Yesterday, the Senate passed a six-year transportation bill that increases spending on highways and transit but only provides three years of funding for that increase. As the Washington Post commented, “only by Washington’s low standards could anyone confuse the Senate’s plan with ‘good government.'”
Meanwhile, House majority leader Kevin McCarthy says the House will ignore the Senate bill in favor of its own five-month extension to the existing transportation law. Since the existing law expires at the end of this week, the two houses are playing a game of chicken to see which one will swerve course first and approve the other house’s bill.
As the Antiplanner noted a couple of weeks ago, the source of the gridlock is Congress’ decision ten years ago to change the Highway Trust Fund from a pay-as-you-go system to one reliant on deficit spending. This led to three factions: one, mostly liberal Democrats, wants to end deficits by raising the gas tax; a second, mostly conservative Republicans, wants to end deficits by reducing spending; and the third, which includes people from both sides of the aisle, wants to keep spending without raising gas taxes.
Growth management not only makes housing more expensive, it makes housing prices more volatile. So, even though the American economy isn’t exactly booming, growth in some parts of the country is sending housing prices upwards, and housing affordability has become a battlecry in San Francisco, Los Angeles, Seattle, Portland, and many other cities.
Unfortunately, it is usually the battlecry of advocates of the wrong policies. San Francisco’s affordability crisis has led to a blame game, with some blaming high housing costs on anti-development progressives (which is partly true) while other say they are solely due to due to demand, not supply (which is completely wrong). Proposed solutions include increased rent controls and inclusionary zoning, both of which would make housing less affordable in the long run.
In Seattle, someone noticed that developers were tearing down $400,000 bungalows in order to build three $600,000 condos and came to the wrong-headed conclusion that housing could be made more affordable by saving the bungalows. Yes, $400,000 is less than $600,000, but if you don’t increase the supply of houses, overall affordability will decline.
The Antiplanner is taking a break this week, hoping to bicycle, kayak, and hike in the wilderness. If anything interesting comes up, I’ll write about it, but I may not have many posts this week. I hope everyone else has a great summer.
The Antiplanner has an op-ed about transportation gridlock in The Hill. It is similar to, but a bit more detailed than, my post here a few days ago.
One of the commenters says, “Is it any surprise that Obama and the GOP leadership are in agreement on the one truly indefensible position on this issue? ‘Just raise the spending and issue more debt to cover it’ is obviously what has put the federal government in the abysmal fiscal condition it is. It is the thinking of selfish politicians whose only concern is for their short term poitical benefit. . . . There are only two responsible positions. Either cut the spending or raise taxes to pay for the spending.” This reflects my view as well.
Phoenix voters will decide next month whether to extend the current transit sales tax (set to expire in 2020) through 2050 and increase it by 75 percent (from 0.4 percent to 0.7 percent). This would supposedly be enough to fund at least three more light-rail lines plus several bus-rapid transit lines.
According to Valley Metro, this beautiful vacant lot across the street from a light-rail station is Escala on Camelback, a mixed-use development with 160 condos and 15,000 square feet of retail space that was supposed to be completed in Fall, 2010. It remains vacant today.
The big argument from rail advocates is that Phoenix’s first light-rail line, which opened in December, 2008, generated $7 billion in economic development. Not so much. A new report from the Arizona Free Enterprise Club shows that the light rail generated very little, if any, new development.
According to the 2013 American Community Survey, San Francisco has 381,000 housing units. The San Francisco Chronicle has found that about 350 of them are used as full-time vacation rentals through Airbnb. This, says the paper, “bolster[s] claims by activists that the service removes scarce housing from the city’s limited inventory.”
Supporters of Airbnb held a rally last October to persuade the city to legalize the service. Flickr photo by Kevin Krejci.
Since they live in one of the least affordable housing markets in the country, San Francisco residents are understandably sensitive to housing affordability. However, they are quick to blame high housing costs on everything but the real culprit. If it’s not Airbnb, it’s the Google, Apple, and Facebook buses taking people to work in Silicon Valley.
Continued and increased federal funding of highways and transit is vitally important, says Jack Schenendorf in a paper titled, The Case Against Transportation Devolution. Devolving transportation to the states “would conflict with the nation’s long and unbroken history of federal transportation investment, balkanize the nation’s transportation networks, cause a substantial drag on the economy, and bring about a host of other serious problems.”
Schenendorf may be a Republican, but that doesn’t make him a conservative, at least not in the fiscal sense. He was the chief of staff for the House Transportation and Infrastructure Committee from 1995 to 2001. Those happen to be the years when committee chair Bud Shuster (R-PA) made himself known as “one of the most shameless promulgators of pork-barrel spending in all of Congress.” Shuster has all sorts of highways, museums, and buildings named after him throughout his district and state, and he paved the way for his son, Bill, to take his seat when he retired. Today Bill also chairs the House T&I Committee.
Also during those years, Congress passed the 1998 transportation bill, TEA-21, which happened to be the first law that mandated increased spending every year even if revenues did not keep up. While that only became a problem in 2007, it is the main reason why Congress is gridlocked today. In other words, Schenendorf is part of the reason why the federal transportation funding process has broken down.
Congress has three work weeks to figure out what to do about the highways & transit law that expires on July 31. As noted here a month ago, Congress remains gridlocked over the issue. Two weeks ago, the Senate Environment & Public Works Committee bravely passed a bill that increases spending by 3 percent, but failed to spell out where that money would come from.
That’s the heart of the issue: Congress is spending $52 billion a year on highways and transit, but is collecting only $40 billion a year in gas taxes and other highway user fees. Though there are just two political parties, the gridlock results from the fact that there are four different factions, each with its own solution to the problem of how to reconcile the difference between spending and revenues.
First are those who want to raise highway user fees to cover the entire $52 billion, and maybe a little more. A six-cent increase in taxes would cover the $52 billion, while even a nine-cent increase would still result in a tax that, after adjusting for inflation, would be less than it was in 1994, the last time it was increased.
Yesterday, the Department of Housing and Urban Development (HUD) approved a new fair housing rule called Affirmatively Furthering Fair Housing. This follows the Supreme Court’s recent ruling allowing HUD to use disparate impact as a criterion for determining whether a community is guilty of unfair housing practices.
Racists. Wikimedia photo by Bernard Gagnon.
In one form of disparate impact analyses, HUD compares the racial makeup of a city or suburb with the makeup of the urban area as a whole. If the city doesn’t have enough minorities, it is presumed guilty and must take steps to attract more. Under the Affirmatively Furthering Fair Housing rule, that could mean subsidizing low-income housing or rezoning land for high-density housing.
The Portland Tribune reports that the number of police officers in Portland has declined by 9 percent since 2001, even as the city’s population grew by 13 percent, resulting in a 20 percent decline in officers per capita. This decline is typical for a city that is neglecting its streets, its schools, and other essential services all so that it can fund streetcars and transit-oriented developments.
The Portland Development Commission (the city’s urban-renewal agency) is using tax-increment financing (which is a polite term for stealing) to gobble up as much tax revenue as it can. According to the State Department of Revenue, that’s nearly $100 million per year (see page 45). Since nearly all of that development would have taken place without the subsidies (though perhaps not as dense as planners would like), that’s $100 million that’s not available for police, streets, schools, and other services that depend on property taxes.
All of that urban renewal isn’t doing much to create jobs. Oregon was just ranked the second-worst state to make a living in due to its high cost of living (meaning housing costs), low average incomes, and the highest income taxes in the country.