California Thieves Steal Money Transit Stole from Highways

As in most states, California originally created gasoline taxes to pay for highways. But the ever-hungry transit lobby effectively stole some of that money by convincing the state legislature to divert some gas taxes and most Diesel taxes to transit.

Of course, no amount of money is ever enough for the passenger rail lobby, so they conceived the idea of the state selling nearly $10 billion of bonds — with no particular source of revenue to repay those bonds — to fund high-speed rail and rail transit improvements in cities on the high-speed rail route. Of course, this was sold to voters as being essentially cost-free — because measures that require a tax increase must get approval from two thirds of voters instead of just half.

Now, of course, California is projecting a budget deficit of something like $42 billion, mainly due to various special interest groups convincing the legislature or voters to fund their “must-have” programs, like high-speed rail, without finding any revenues to pay for those programs.
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To balance the budget, Governor Schwartzenegger has essentially proposed to take the money the transit lobby stole from highways and spend it on other things like school buses. His budget would reduce funding for state transit assistance by 75 percent from $1.37 billion in 2009 to $350 million in 2010.

Naturally, the transit lobby is outraged at this “theft” of its funds. Just desserts, as far as the Antiplanner is concerned.

As the state legislative analyst observes, funding for most state transportation programs is “unstable.” That’s what happens when you rely on stealing taxes from other program.

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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

38 Responses to California Thieves Steal Money Transit Stole from Highways

  1. Scott says:

    Congestion is increasing everywhere. This emphasis on transit is just allowing the congestion to worsen & not addressing proper solutions–more lanes.

    CA has bad traffic:…

    …Not because of lack of transit. There is plenty available, you need to locate your home by a stop & your job by a stop. Shopping & other activities could be a problem. Transit offers far fewer options than a car, and your travel time will be 2-4 times longer.

    …Not because of sprawl. CA has the least sprawl out of the country. The LA UA (urban area) has the highest density at about 7,000ppl/sq.mi. The Bay Area is 2nd at about 6,000. For transit to be highly used, a large area of over 10,000 ppl/sq.mi. & a large CBD is needed, within the UA. Only about 6 UAs have core cities that fit that. SF is one; all the others are east of the Mississippi.

    …Because not enough roads have been built. There are many freeways, but not enough lane-miles/person. CA’s 3 main metropolitan areas have about 25 million people (8% of US). The CA UAs are about double that of the average. Almost double the amount of roads per area would be needed, but no; CA’s lane-miles/person is very low.

    Density makes traffic worse. VMT per capita is fairly consistent, regardless of density. Based upon comparing UAs, a 10% increase in density has a 1% decrease in VMT, on average, it varies by region.

    Transit is way over-emphasized. I know from the MTC (the MPO) that the Bay Area spends twice that of roads for transit, yet the roads have more than 20 times as many passenger-miles. And the car user fees pay for about all road spending, whereas the farebox recovery is 1/3 or less. That’s a terrible ROI.

    A $0.40 increase in the CA gas tax would raise $billions, and pay for the necessary upgrades.

    Think about the future. In 5-10 years there will be affordable cars with no emissions, so that won’t be a concern. If roads are not expanded, congestion will be horrendous then, but without pollution. Also, a non-gas user fee will have to be transitioned in.

  2. D4P says:

    California Thieves Steal Money Transit Stole from Highways

    Who’d the highways steal the money from?

  3. craig says:

    Who’d the highways steal the money from?
    D4P

    The fuel tax and the users

  4. bennett says:

    “Congestion is increasing everywhere. This emphasis on transit is just allowing the congestion to worsen & not addressing proper solutions–more lanes.”

    Nice try. That’s just as big of a lie. Lets get one thing straight right now; rail transit nor highway expansion decreases congestion (see Denver’s T-Rex or any number of other massive lane additions in Dallas, Houston, Atlanta etc. etc. etc.). And here in Austin toll roads have made congestion much worse on every road that isn’t tolled. In growing American cities there really is no solution to congestion. Congestion is actually somewhat of a blessing in disguise, because it is an indicator of economic vitality. Here in Austin, since the layoffs at Dell, Freescale, AMD, and Samsung I’ve noticed less rush hour traffic. I’ve heard that there has been very little congestion in Detroit for some time now. So why argue for transit? First, it a nice choice to have in order to avoid driving (in congestion/drunk/tired/while reading/etc.). Second, it is often the only viable option for the poor and disabled. I’m just as tired of hearing rail supporters claim that transit will reduce traffic as all of you antiplanners, but I’m even more tired of hearing how highway expansion will reduce congestion. Both have been proven false time and time again in American cities.

  5. the highwayman says:

    craig Says:
    Who’d the highways steal the money from?
    D4P

    The fuel tax…..

    THWM: Now if only that were true. http://www.teslamotors.com/

  6. Dan says:

    I like the implicit argument for expanding road lanes to address congestion:

    “Eminent domain for me, but not for thee”.

    Sweet.

    Not to mention that the expanding cycle of congestion will mean business for lawyers for years, including the next cycle of Eminent Domain when the oil gets too expensive, then who gets all that concrete?

    Sweeeeet.

    DS

  7. msetty says:

    The Antiplanner:
    But the ever-hungry transit lobby effectively stole some of that money by convincing the state legislature to divert some gas taxes and most Diesel taxes to transit.

    Well, not really.

    I’m not aware of any diversion of per gallon fuel taxes to transit in California. The biggest chunk of transportation funding for transit is obtained from sales taxes.

    In 1971 in order to pay for local transit, the California State Legislature passed the Mills-Alquist-Deddeh Act, otherwise known as the Transportation Development Act (TDA). In order to pay for this 0.25 percent share of sales taxes for transit, the Legislature expanded sales taxes to gasoline and diesel fuel–perhaps this is the “theft” The Antiplanner is referring to.

    To date over nearly 40 years, highway/automobile apologists have yet to provide a convincing reason why gasoline should have been, or should, be exempted from sales taxes–unlike virtually every other materials and goods in this state.

    In the past few years, the revenues generated from the sales taxes on gasoline and diesel have regularly exceeded the amounts generated by the overall TDA 0.25 percent sales tax rate, which led to more than one state constitutional amendment earmarking the excess over the 0.25 percent to transportation, on an 80% roadway/20% transit split, by the way. Of course in the past few years, neither roads nor transit saw much of what was supposed to be substantially higher revenues, because the Legislature diverted this funding to the state budget deficit.

    Overall, I think The Antiplanner could get in over his head if he wants to continue his indicated course of financial reasoning–as he has in the past, consistently ignoring the identifiable public costs of automobility NOT covered by various taxes and fees, let alone calculable private impacts such as the actual cost of “free parking,” medical costs not covered directly by automobile insurance, and other financial impacts–which are smaller than the first few mentioned but legion.

    Let’s not forget the negative impact on the environment, of course, such the auto’s share of global warming and other negative climate change. I don’t know the source exactly yet, but just the other evening, some scientists are virtually certain that the S.F. Bay Area will shift to a climate similar to Los Angeles within the next few decades, thanks to global warming. Of course, this will have tens of billions annually negative impacts on agriculture and the economy in California alone. The Antiplanner’s local climate in Oregon would be more like Mt. Shasta or Yreka, rather than what is now where he domiciles!

  8. msetty says:

    Is there anyone reading The Antiplanner’s blog who is QUALIFIED to argue with Dr. Stephen Chu?

    http://www.guardian.co.uk/environment/2009/feb/04/steven-chu-obama-climate-change-drought

    (Thought not!)

  9. Kevyn Miller says:

    msetty, There is nothing in the Gaurdian article related to transit. Unless msetty is just being mischevious and conflating electric transit with diesel transit. Whilst electric transit is less carbon emitting per passenger mile than autos that is not true for diesel bus services. Unfortunately buses carry several times more passenger miles than trains do.

  10. Lorianne says:

    I’m surprised California doesn’t have a referendum to decide where every dollar of tax money goes. They seem to referendum everything else.

    It would be interesting to see what array of programs/services a direct vote would entail.

  11. lgrattan says:

    msetty – Dr Chu the last word.
    As a student a few years back at SJSU we were taught that it was Global Cooling and also there was ONLY ten years of OIL left. So much for esperts.

    Also: San Jose a few years back built HY 280 that Randal some where describes of how it did reduce congestion.

  12. the highwayman says:

    lgrattan Says:
    msetty – Dr Chu the last word.
    As a student a few years back at SJSU we were taught that it was Global Cooling

    THWM: That’s why it’s called climate change.

    So much for the summer of 1816.

    lgrattan: and also there was ONLY ten years of OIL left.

    THWM: Most peak oil stuff touches on the supply side of a curve, there is a demand side too. Though this still doesn’t mean people should take liberal attitude towards things in life.

    lgrattan: So much for experts.

    THWM: A lot of this is just educated guessing.

  13. Dan says:

    The IEA is finally stating that the oil is running out. And I did metro at SJ State distance learning for a year and I never heard ‘globul coolin’. But I was in science classes and not pop culture or marketing.

    We know the globul coolin is a talking point, so lets move on.

    DS

  14. the highwayman says:

    Kevyn Miller Says:
    msetty, There is nothing in the Gaurdian article related to transit. Unless msetty is just being mischevious and conflating electric transit with diesel transit. Whilst electric transit is less carbon emitting per passenger mile than autos that is not true for diesel bus services. Unfortunately buses carry several times more passenger miles than trains do.

    THWM: It’s just that trains cost half as much as buses to operate.

  15. Kevyn Miller says:

    THWM: “It’s just that trains cost half as much as buses to operate.”

    And ten times more to buy (per seat)including the cost of the supporting infrastructure that only trains need.

    Incidently, my original response to msetty was substantially by that fact that I live on an island with 100% hydropower. Ergo any form of electric transport will be more climate friendly than any form of liquid fueled transport. Of course thats not true in places where the electricity comes mainly from coal or gas fueled power stations.

  16. Kevyn Miller says:

    msetty asked “Is there anyone reading The Antiplanner’s blog who is QUALIFIED to argue with Dr. Stephen Chu?

    http://www.guardian.co.uk/environment/2009/feb/04/steven-chu-obama-climate-change-drought

    (Thought not!)”

    Hopefully msetty intended ‘argue with’ to mean both argue for and argue against. If so then “(Thought not!)” is a very honest closing comment.

  17. the highwayman says:

    Kevyn Miller Says:

    February 6th, 2009 at 10:00 pm
    THWM: “It’s just that trains cost half as much as buses to operate.”

    And ten times more to buy (per seat)including the cost of the supporting infrastructure that only trains need.

    THWM: Though the life span of rail equipment is longer too.

    BRT projects end up costing more money in the long run than rail.

    I’m not saying that buses don’t have their place, but trains have their rightful place too.

  18. msetty says:

    “Hopefully msetty intended ‘argue with’ to mean both argue for and argue against. If so then “(Thought not!)” is a very honest closing comment.”

    I meant I serious doubt there is anyone with the scientific credentials and the command of the science that Dr. Chu presumably has as a physicist.

    While someone may accuse me of the “appeal to authority” fallacy here, I’d say it is much less of a fallacy when highly trained scientists are concerned, as opposed to say, people who mainly use rhetorical arguments in the comments section of a blog, or “social scientists” like economists who too often are preaching a highly politicized mantra–like so-called “classical” (sic) economics or “Austrian” economics, the latter arguing that empirical evidence is irrelevant.

    While real scientists like Chu tend to shoot themselves in the foot rhetorically by consistently pointing out the uncertainty inherent in hard science, they have much stronger evidence and data than garden variety blog commentarians.

  19. Kevyn Miller says:

    msetty, I wholeheartedly agree with what you say in your last comment. Hopefully Dr. Chu will bring that same degree of scientific rigourousness to bear on the various ‘solutions’, something that really hasn’t happened to date, at least for transportation.

    I must say that I find most of the work of transport planners, and particularly sustainable transport planners, to be firmly in the social science arena rather than being rooted in the physical sciences but that most of the practioners pretend or pretext that their discipline is ‘scientific’ when in fact it is a discipline ratehr than a science. While it is easy to be scientific in studying and describing the behaviour of inanimate objects it’s a different story when the perversities of human behaviour have to be factored. Then the best you can hope for is to be disciplined in your approach.

    To a considerable extent the social sciences are disciplined until they enter the realms of public policy. At that point they sucomb to political influence (in it’s loosest meaning) and get subsumed by idealogues and their rhetorical arguments.

    Hence they social sciences are great fodder for blogs whereas the physical sciences don’t really stimulate spirited debates. Too bland by far.

    While I alwasy enjoy a spirited debate, as an experienced systems analyst I do like to see the supporting evidence whnever somebody is arguing their opinion as self-evident fact.

    That’s also why I frequently point out possible problems with APs statistics.

  20. prk166 says:

    Bennett, I agree with you that that congestion is more complex than something that can be simply addressed by building more lanes or more rails. But I have a hard time seeing how one would feel that T-Rex hasn’t reduced congestion. Yes, I-25 still has congestion. But it’s a lot better than it used to be. And had nothing been done it would be even worse. I don’t think the goal should be to eradicate congestion but doing nothing will only allow it to grow worse.

  21. msetty says:

    Kevyn:
    “That’s also why I frequently point out possible problems with APs statistics.”

    While I do respect a lot of the work that The Antiplanner does–particularly when he dives into and summarizes National Transit Database data every year, so I don’t have to!–I also see the shortcomings in much of his analysis.

    The two biggest bugaboos are The AP’s treatment of transit capacity, particularly rail, and the consistent pointing out of the “low market share” for transit, both here and in Europe, as shown in the previous article before this thread.

    As I’ve pointed out numerous times in the past here, the peak period capacity carried by a transit line is the proper comparison, rather than the “all day” number. It is more useful to know that a transit line carries, say, one lane equivalent capacity during the peak periods, rather than only half the equivalent lane capacity all day. This is mainly because roads are generally planned to be as wide as the PEAK capacities projected. The second point is that at least in U.S. urban areas, there is really no “market” situation in terms of traffic. If peak period traffic, particularly on limited access roads were priced, parking was priced, and other automobile externalities “internalized,” we would see much higher transit ridership and significantly lower auto traffic in a given urban corridor. In many cases, much road capacity could prove redundant.

    Second, as someone previously mentioned in the previous European thread, in many cases a 0.5 or 1.0 kilometer walking trip may be the functional equivalent of a much longer trip by automobile–for the person making the trip. In San Francisco, research has shown that residents make slightly more daily trips overall that suburban residents, mainly by walking. So just because someone may have as much “mobility” as someone else, perhaps they have just as good “accessiblity” to daily activities, certainly the case in most of Europe where “walkable” areas are still ubiquitous, but unfortunately in much fewer cases in the U.S., such as San Francisco, New York, and Boston.

  22. Rivlin says:

    msetty,

    Both peak and average transit and road usage are relevant, depending on the particular cost or benefit that is being evaluated and compared. AP discusses each of them where appropriate. The low market share of transit is obviously relevant to a number of issues, including land-use issues and public funding.

  23. the highwayman says:

    Rivlin Says:
    Both peak and average transit and road usage are relevant, depending on the particular cost or benefit that is being evaluated and compared. AP discusses each of them where appropriate. The low market share of transit is obviously relevant to a number of issues, including land-use issues and public funding.

    THWM: Well that’s a “Catch 22”.

  24. msetty says:

    Rivlin:
    “…Both peak and average transit and road usage are relevant, depending on the particular cost or benefit that is being evaluated and compared…”

    Your point, beyond trying to nitpick?

    Peak road and transit usage is the most relevant to the most important factors, e.g., those that determine the sizing, and much of the capital costs, of either option.

    Also, The AP more often than not misses important points, or compares apples to oranges, not a nitpick. A good example is The AP’s recent Independence Institute analysis of the Denver RTD rail system, where he compared inflation in rail capital costs to the CPI. However, the comparison would have been more valid if it had been compared to the road construction cost price index for Colorado (since both road and transit construction use a lot of steel and concrete, this is an excellent comparison). Using the construction cost index would have revealed rail cost inflation in the same ballpark as Colorado roadbuilding, and thus would hardly be such the “big deal” as claimed by The AP’s paper.

  25. Rivlin says:

    msetty,

    Your point

    You claimed “the peak period capacity carried by a transit line is the proper comparison.” That’s not true. It depends on the issue. Modal comparisons of energy-efficiency and cost per passenger-mile, for example, are determined by total usage, not peak capacity. You don’t seem to be clear on whether you mean capacity or usage, either. You now say the “most relevant” measure is peak usage rather than peak capacity. Your claim that peak usage is “most relevant” to “much of capital costs” doesn’t make much sense, either. The relationship between peak usage and capital costs may be weak. Your whole argument is very confused.

  26. Dan says:

    I’m confused about the recent uptick in conservatarian rhetoric using ‘confused’ when rebutting opponents’ assertion. Is this a new marketing theme for Limbaugh?

    DS

  27. msetty says:

    Dan:
    “I’m confused about the recent uptick in conservatarian rhetoric using ‘confused’ when rebutting opponents’ assertion. Is this a new marketing theme for Limbaugh?”

    Appears to be, at least on this blog. I’m reminded of the old “Eliza” computer program in some of the responses here. I guess this happens when the opponent has no real arguments and is just confused. about how peak usage typically has a big influence on the sizing of a facility. Must be an economist!

  28. msetty says:

    Rivlin:

    You failed to address my point about The AP’s flawed analysis of the Denver RTD rail program for the Independent Institute. Are you confused about its importance as an example of his work?

  29. Rivlin says:

    You failed to address my point about The AP’s flawed analysis of the Denver RTD rail program for the Independent Institute.

    You’ll have to clearly describe the nature of the alleged flaws before I can do that. What specific claims or arguments are you disputing, and what do you think is wrong with them?

  30. msetty says:

    A ha! We are dealing with an “Eliza” top program.

    Go back and reread No. 24. If you don’t understand my point in the last paragraph, I really don’t care now. Post what you want; I may or may not care.

    Here is the link to The AP’s Denver RTD paper in case you missed it: top of page http://www.i2i.org/main/page.php?page_id=85. I’m referring to Randal’s Item 1 and 2 in this report.

  31. Rivlin says:

    msetty,

    No, I don’t understand your point. If you think items 1 and 2 are false or misleading, then you need to explain clearly why you think that. I doubt I’m the only one having trouble understanding the precise nature of your complaint.

    If you don’t want to do that, fine. There’s nothing to answer.

  32. msetty says:

    Rivlin:
    “No, I don’t understand your point. If you think items 1 and 2 are false or misleading, then you need to explain clearly why you think that.”

    Because in his Denver RTD paper, The Antiplanner used the wrong inflation indices (the CPI) to claim big rail cost overruns that actually were no more egregous than that for roads; why he didn’t use a construction cost index is not clear to me. The CPI is NOT the correct one to use for construction costs because it measures a different basket of goods and services than construction cost indices. Since Clinton tinkered with the CPI in the early 1990’s, it has increasingly been an ongoing lie understating actual real world inflation, BTW. Evidence here: http://www.shadowstats.com.

    If you don’t get how different inflations measurements work, you’re either an idiot or an ideologue just trying to win a few worthless debating points.

    In either case, my participation in this increasingly pointless thread is over, except for one question: Are you any relation to Alice Rivlin, former OMB director, among other things, and someone IMHO who has a track record of being dense on a number of things, particularly the value of infrastructure projects?

  33. Rivlin says:

    msetty,

    Because in his Denver RTD paper, The Antiplanner used the wrong inflation indices (the CPI) to claim big rail cost overruns that actually were no more egregous than that for roads;

    First, AP’s point is that the actual cost exceeded the original estimate (whether adjusted for inflation or not) and that RTD’s claim that the light rail line was on budget is therefore a deception. Whether or not road projects in Denver have also overrun their budget estimates is wholly irrelevant to this point. (And you haven’t produced any evidence to support your own claim that the light rail cost overrun was “no more egregous than that for roads” anyway. Not that it would invalidate AP’s point even if that claim were true).

    Second, AP didn’t use any inflation index. He cited data from a report of the Transportation Research Board of the National Academies, which provided inflation-adjusted figures. You keep referring to the CPI, but nowhere in either AP’s paper or the TRB report is the CPI even mentioned. So where you got that from I have no idea. If you’re asserting that the TRB data does not reflect the true inflation rate for the project, and that applying the true rate would invalidate AP’s claim of deception, it’s up to you to produce evidence to support that assertion. You haven’t done that.

    And by the way, calling me an idiot and making other such ad hominems does nothing to support your assertions, either. It just makes you look even more foolish.

  34. msetty says:

    Rivlin, you’re still wrong on key details. I stand by my analysis and repeat my assertions based on that analysis.

    It’s not clear why The AP claims on page seven of his report that the Southwest LRT line in Denver came 28% over budget, “after inflation.”

    Well, let’s take a look. See http://www.bls.gov/schedule/archives/cpi_nr.htm for documentation of the CPI. According to BLS, the CPI in July 1994 was 145.8 (when the original Southwest Corridor cost estimate of $127 million was calculated); in June 2000, the CPI was 172.3, up 18.2% in 6 years. The Southwest LRT line should have cost no more than $150 million if costs stayed at the CPI “inflation” rate. But as reported by The AP and the Dantata, Touran, and Schneck paper presented at the 2006 TRB meeting, the actual cost was $177 million upon project opening.

    When you apply the most relevant construction cost indice–Colorado road construction indices, available at http://www.wsdot.wa.gov/biz/construction/constructioncosts.cfm–the Southwest LRT line actually came a bit UNDER inflation, as measured by the COLORADO construction cost indices I’m referencing here.

    The Colorado indice was at 119 in 1994 and 171 in 2000, up 43.6%. Applying this to the original 1994 $127 million estimate for the Southwest LRT line by completion in 2000, the result is $182.5 million if the project had exactly tracked the Colorado construction cost indice. Actually, by this measure, the Southwest LRT line came about 3% under construction cost inflation in Colorado between 1994 and 2000.

    Where The AP came up with “28% higher after inflation” still beats me, and based on this, I seriously doubt his other numbers; however, I’m too lazy tonight to do any more number crunching, and I don’t think I need to.

  35. Rivlin says:

    msetty,

    It’s not clear why The AP claims on page seven of his report that the Southwest LRT line in Denver came 28% over budget, “after inflation.”

    It’s right there in the TRB report AP cites. Original estimate, in YOE dollars: $138 million. Final cost, in YOE dollars: $177 million. Overrun: $39 million, or 28%.

    Well, let’s take a look. See http://www.bls.gov/schedule/archives/cpi_nr.htm for documentation of the CPI.

    There you go again with this CPI nonsense. Neither AP nor the TRB report he cites even mentions the CPI. The TRB isn’t using the CPI. In fact, in its discussion of inflation adjustment, the TRB report explicitly says:

    Inflation rates are published regularly by various sources. More specific to construction, there are cost indexes that track costs of various construction items on a monthly or yearly basis. These indexes are used to compare costs in different years and can be used to forecast costs of future projects.

    I suggest you try reading the material you’re presuming to criticize before making any further comments.

  36. Kevyn Miller says:

    Rivlin, The correct reference is the one cited by AP in his paper: page 55 of
    http://onlinepubs.trb.org/onlinepubs/tcrp/tcrp_rrd_78.pdf

    Booz Allen Hamilton, Inc., are quite specific that they are using the Consumer Price Index to calculate YOEdollars in order to “…tracks the change in capital costs from the initial planning estimate to the completion of project development, with the final project cost in the YOE dollar value.”
    Very simply, msetty is arguing that the cost overrun identified by AP as Deception 1 is actually due to the difference between the Consumer Price Index and the Construction Price Index over the project timeframe, and that highway projects are equally susceptible to this source of cost overruns. In #34 msetty provides sources for these two indices between 1994 and 2000 which show the CrPI had increased at twice the rate of the CPI. I have seen internal memos from several highway agencies stating that that trend has continued at least up till last year.

    However, I think the original point that you made is valid: “Both peak and average transit and road usage are relevant, depending on the particular cost or benefit that is being evaluated and compared. “

  37. Rivlin says:

    Kevyn Miller,

    Rivlin, The correct reference is the one cited by AP in his paper: page 55 of
    http://onlinepubs.trb.org/onlinepubs/tcrp/tcrp_rrd_78.pdf

    Yes, I know the correct reference is the one cited by AP in his paper. That’s why I wrote: “He cited data from a report of the Transportation Research Board of the National Academies.” The full report is available via this link: http://www.trb.org/news/blurb_detail.asp?ID=6908. Your link above references only a summary digest of the report that does not include the data AP cited from page 55 of the report, or the discussion of inflation.

    Booz Allen Hamilton, Inc., are quite specific that they are using the Consumer Price Index to calculate YOEdollars in order to “…tracks the change in capital costs from the initial planning estimate to the completion of project development, with the final project cost in the YOE dollar value.”

    Nonsense. The TRB report doesn’t even MENTION the CPI. The discussion of inflation explicitly states that inflation rates were calculated using a number of indexes, including those relating specifically to inflation rates for construction items.

  38. Kevyn Miller says:

    Rivlin, Thanks for providing the correct link.

    The discussion of inflation explicitly states that inflation rates can be calculated using a number of indexes. The report never explicitly states which indices were used to calculate the initial inflation adjustments for the 12 projects that reported in planning year dollars. Therefore one must assume that they were using a standard methodology to calculate real dollars, and there is only one of those – the CPI.

    But this whole discussion is unnecessary because the appendices provide details of the various factors that caused the cost overruns for each project, and those don’t support msetty’s argument.

    Adjusting the initial cost
    estimate into year-of-cost-estimate dollars to account for the project development
    schedule increased the estimate by $10.5 million (8.2 percent), resulting in a baseline
    planning estimate of $138.0 million. Project costs then increased from the baseline
    planning estimate due to changes throughout project development:
    • The Southwest Line experienced one major schedule delay, shifting the estimated
    midpoint of construction from 1995 to 2000. This increased project costs by about
    $15.1 million (10.9 percent of the baseline).
    • The remaining $24.0 million increase (17.4 percent of the baseline) was due to scope
    and unit cost changes introduced into the project over the developmental period.”

    The literature review in the TRB study does, however, conclude that highway projects exhibit the same or greater magnitude of cost over-runs and suggests that the reasons for this are the same for transit and highway proposals. Essentially they are lying until the project has been “sold”. The real argument is whether the benefits and subsidies are also being lied about equally by transit and highway project proponents. That’s the sort of discussion that really livens up this blog!

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