Today, the Cato Institute releases my policy paper on the Federal Transit Administration’s “New Starts” program that gives about $2 billion a year in grants to cities to build new streetcar, low-capacity rail, and other rail transit lines. My basic argument is that nearly all of the billions spent on this program since 1992 have been wasted, mainly because rail transit is obsolete except in a few extraordinary places such as Hong Kong.
The paper starts by quoting FTA administrator Peter Rogoff, who in a 2010 speech chastised the transit bureaucracy for asking his agency for money to build rail lines when they couldn’t afford to maintain the lines they already have. “Paint is cheap, rails systems are extremely expensive,” he said. “You can entice even diehard rail riders onto a bus, if you call it a ‘special’ bus and just paint it a different color than the rest of the fleet.” “Bus Rapid Transit is a fine fit for a lot more communities than are seriously considering it.”
My paper points out that Rogoff’s own agency, with the complicity of Congress, is the main reason so many cities want to build rail lines they can’t afford to maintain. Although Congress set competitive grant criteria such as “cost effectiveness,” when the FTA tried to implement that criteria Congress simply exempted favorite projects from the rule. More recently, the FTA has rewritten the rule so it is now meaningless.
Another criterion the FTA supposedly requires is that agencies must be financially able to maintain rail service without cutting bus service. By an extraordinary coincidence, just last week the Cascade Policy Institute sent an open letter to the FTA pointing out that Portland’s transit agency, TriMet, does not come close to meeting this criterion. Not only is TriMet not offering the service it promised on the last two rail lines it built, TriMet’s own forecasts indicate that it will never be able to reach that service level. Instead, it has cut service and has warned that, given its current financial condition, it will have to cut it by another 70 percent by 2025.
The point is that the FTA ignores all of these problems and continues to give money to agencies such as TriMet. So it is no wonder that agencies continue to ask Rogoff for money for rail lines they can’t afford to maintain–those who ask, get it.
Sadly, Rogoff has never repeated his comments, and presumably was gagged by his boss, Ray LaHood. But this just shows why the only solution is for Congress to completely abolish New Starts. Instead, if the federal government funds transit at all, that money should be given to the agencies using formula grants, preferably with formulas that give them incentives to provide better transportation, not just more costly transportation.