Subways Going Down the Tubes

Rail advocates sometimes claim that we can ignore the high cost of building rail lines, because “once they are built, they are there forever.” Yes, forever, or about 30 to 40 years, whichever comes first.

Which is why the San Francisco Bay Area Rapid Transit District (BART), Washington Metro, and Chicago Transit authority are all looking at roughly $10 billion each in rehabilitation expenses in the next few years, little of which is funded. Of the three, BART is in the best shape, saying it needs $11 billion for rehab, slightly less than half of which is funded. The remaining $5.8 billion is still a lot of money just to keep the system going.

The Washington Metrorail system needs $12 billion to rehabilitate its system over the next decade. Transit officials admit to having virtually no hope of raising that amount unless the federal government comes riding to the rescue. In the meantime, they are begging local governments to cobble together a $1.5 billion fund to just repair the system’s worst problems.

The latest is from the Chicago Transit Authority, which is supposed to be on the verge of collapse. The system is so poorly maintained that some trains are restricted to as little as six miles per hour. As if to one up BART and Metrorail, CTA says it needs $16.1 billion over the next decade to put it back in a “good state of repair.”

Meanwhile, the New York and Boston transit authorities say they have kept their systems up. But New York MTA is looking at spending nearly $2 billion a year on debt service on the money it has borrowed to maintain the system (see page II-2 of this 2.7MB pdf). Boston’s MBTA is spending one third of its operating budget on interest on its $5 billion debt (scroll to end of article).

You might think that government officials wouldn’t like to admit they are such poor managers that they have failed to keep up with system maintenance. In fact, they know that, when they screw up, they will be “punished” with larger budgets to fix the problems they created.

I suspect they particularly have an incentive to highlight their problems now due to the Minneapolis bridge collapse. Members of Congress responded to this by falling all over themselves with proposals to raise taxes for infrastructure.

Transit officials know that a large portion of that infrastructure money is likely to be dedicated to transit, especially if Democrats take both Congress and the White House in the next election. So the agencies are each trying to get their bid in for “their fair share” (meaning more than their fair share) of the take.

The lesson for other cities that are building or considering rail transit is still valid: rail transit is a pay-now, pay-later program. It costs a lot to build and a lot to maintain (and those who say it is cheaper to operate than buses are full of you-know-what). Once you have it, no more than 1, 2, or at the very most (unless you are New York City) 3 percent of all passenger travel will use it, but that 1 to 3 percent will be vocal while the 97 to 99 percent of people who rarely or never use it will have to pay for it.

Transit’s and Rail Transit’s Share
of Passenger Travel in Urban
Areas with Subways/Elevateds

.   Urban Area    Transit    Rail
.   New York        9.7%     7.4%
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.   Chicago         3.7%     2.7%
.   Washington      4.1%     2.9%
.   San Francisco   4.2%     2.9%
.   Boston          3.1%     2.5%
.   Philadelphia    2.6%     1.6%
.   Miami           1.0%     0.0%
.   Atlanta         1.1%     0.6%
.   Baltimore       1.4%     0.3%
.   Cleveland       1.4%     0.3%

Source: Calculations based on National Transit Database and Highway Statistics. Rail transit’s share includes all forms of rail transit.

The Engineering News Record, which is no doubt eager to open the floodgates of infrastructure pork, points out that “many transit do not raise sufficient revenue to cover all capital expenses and operations.” That’s an understatement, especially if by “revenue” they mean “farebox revenue.”

With the exception of a few commuter bus lines in the Greater New York metro area, no bus or rail agency manages to cover its operating costs, much less its capital costs, with fares. Even if you count local taxes dedicated to transit, most agencies are addicted to federal grants. And even if you count those federal grants, most rail agencies have no plans for where they are going to get funding for periodic rehabilitation of their physical plants.

This is going to come back and bite them in the long run. People don’t like having to pay for things they don’t use. I myself resent the fact that every time I change planes in Portland or Minneapolis, a large share of my landing fee goes to subsidize light-rail systems that produce absolutely no benefits for air travelers who are merely changing planes at those airports. Those landing fees would pay for a lot of taxi fares for the few times that I actually need ground transportation in one of those cities.

By the same token, auto drivers who know that a large share of their gas taxes are being diverted to little-used rail transit systems are going to resist road tolling, even though economists agree that variable-priced tolls are the best hope we have for reducing congestion. What is going to prevent, those drivers will legitimately ask, elected officials from funneling a large share of those tolls into some rail or real-estate scheme? Remember, the twin towers of the World Trade Center probably would not have been more than 70 or 80 stories tall if the top 30 or so stories had not been subsidized by New York City bridge tolls.

It is hard for toll advocates to answer that one except to design institutions that are hard for pork-barreling officials to break into. State tolling authorities don’t have enough insulation to protect them from such funding grabs, which is one reason why the Pennsylvania Turnpike is so poorly managed. One alternative is private toll roads. Another might be regional toll road authorities, like the Harris County Toll Road Authority or the Tampa-Hillsborough Toll Road Authority, that have no job other than to build, operate, and maintain toll roads.

In any case, I expect that Atlanta will soon announce that it, too, has a $10 billion shortfall in its rehabilitation budget. Atlanta opened its first rail line at about the same time as Washington DC, and though it has been pretty much a failure, many people in Atlanta think it is and still support it.

The real question is why taxpayers should pay to cover these deficits when, outside of New York City, the rail systems contribute so little to the well-being of any but an elite handful of urban residents.