The Antiplanner

Getting Real About Transport Costs

2nd December 2009

Getting Real About Transport Costs

posted in Transportation |

The New Republic asks if our looming national debt will play a role in the coming transportation debate. The Antiplanner is counting on it.

“Ever-rising obligations outpaced gas tax collections and forced the federal government to twice infuse the highway trust fund with general fund revenues,” points out TNR. “In other words: Transportation no longer pays for itself.” Of course, those “ever-rising obligations” are entirely because Congress passed a bill in 2005 that authorized it to spend more than it was collecting in highway user fees (and 20 to 40 percent of that spending wasn’t on highways). And as for transportation no longer paying for itself, it never really did because it was too attractive as a form of pork barrel.

If the 2005 reauthorization of federal surface transportation programs overshot revenues, the House Transportation & Infrastructure Committee’s proposal for a 2009 (2010? 2011?) bill is totally unrealistic. It calls for spending about $500 billion over six years, which is roughly twice anticipated revenues. Of course, most of that spending will be on things that don’t generate any federal revenue, including mass transit, bike paths, and high-speed rail. Moreover, the bill proposes to create obstacles to states that want to generate more revenues via tolls.

Meanwhile, we can see the results of past spending on crazy transit projects. Seattle’s new light-rail line — at $179 million per mile the most expensive in the world — is carrying less than 2,700 new transit riders per day. Los Angeles’ new Gold Line extension is also suffering lower than expected ridership. Residents of Tigard, a suburb of Portland, have such little faith in light rail that most prefer to widen roads over building a new light-rail line.

Meanwhile, transit officials casually talk about how 82 percent operating subsidies and 100 percent capital subsidies are “in line” with transit systems elsewhere in the country. This only shows how warped our sense of perspective can become when government takes over businesses that ought to be run by the private sector.

After a stimulus bill that cost nearly a trillion dollars, a health care bill that is likely to cost trillions (after the first decade, which is all the further the CBO looks), and a cap-and-trade bill that is also likely to cost a lot, we can only hope that Congress will recognize it can no longer afford to spend hundreds of billions on projects that can’t pay for themselves. If the federal government is to play a role in transportation at all, it should be to emphasize transportation that pays for itself out of user fees.

Does that include roads? In some places. Does it include buses? In some places. Does it include high-speed rail or any rail transit? I wish it did, but it probably doesn’t, at least not in the U.S. From now on, transportation spending must recognize that we have financial limits.

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There are currently 17 responses to “Getting Real About Transport Costs”

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  1. 1 On December 2nd, 2009, Dan said:

    From now on, transportation spending must recognize that we have financial limits.

    One wonders where the call for investment in alternative fuels went. See, even the IEA says we’re past peak in oil. Oil limits.

    So what do we do? Write articles that deceive the reader that it’s not happening? Change the subject to something else to avoid the issue of how are we going to get around in a world with um…limited…oil supplies and (for now) increasing population?

    DS

    posted on December 2nd, 2009 at 5:13 am

  2. 2 On December 2nd, 2009, bennett said:

    “And as for transportation no longer paying for itself, it never really did…”

    Exactly. But yet mobility is still important to Americans, even those who strive for the free market utopia. As far as transit is concerned, Americans still think it is important that those without that ability to drive themselves should have access to transportation at a subsidized rate.

    There is undoubtedly a lot of waste in some transportation planning projects. DOT’s and transit agencies do need to “recognize that we have financial limits.” But y’all need to realize that transportation will NEVER pay for itself entirely (or even remotely close to entirely). You can’t draw the government spending line at defense and fire protection. It ain’t gonna work. Sorry.

    posted on December 2nd, 2009 at 8:24 am

  3. 3 On December 2nd, 2009, C. P. Zilliacus said:

    Dan posted (quoting the Antiplanner):

    > > From now on, transportation spending must recognize that we have financial limits.
    >
    > One wonders where the call for investment in alternative fuels went. See, even the
    > IEA says we’re past peak in oil. Oil limits.
    >
    > So what do we do? Write articles that deceive the reader that it’s not happening?
    > Change the subject to something else to avoid the issue of how are we going to get
    > around in a world with um…limited…oil supplies and (for now) increasing population?

    Maybe because the notion of “peak oil” is only marginally relevant to the discussion of transportation finance?

    The Antiplanner asked about how we finance the transportation system of the future.

    I think it’s fair to say that free markets, if left alone, will come up with viable alternatives for providing energy to fuel the transportation system if we really run out of oil. Maybe that fuel of the future will be cellulosic ethanol, maybe biogas, maybe bioDiesel, maybe fuel cells using hydrogen, maybe stored electric batteries, maybe small-scale (sealed) nuclear reactors (why not? – this is how the U.S. Navy has powered our submarine fleet for many years), maybe something else. Some of these lend themselves to taxation the same way that petroleum-based fuels are taxed, some obviously do not.

    Up to now, we have financed transportation (including, by the way, most mass transit operating deficits and nearly all capital subsidies) through taxes on motor fuels and in some cases (like N.Y. City, and the crossings between N.Y. City and northern New Jersey) by hefty tolls on bridge and tunnel users.

    I think I know the Antiplanner well enough to say that he’s not all that worried about “peak oil” (I am not). But maybe the better question is where the subsidies for all of these expensive and usually under-performing mass transit lines will come from in the future. Up to now, those subsidies have come from users of the highway system and never, ever from transit patrons (at least not in the United States since about 1950).

    But if we were to switch from a system of motor fuel taxes to (for example) user-financing of the highway system, then where will the subsidies for mass transit come from?

    posted on December 2nd, 2009 at 8:36 am

  4. 4 On December 2nd, 2009, C. P. Zilliacus said:

    The Antiplanner wrote:

    > Meanwhile, transit officials casually talk about how 82 percent operating subsidies and 100 percent capital subsidies
    > are “in line” with transit systems elsewhere in the country. This only shows how warped our sense of perspective can
    > become when government takes over businesses that ought to be run by the private sector.

    In theory, metropolitan planning organizations (MPOs) are supposed to develop regional transportation capital spending plans under financial constraint, which is required by federal law.

    In my opinion, this is a good thing, but, of course, the very same Congress that imposed financial constraint on MPOs does not consider financial constraint when it comes to spending money.

    posted on December 2nd, 2009 at 8:43 am

  5. 5 On December 2nd, 2009, bennett said:

    C.P said: “I think it’s fair to say that free markets, if left alone, will come up with viable alternatives…”

    The problem is that the free market, as far as I can tell, is a mythical phenomenon, at best, something we can strive for yet never achieve. And it’s not only government that will not let the market be free. For a market to be free, doesn’t there have to be a free flow of information and perfect competition? That’s what it says in my government textbooks from freshman year. I’m not sure Exxon or BP will ever let this happen.

    posted on December 2nd, 2009 at 9:11 am

  6. 6 On December 2nd, 2009, MJ said:

    For a market to be free, doesn’t there have to be a free flow of information and perfect competition? That’s what it says in my government textbooks from freshman year.

    Perfectly competitive markets only exist in textbooks. But those who favor greater intervention tend to set the bar pretty low in terms of how much deviation from this ideal is necessary before throwing systems of voluntary exchange out the window. Our experience with the alternative has not been promising.

    posted on December 2nd, 2009 at 10:01 am

  7. 7 On December 2nd, 2009, bennett said:

    MJ,

    I would argue that it is the type of intervention that is important. I don’t think that mandates for transportation or fuel alternatives will work (see the recent ethanol mandates). But what about intervention into the flow (or lack there of) information regarding market participants? What about intervention into the calculation and eventual accounting of externalized cost? Can a more free market even exist without this type of intervention or should we just expect ENRON to police themselves?

    posted on December 2nd, 2009 at 10:33 am

  8. 8 On December 2nd, 2009, Mike said:

    The freer the market, the greater the tendency toward perfect information because of greater capacity, both of capability and conduit, for information to propagate. It is unlikely that the ideal of perfect information will ever be realized in its totality, the way it’s all but impossible to maintain an undefeated record in the face of a long season. But that doesn’t mean we should stop trying to win.

    In answer to the specific example of Exxon and BP, indeed they might decide to collude and suppress information, and one might assume they could even hide the fraudulent element of this from the court system. However, they are at the utter mercy of the consumer. The consumer is free to choose yet a third vendor, or none at all. No matter how brutal a cartel, it can only erect impediments to competition to the degree that an anti-capitalistic governmental authority agrees to cooperate — and as this would be a violation of the government’s most fundamental duty to protect individual rights, it would be legitimate for the citizens to revolt and overthrow it in response.

    posted on December 2nd, 2009 at 12:16 pm

  9. 9 On December 2nd, 2009, Scott said:

    Once there are more affordable non-fossil fuels, where are all these vehicles going to drive, after the roads have neglected for decades?

    posted on December 2nd, 2009 at 3:47 pm

  10. 10 On December 2nd, 2009, the highwayman said:

    Mike: No matter how brutal a cartel, it can only erect impediments to competition to the degree that an anti-capitalistic governmental authority agrees to cooperate…

    THWM: BTW, do you even realize that Mr.O’Toole is a auto/big oil lobbyist?

    posted on December 2nd, 2009 at 4:04 pm

  11. 11 On December 3rd, 2009, Spokker said:

    “But if we were to switch from a system of motor fuel taxes to (for example) user-financing of the highway system, then where will the subsidies for mass transit come from?”

    They will likely be rolled into whatever the new system is. Your highway user fee would also pay for transit. Why would you expect anything different?

    However, not all transit financing comes from taxes on gasoline. Some local governments have enacted general sales tax measures in order to fund highway, road and transit improvements. Los Angeles voters passed Measure R, a half-cent sales tax, for example, to fund transportation improvements. Transit is a significant part of that. Orange County, CA passed Measure M and Renewed Measure M and it was, again, overwhelmingly approved by voters. Measure M differs significantly fro Measure R in that it’s primarily based on roads and highways.

    As an aside, it’ll be interesting to see how Los Angeles County and Orange County develop in the future. They have taken radically different approaches to transportation planning in that LA County is primarily investing in transit, especially rail, and Orange County is widening highways. The 405 in Orange County may become 20 lanes wide in the future. The 405 on the LA County side will see no such improvements.

    posted on December 3rd, 2009 at 1:18 am

  12. 12 On December 3rd, 2009, John Thacker said:

    One wonders where the call for investment in alternative fuels went.

    Did you read: “If the federal government is to play a role in transportation at all, it should be to emphasize transportation that pays for itself out of user fees.”

    It doesn’t matter specifically whether or not there’s peak oil; that worry is already included in the financial part. If peak oil increases the cost of our current motor fuel, then that will mean that driving and roads will pay for itself less. That will necessitate a combination of fewer roads or higher gas taxes and/or congestion charges, which will contribute to solving the peak oil problem.

    If you follow the Antiplanner’s advice and have the federal government spend money only on efficient projects; i.e., those that can pay for themselves out of user fees, then the problems of peak oil are largely automatically addressed. It’s only when the government decides to spend without concern for user fees, as in 2005, and in the supplement bills in 2007 (set up by the 2005 bill) and in the stimulus, that the biggest problems arise.

    posted on December 3rd, 2009 at 6:19 am

  13. 13 On December 3rd, 2009, Dan said:

    Part of the call for alternative fuels is to leave some oil so we can have it to (re)pave roads. Reducing our dollars leaving here and going there means more dollars for investment and R&D. These are aspects of finance. Apologies for presuming this was obvious to readers here.

    DS

    posted on December 3rd, 2009 at 8:35 am

  14. 14 On December 3rd, 2009, bennett said:

    John Thacker said: “If you follow the Antiplanner’s advice and have the federal government spend money only on efficient projects; i.e., those that can pay for themselves out of user fees…”

    This has never and will never happen. It doesn’t happen with transit, roads or highways (see the antiplanner’s post from a couple of days ago). This is the job of the private sector. Let me reiterate that I’m not in favor of excessive government waste, but a big part of what all governments in America do is subsidize and pay or things that are important and that cannot pay for themselves (i.e roads, paratransit, defense, fire protection, medicine for veterans and the elderly, etc). If the federal government only pays for things that can pay for themselves then what is the point of even having a federal government? You libertarians/free market utopian zealots are advocating for some sort of plutocratic anarchy.

    posted on December 3rd, 2009 at 8:52 am

  15. 15 On December 3rd, 2009, prk166 said:

    “But y’all need to realize that transportation will NEVER pay for itself entirely (or even remotely close to entirely). You can’t draw the government spending line at defense and fire protection. It ain’t gonna work. Sorry.”

    Why not? The resources to build and maintain them do not magically appear out of thin air. They come some somewhere. If people value these things enough, they’ll pay for it.

    posted on December 3rd, 2009 at 5:59 pm

  16. 16 On December 4th, 2009, the highwayman said:

    bennett said: You libertarians/free market utopian zealots are advocating for some sort of plutocratic anarchy.

    THWM: Thank you for saying that.

    posted on December 4th, 2009 at 10:31 pm

  17. 17 On December 5th, 2009, MJ said:

    I’m reserving my judgement on Seattle’s Central Link until the extension to the airport is complete, which should be soon. But the early returns are not promising.

    posted on December 5th, 2009 at 9:12 am

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