems.

                                                                    23





Transportation Options for Economic Development in Wisconsin

ISSUE: Direct Consideration of Tourism Benefits in Transportation
Projects

Wisconsin's economic development is enhanced by tourism.  Travelers in
Wisconsin spent almost $5.5 billion in 1992, supporting over 150,000
jobs (full-time equivalents), and generating close to $3 billion in
income for Wisconsin residents.  Tourism will continue to be an
important element in Wisconsin's expanding economy.

The alternative strategies below outline possible approaches to the
evaluation of transportation projects that would take the economic
benefits of tourism into account.  Of course, transportation
improvements that encourage tourism will also improve the
transportation network for all users regardless of travel purpose.

Importance to Manufacturing
This issue is not of direct relevance to the manufacturing sector in
Wisconsin.  However, when .transportation projects compete for limited
funds, some projects conducive to tourism may not offer any benefits
to commercial traffic, and in those instances consideration of tourism
benefits could be at odds with a concern for direct benefits to
freight shipping.

Importance to Agriculture
Same as with manufacturing above.

Importance to Services
Many of the transportation needs of the services sector parallel those
of the tourism industry.  For example, the issue of connectivity
between various passenger modes of travel (which is considered in the
section titled "ISSUE: Intermodal Passenger Service") is important to
both tourist travel and to the travel of professionals in various
service businesses.

Alternative Strategy #1: Pursue tourism-enhancing projects that meet
standard transportation efficiency criteria

Current WisDOT planning places emphasis on travel time and cost
minimilization, safety maximization, and environmental responsibility. 
WisDOT plans the network according to present and projected traffic
flows.  As such, tourists, sales people, commuters, and other users
are lumped into system travel projections.  According to this
strategy, WisDOT would continue to use the standard efficiency
criteria to evaluate projects, but would seek to identify projects to
enhance tourism.

Possible WisDOT actions which might complement this strategy could
include: completing the Corridors 2020 and Metro 2020 initiatives to
improve highway access to the major tourism areas of the state; or
identifying innovative means for efficiently improving multimodal
transportation access (air to rail to bus connections, for example) to
tourism areas in the state.


24





Transportation  Options for Economic Development in Wisconsin   

Alternative Strategy #2: Include tourism benefits in criteria that
rank possible alternative projects

At times, transportation network improvements can be of marginal
efficiency from a transportation standpoint, but the benefits to the
state make the project worthwhile.  This is one reason why WisDOT
assigns economic development values when setting priorities for major
highway projects.  The cost of the project is weighed against the
project's economic development value, transportation benefits and
other factors in order to determine its desirability.  The strategy
considered here expands the concept of adding economic development
value to transportation benefits for projects other than major
highways.

Alternative Strategy #3: Pursue transportation-related projects that
promote tourism but have limited transportation benefits

This strategy recognizes that some tourism related projects may have
few transportation benefits, but that other benefits (jobs, revenue,
recreational choice,) may justify their undertaking.

Possible WisDOT actions which might complement this strategy could
include: promoting ferry service for both transportation and tourism
benefits; or promoting and funding programs of memorial and designated
routes, including the Great River Road, Rustic Roads, the Great Lakes
Circle Tours, and the Kettle Moraine Scenic Drive.

                                                                 25





         CHAPTER 3: TRANSPORTATION NEEDS AND DIRECT EMPLOYMENT
                             OPPORTUNITIES

BACKGROUND:    EMPLOYMENT OPPORTUNITIES AND TRANSPORTATION

Nationally, total suburban population has exceeded total city
population since 1970 and, over the same period, suburbs have 
experienced the majority of job growth.  It is clear that
employment opportunities have migrated outward from cities to the
metropolitan periphery.  The purpose of this chapter is to examine
strategies the WisDOT may propose in response to the dispersion of
population and employment to the metropolitan periphery.  The
alternative strategies are extensions of programs adopted in the mid-
and late 1980's.  The first set of strategies addresses the issue of
formulating transportation programs to-expand and improve the working
of the labor market in Wisconsin.  The second set of strategies
addresses the issue of how to most effectively provide transportation
improvements to businesses to induce them to locate, remain, or expand
in Wisconsin.

Transportation and the Labor Market

Although population and employment growth have been greatest in the
suburbs, a subset of the population, generally minorities and lower-
income individuals, were 'left behind" in the central cities.  A
number of approaches have been tried to respond to the lack of
employment opportunities and associated poverty in inner cities.  For
example, enterprise zones attempt to induce firms to locate in inner
cities, thereby bringing jobs to workers; housing programs attempt to
enable inner-city residents to obtain housing in suburban areas,
thereby bringing workers to job locations.  Mobility initiatives
differ from other employment strategies in that they do not require
relocation of either firms or workers: they simply provide
transportation from areas lacking employment opportunities to areas
where job opportunities exist.

Mobility initiatives support economic development by enabling
transportation-disadvantaged individuals to participate in labor
markets from which they were previously excluded by a lack of
transportation.  In addition, mobility initiatives support economic
development by enabling firms to increase employment, i.e, to fill
jobs that would otherwise remain vacant for lack of workers. 
Essentially, mobility initiatives increase the size of the labor
markets in which job seekers look for work and from which employers
hire workers.  The greater supply of workers enables businesses to
more closely fill their labor needs and, in some instances, increase
their production, sales, and profits.  Thus, mobility initiatives can
benefit employers through increased outputs, sales, and profits as
well as workers through increased wage or salary incomes.

In general, public transit serves as a labor mobility program. 
However, traditional fixed-route mass transit is sometimes unable to
effectively reach all job destinations or workers.  In Wisconsin, the
Employment Transit Assistance Program or "Job Ride" was enacted in
1989 specifically to provide unemployed, underemployed, or discouraged
workers temporary transportation assistance from the inner city to
workplaces not adequately served by public transportation.

                                                                 27





Transportation Options for Economic Development in Wisconsin

Transportation and Business Location/Expansion/Retention

Intense competition for jobs among nations as well as among states has
induced many state transportation departments to incorporate economic
development in their transportation planning.  The objective of
WisDOT's special economic development initiative, the Transportation
Economic Assistance (TEA) program, is the creation of new jobs or
retention of existing jobs within Wisconsin by building transportation
improvements at specific sites.  This program was enacted in 1987 to
fund localized transportation improvements needed to create new jobs
or retain existing ones.

The TEA program affects the demand side of labor markets -- the
program is intended to influence firms' hiring decisions via their
location and transportation cost decisions.  WisDOT does not create or
act to retain jobs directly; instead, the department facilitates
private firms' efforts to achieve these goals.  In essence, the
program attempts to create conditions under which firms will choose to
locate or remain in Wisconsin and employ Wisconsin residents.

The TEA program aims to reduce firms' transportation costs.  Lower
costs are incentives to firms to locate or expand at transportation-
improved sites because they enable firms to produce more efficiently
and compete more effectively.  Increased efficiency implies that firms
are likely to increase employment, output, market share, and
profitability.  The most immediate beneficiaries of transportation
improvements are owners (i.e., shareholders) and employees whose
profit and wage incomes increase.  Other beneficiaries include the
communities in which the enhanced incomes are spent, and local, state,
and federal governments that collect increased tax revenues. 
Customers of firms producing at transportation-improved sites also
benefit when reduced transportation costs are reflected in lower
prices or faster response times.

Most retail jobs do not qualify for TEA funding because of the
requirement that such assistance not result in transfers of existing
jobs among regions or firms within the state.  Transportation projects
to benefit specific retail firms are not approved because individual
retail firms generally participate in markets so small that gains by
one firm imply losses by other, existing firms.

ALTERNATIVE STRATEGIES TO ADDRESS THE TWO ISSUES

Strategies considered in this section focus on increasing the
efficiency of labor markets, and on job creation and retention.  One
set of alternative strategies is designed to promote economic
development by increasing employment among transportation-
disadvantaged individuals and to ameliorate labor shortages through
public transit initiatives, including the Job Ride program.  The
alternative strategies in this set differ in terms of whether they
would be applicable only in selected areas or statewide, and whether
they have an employee, employer, or public transit operator
orientation.

A second set of alternative strategies focuses on the TEA program. 
TEA projects have an inherent and unavoidable element of risk because
they involve future events.  Greater employment gains might be
realized if WisDOT were willing to participate in riskier TEA program
transportation improvements.  There are two sources of risk.  On the
one hand, there


28





Transportation Options for Economic Development in Wisconsin 



is the risk that WisDOT may provide transportation improvements and an
applicant may renege on its agreement.  On the other hand, potential
jobs may be foregone because transportation improvements were not made
and, consequently, firms did not locate or remain in Wisconsin. 
Possible strategies to guide the TEA program are designed to balance
these two types of risk so as to gain the greatest amount of new
employment while incurring the least risk of state funds.


ISSUE: Labor Market Mobility and Public Transit

Alternative Strategy #1: Continue the Job Ride program at its current
funding level and focus on inner-city unemployment in Milwaukee

The Job-Ride program is maintained at its current funding level and
focus.  This "inner-city focus" alternative implies that Job Ride
would continue to provide vanpool services to targeted transportation-
disadvantaged individuals from Milwaukee's inner city to workplaces in
the greater Milwaukee metropolitan area.

Alternative Strategy #2: Expand the Job Ride program to metropolitan
areas statewide

Additional Job Ride programs would be established to serve the
transportation-disadvantaged in metropolitan areas across the state. 
The "statewide expansion" strategy would entail replication of the
current Job Ride program in other metropolitan areas.  Expenditures
would likely increase in direct proportion to the number of additional
vans provided.

Alternative Strategy #3: Develop more widely-focused transportation
assistance

Employers could request transportation assistance to alleviate
shortages of workers.  In addition, local public transit operators
could request assistance to serve developing employment centers that
are not yet generating sufficient traffic to enable operators to
extend service to those destinations.  Additional initiatives under
this alternative might include state-assisted vanpool subscription
services (either privately or publicly-operated), and WisDOT
coordination of employer transportation management associations.  The
Department would develop criteria to document the existence,
magnitude, and cause of such needs.  In addition, the Department would
develop a range of options to respond to documented labor market
transportation needs.  These options would range from technical
assistance in setting up ridesharing programs to creation of public-
private partnerships under Job Ride, and even to establishment of
fixed routes where justified.  In contrast to the first two
alternative strategies, this one focuses on employer needs as well as
employees.  Adoption of this alternative strategy would not preclude
adoption of either of the first two.


29





Transportation Options for Economic Development in Wisconsin 

ISSUE: Transportation Economic Assistance (TEA) Program

Alternative Strategy #1: Maintain stringent eligibility requirements
for assistance under the TEA program.

Currently, the Department participates only in very low-risk economic
development projects to minimize the risk that transportation
improvements do not result in employment increases.  The Department
minimizes this risk by requiring commitments of matching funds, from
either local governments or prospective employers.  In addition,
private firms are required to locate at specific sites and to hire
certain numbers of workers within specified periods of time.  Finally,
if private firms do not achieve employment targets within specified
time periods, local governments are required to guarantee
reimbursement of the Department's costs.

Current eligibility requirements for TEA assistance are among the
strictest of those states having similar programs.  The eligibility
requirements are designed to minimize the likelihood that the
Department will spend tax dollars on projects that do not result in
employment gains.  These requirements may preclude expenditures on
employment producing projects which local governments are not willing
or unable to guarantee.

Alternative Strategy #2: Develop flexible eligibility requirements

TEA eligibility requirements would be relaxed to allow participation
in higher-risk projects than are allowed under current rules.  The
purpose of Alternative Strategy #2 is to increase the number of jobs
created or retained over current levels by increasing the flexibility
of eligibility requirements.

The flexible eligibility alternative might be implemented by any of
several actions: (1) allowing local governments or private firms to
provide less than 50% matching funds, (2) waiving requirements for
agreements with specific private firms to locate at specific sites,
(3) waiving requirements for agreements with specific private firms to
hire certain numbers of workers, (4) waiving requirements that local
governments reimburse the Department when private firms are unable to
meet their employment goals, or (5) changing the types of
transportation improvements eligible for TEA assistance.


30





CHAPTER 4: ECONOMIC DEVELOPMENT ALTERNATIVES

INTRODUCTION

In this chapter, the transportation strategies examined in this paper
will be grouped into four alternative packages which are designed to
promote economic development in Wisconsin.  There are many possible
policy questions that could be encountered in the near future.  Some
examples of important issue areas to incorporate into these strategy
packages include: intermodal transfer facilities, highway
improvements, air service improvements, port service improvements,
rail service improvements, and tourism.  These issue areas affect one
or more of the major sectors of the Wisconsin economy: manufacturing,
agriculture, tourism, or services.  In addition, the issue areas
include those designed to reduce transportation-related unemployment
as well as to create and retain jobs in the State.

The four alternative packages presented for discussion include:

Alternative #1: Wisconsin's future transportation system is driven
primarily by market choices, with most public revenues and programs
directed toward highway improvements.  Economic development priorities
are the primary factor in transportation decisions.

Alternative #2: Wisconsin's transportation systems and policies remain
largely as they are today.  Highways remain the dominant mode of
travel in Wisconsin.  On a modest basis, more revenues are invested in
complementary modes such as transit, freight and passenger rail,
airports, harbors, and bicycle facilities where they are appropriate
and cost effective.

Alternative #3: While highways remain the primary mode of travel, a
much wider range of transportation options is developed and enhanced
in all areas of the state, supplementing highways as a travel choice. 
Environmental protection and travel choice, along with economic
development, receive more emphasis.

Alternative #4: Wisconsin's transportation decisions are shaped
largely by environmental and social values.  State regulations and
pricing changes are implemented to reduce auto and truck travel and
greatly expand or enhance urban and rural transportation modes, and to
shift freight movements from truck to rail.

RELATIONSHIP OF ISSUE AREAS TO THE ALTERNATIVE STRATEGY PACKAGES

The various strategies that were identified in Chapters 2 and 3 for
each major issue area can be grouped into packages of strategies that
are consistent with these four alternatives.  These groupings are
presented here as a basis for discussion; it is expected that the
ultimate selection of strategies may include other elements identified
during the TRANSLINKS 21 process.

ALTERNATIVE #1
The Department assumes that private investors, motivated by potential
profits, are best qualified to evaluate the demand for intermodal
freight transfer facilities.  Profits are viewed as sufficient


                                                                    31





Transportation Options for Economic Development in Wisconsin

incentives for private investors to create these facilities, and the
network evolves independent of WisDOT involvement.

The Department provides the basic infrastructure for the line-haul
portion of passenger trips, and leaves development of intermodal
passenger connectivity to the private sector as it responds to profit
opportunities.

With regard to highways, the Department extends the multi-lane
backbone system and the system of connector highways as outlined in
the Corridors 2020 plan.  In addition, the Department strives to
continually improve both road systems in response to the forces of
private economic development and the public demand for roads.  Highway
programs would increase from current levels.

The Department provides navigational aids to airports lacking such
aids.  These aids reduce transportation costs by making assisted
airports more accessible and shipments more reliable.

The Department leaves line, routing, investment, and service decisions
to private rail operators responding to the dictates of the
marketplace.  To ensure accurate signals from the marketplace, the
Department institutes measures to induce highway users to pay the full
costs of that mode.

ALTERNATIVE #2
The Department fosters development of intermodal transfer facilities
through participation in public-private partnerships by awarding
grants or loans for construction.

The Department extends the multi-lane backbone system and the system
of connector highways as outlined in the Corridors 2020 plan.  These
extensions improve the accessibility of all localities to the state
system and the state system to the national transportation network. 
Transportation systems and policies remain largely as they are today,
although funding for other modes is increased gradually where it is
cost-effective and appropriate.

The Department recognizes that air cargo is increasingly being
transported in the underbellies of passenger aircraft as well as in
cargo aircraft.  The Department assists in the construction of
combined passenger-air cargo facilities.  Moreover, the Department
assists in construction of runways, terminals, and package storage and
handling facilities.

The Department expands the existing Harbor Assistance Program to
include not only maintenance of dock walls, but also land-side
facilities such as access roads or rail connections.  This option is
designed to preserve existing service levels for agricultural products
and other bulk commodities.  Assistance for improvements is made in
response to applications by port operators for aid.

Currently, the Transportation Economic Assistance (TEA) program
provides funding only for economic development projects that minimize
the risk to the Department that transportation improvements will not
result in employment increases.  The Department's exposure to risk is
minimized by funding only projects meeting strict eligibility
requirements.


32





Transportation Options for Economic Development in Wisconsin

The Department administers the Freight Railroad Preservation Program
and the Freight Railroad Infrastructure Improvement Program to
preserve current service levels.  These programs allow the Department
to lend funds directly to rail operators for new rails and equipment.

Current Departmental policy provides for an open transportation
network for all users, regardless of purpose.  The Department
continues to use efficiency criteria to evaluate projects but also
seeks to identify projects of particular benefit to tourism.

The Job Ride program continues to assist inner-city residents of
Milwaukee find employment in the Milwaukee suburbs by providing van
pools.

ALTERNATIVE #3
WisDOT continues to develop an extensive highway network as now
envisioned in the Corridors 2020 plan, supplemented by a wider range
of transportation options as the network is completed.  Highway
programs would not increase beyond the Corridors 2020 level.

The Department focuses on development of all-cargo airports, including
transforming some small, local airports into all-cargo facilities, or
assisting private investors or local governments in constructing all-
cargo airports.


Transportation Economic Assistance eligibility requirements are made
more flexible to allow participation in higher-risk projects than are
currently allowed.  Flexible eligibility requirements are intended to
reduce the numbers of jobs lost to other jurisdictions or not created
in Wisconsin by increasing the number and types of projects qualifying
for assistance under the TEA program.

The Department expands the types of projects eligible for the Harbor
Assistance Program and increases funding and priority for projects
consistent with the Department's harbor plan and Intermodal System
Plan.  In addition, the Department establishes a program wherein local
governments can apply for funds to convert harbors to public
facilities for commercial cargo operations.

In addition to the current policy of assigning economic development
values when setting priorities for major highway projects, the
Department assigns economic development benefits for other projects. 
Furthermore, the Department pursues some projects that promote tourism
although they have limited economic development benefits.

The Job Ride program is expanded to serve the transportation-related
unemployed in all metropolitan areas of the state.  Moreover, the
Department develops a range of assistance alternatives to respond to
requests from employers and public transit operators for assistance in
transportation-related employment problems.

ALTERNATIVE #4
The Department analyzes freight movements and determines feasible
locations for intermodal transfer facilities, and constructs or
operates them as public facilities.


33





Transportation Options for Economic Development in Wisconsin

The Department attempts to optimize use of existing highway
infrastructure, keeping capital and maintenance costs low.  State
highway programs would be cut back, with no planned expansions.

The Department works to preserve existing rail services through
current rail programs.  In addition, the Department owns rail lines
and contracts with private firms for their operation.

The Department focuses on total passenger trip services by providing
and coordinating passenger intermodal connectivity at trip-ends.  In
addition, the Department's role in high-speed rail and AMTRAK is
extended beyond station-to-station service.


34




FOR MORE INFORMATION ON THIS TOPIC, CONTACT:

ANDREW RICHARDS
ECONOMIC STRATEGIES & ANALYSIS SECTION
WISCONSIN DEPARTMENT OF TRANSPORTATION
P.O. BOX 7913
MADISON, WI 53707-7913
608/267-3614

FOR ADDITIONAL COPIES, CALL:
OFFICE OF PUBLIC AFFAIRS, 608/266-3581





WISCONSIN
TRANSLINKS 21



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