USA Today thinks the federal government needs to spend more on infrastructure. An opposing view suggests that most of any spending increases would go for unnecessary new projects, not for repair of existing infrastructure.
Certainly, something must be done about the impasse over the federal transportation bill. But increased spending isn’t necessarily the solution; we first need to make sure that the money that is being spent is going to the right places.
The House of Representatives voted yesterday to extend federal funding for highways and transit for two months. The Senate is expected to pass similar legislation later this week. While transportation bills normally last for six years, this short-term action, which followed a ten-month extension last fall and a two-year extension in 2012, has proven necessary because no one has been able to rustle up a majority agreement on the federal role in transportation.
For those who haven’t followed the issue, the federal government collects about $34 billion a year in gas taxes and related highway user fees. Once dedicated to highways, an increasing share has gone for transit and other uses since the early 1980s. Compounding this was a decision in 1998 to mandate that spending equal to the projected growth in fuel taxes. When fuel tax revenues stopped growing in 2007, spending did not, with the result that annual spending is now about $13 billion more than revenues.
Under Congressional rules, Congress must find a revenue source to cover that deficit. The Antiplanner’s colleague at the Cato Institute, Chris Edwards, thinks that the simple solution is for Congress to just reduce spending by $13 billion a year. That may be arithmetically simple, but politically it is not as too many powerful interest groups count on that spending who have persuaded many (falsely, in my opinion) that we need to spend more on supposedly crumbling highways.
Boston’s Massachusetts Bay Transportation Authority (MBTA) is $9 billion in debt. It has at least a $3 billion maintenance backlog. It must spend $470 million a year just to keep that backlog from growing, but its maintenance budget this year is just $100 million. So when Boston shoemaker New Balance said that it was willing to spend $16 million building a new commuter rail station next to its headquarters, and to pay to maintain that station for the next decade, Boston transit officials were overjoyed.
The Atlantic calls this a public-private partnership. While it might be considered appropriate that employers help pay for transit stops that serve their employees, there’s another question no one else seems to be asking: how much will the transit line to serve this stop cost taxpayers?
The station is on a transit line that recently has had poor commuter-rail service because the passenger trains conflict with freight trains. In 2011, the state had to pay CSX $100 million to move most of its freight trains elsewhere. Since then, the state has spent more than $40 million upgrading the line. While New Balance might pay to maintain the station, taxpayers will have to pay to operate trains on the route.
Last week, San Antonio voters overwhelming approved of a measure forbidding the city’s transit agency from building any rail transit lines without voter approval. While that seems like a no brainer, opponents contended that it was unfair to single out rail transit for such a measure just because rail cost 50 to 100 times as much as bus transit.
Meanwhile, Maryland Governor Larry Hogan is still trying to decide whether to cancel the $2.5 billion Purple Line (not to mention Baltimore’s $3 billion Red Line). Rail supporters were disappointed that he cut tolls on bridges and toll roads, since they figured that any surplus tolls should have gone to their pet project.
Rail supporters are claiming that the evil Cato Institute is leading a major campaign to undermine their plans. In fact, with the exception of the Antiplanner and maybe one other person, no one at Cato has put much thought into the Purple Line, as they are working on such relatively trivial things as reducing conflict in the Mideast, improving health care, and keeping government from watching everything we do.
The Antiplanner traveled from Louisiana back to Oregon yesterday and didn’t have time to write a lengthy post. So here is an op ed for your consideration. It briefly summarizes a report about federal funding of rail transit published by the Cato Institute last week.
Speaking of rail transit, rail systems in Boston and Washington have gotten so bad that a private bus company is attempting to replace them. Offering free WiFi, flexible pick-ups and drop-offs responsive to smart-phone apps, and prices “slightly more than public transit but significantly less than taking a taxi,” Bridj is providing service between major suburbs and downtown Boston and between Dupont Circle and Capitol Hill in DC.
Voters in the Spokane, Washington area appear to have rejected a proposed 50-percent increase in the sales tax used to support transit by a small margin this week. At the latest count, the vote was 50.5 percent against the tax and 49.5 percent in favor of it.
Click image to download the “public education” flyer distributed by Spokane’s transit agency.
A few hundred votes remain to be counted, but almost all of them would have to favor the tax to turn the election around. The measure lost despite the fact that the transit agency used taxpayer dollars to promote the measure with a one-sided “information mailer” distributed to voters. Tax proponents vowed to bring the tax back to the voters, saying that those who supported the tax did so with “a strong majority.”
Hampton Roads Transit, which serves Norfolk, Virginia Beach, and Newport News, is having a difficult time. Ridership for the first seven months of fiscal 2015 (which began in July) is down 9 percent from 2013, and 2013 ridership wasn’t so hot in the first place. Financial records show that the revenue per rider, at 98 cents per trip, is 8 cents more than the agency’s target, but the cost per rider, at $5.41 per trip, is 73 cents less than targeted, so fares are only covering 18 percent of operating costs.
Click on the image to go to the page where you can download the draft environmental impact statement–comments due May 5.
What to do in this situation? For any transit agency, the solution is obvious: build more light rail. The region’s one light-rail line opened 16 months late and cost 60 percent more than projected. It was supposed to carry 10,400 riders per weekday in its opening year; it actually carried less than 4,400. While it was up to 5,500 in 2013, the 23 percent drop in light-rail ridership so far in 2015 suggests that the average this year will be even less than in the opening year.
The Washington Metropolitan Area Transit Authority (WMATA) is increasingly dysfunctional. DC’s subway system is designed to run eight-car trains but due to lack of equipment two-thirds of the trains operating during rush hour have only six cars even though they are packed full of people. WMATA has asked Virginia, Maryland, and DC for nearly $1.5 billion so it can purchase new equipment and upgrade its system to allow a return to eight-car trains.
The Maryland secretary of transportation, Pete Rahn, says the state is reluctant to give hundreds of millions of dollars to an agency as poorly run as WMATA. As an example of poor management, Rahn pointed to a dispute among the agency’s board over what kind of person should replace the agency’s general manager, Richard Sarles, who retired from his $366,000 a year job in January.
Some on the board wanted to hire a “turnaround expert” who could restore the agency’s fortunes. Others wanted to hire someone with more experience in the transit industry. The dispute became so serious that the mayor of Washington proposed to dismiss board member (and last year’s board chair) Tom Downs, who favored hiring someone with more transit expertise, because he disagreed with the mayor’s desire for a turnaround expert. In response, three candidates who were being considered for the job withdrew their applications.
The Antiplanner was in Spokane yesterday where the local transit agency is asking voters for a 50 percent increase in the sales tax that funds most of the agency’s operations. Much of the new money will go for various capital projects that will do little to increase ridership.
$1.2 million will buy you a bus that can go 170 miles on a single charge of batteries. The bus has 60 seats, which is just what is needed in Spokane, where the average bus carries just 9 people.
Spokane Transit previously persuaded voters to double the sales tax in 2004. The improvements made with that money led to a small increase in per capita transit ridership from about 25 trips per person per year to 27. Based on this, it doesn’t seem likely that another 50 percent increase in funding will do much to boost ridership.
During the Antiplanner’s visit to Washington DC last week, I tried to encourage people to think about the incentives created by federal transportation funding. But the first question on the minds of most of the people I talked with was, “How will we pay for highways and transit?”
From outside the Beltway, this question almost seems like nonsense. In fact, no one would have ever asked this question before 2008. When Congress set up the Highway Trust Fund in 1956, it decided to spend the money strictly on a pay-as-you-go basis, meaning it wouldn’t spend any more than was collected in gas taxes and other highway revenues (mainly excise taxes on cars, trucks, and tires, most of which have since been repealed).
Pay-as-you-go had a disadvantage: when inflation hit, it seriously slowed the pace of construction because the gas tax wasn’t indexed to inflation. But the policy also had an advantage: since no one was borrowing money against anticipated future revenues, nearly all of the revenues could go for construction rather than a significant chunk going for interest and other finance charges.