Tag: "Transportation"

Transportation Budget from the White House – Deja Vu All Over Again

It is that time of year for a President Obama transportation tradition. Each of the past six years, the President has sent a transportation proposal, concept, or list of guidelines to Congress. And each year Congress, in a bipartisan manner, has rejected the President’s proposals as being completely unreasonable. Some hoped, with the prospect of corporate tax reform, that this year’s budget would be different. But while somewhat better than past years, this year’s budget is still an unrealistic document that is more focused on politics than policy.

The White House submitted a $95 billion budget request for USDOT for fiscal year 2016. The budget is a $22 billion or 31% increase, over 2015. And the Administration proposes to achieve this increase by removing Amtrak, transit new starts grants, TIGER grants, high speed rail funding, and a few other items controlled by the Appropriations committee. If this sounds familiar it is because the White House has submitted a variation of this proposal for the last several year; it has been rejected on all occasions in a bipartisan manner.

The first problem with this approach is it takes power out of the Appropriations committee and gives it to the White House. Appropriations committee members like the power of the purse and are unlikely to give it up even if they and the President agree on transportation policy.

The second problem is this proposal changes the fundamental users-pay/users-benefit nature of the highway trust fund. Both roadway and transit interests have dedicated funding in the current system. While transit might receive more funding under the President’s proposal, the funding is not guaranteed so it is unclear they would support this change. Other than passenger rail interests, it is unclear who would support this change.

The final and biggest problem is finding the money to pay for this proposal. The President is proposing a 14% tax on repatriated profits. However, there is bipartisan consensus that 14% is too high. Senators Boxer and Paul have introduced a 6% rate which is far more likely to pass. But the 6% does not provide enough money to fund the proposal. And both taxes are short-term fixes that do not provide the long-term certainty the transportation community is seeking.

For the seventh year in a row, the White House has proposed an overtly political budget which has no chance of passing. It is déjà vu all over again.

Feb 18, 2015 | Leave a Comment | by

California High Speed Rail Advocates Want to Ignore Law

The California high-speed rail project is an out-of-control train careening down the tracks. Everybody knows the project is a disaster in the making. But Governor Jerry Brown and California’s political elite are so enamored with being remembered, they are less concerned with whether it is in a good or a bad way. Earlier this month, the authority broke ground on the first planned section between Madera and Fresno.

For those keeping track, the proposed high speed rail line has no realistic funding plan and uses wildly optimistic and unrealistic ridership forecasts. It has violated the language of its 2008 bonds by providing far slower service than initially proposed. It plans to use gas tax funding from an environmental protection plan to help build the train even though the California Air Resources Board found that high speed rail will increase greenhouse gas emissions for the near term.

The past few months have brought one more twist. Since its inception, the rail authority has promised that the project would comply with the California Environmental Quality Act (CEQA). But after plaintiffs filed seven different lawsuits, the California High Speed Rail Authority asked the Surface Transportation Board (STB) to invalidate these lawsuits arguing that the project only has to comply with federal guidelines that they say have been cleared because of regulatory approvals of the 114-mile Fresno to Bakersfield segment. In late December, the STB agreed with this dubious logic. However, the plaintiffs have promised to appeal and most experts doubt the Supreme Court will side with the STB.

A previous attempt by state lawyers to argue that CEQA was negated by federal approvals was rejected by a Sacramento appeals court. Further, the state Supreme Court declined to hear an appeal of a bullet train case in a similar case.

The authority’s spokesman says this isn’t an attempt to get around CEQA just an attempt to “clarify” matters. But it is clear the only reason the authority does not want to go through CEQA is because it will slow down of potentially cancel construction of the rail line.

The federal Surface Transportation Board consists of three appointees of President Obama who has strongly supported rail with earmarked high-speed rail funding and Transportation Investment Generating Economic Recovery (TIGER) grants. So the authority is making an end-run around the law which they ideologically support to get the train built. And they are turning to their political friends in the federal bureaucracy to ensure they can get away with ignoring the law. How many laws and rules will California politicians ignore to get this train built?

 

Feb 16, 2015 | 1 comment | by

Increasing Transportation Funding Without Raising Taxes

Many state departments of transportation are facing a perfect storm. As parts of their Interstate systems reach the end of their design life, the gas taxes which make up most of their funding stream are declining in real value due to inflation and increased fuel efficiency.

There are two solutions to this problem. The first is to go on a public crusade convincing citizens that roads are crumbling and stress the need for a major tax increase is urgent. The second is to acknowledge the problem but try to work with the existing revenue to solve the problem. The second solution is better from a policy standpoint, because states typically need small increases in funding which can often be found in the existing budget. But it is also better from a political standpoint. Everyday, taxpayers drive on roads, most of which are not falling apart. When politicians and transportation officials start claiming the sky is falling, people don’t believe them. When taxpayers think politicians are lying, they are less likely to support giving any new funding for transportation, even if it from resources which are being inefficiently used.

The Georgia Legislature is working on a package to increase transportation funding without increasing taxes. Currently, only approximately 52 percent of the gas tax revenue in Georgia supports transportation. The other 48 percent supports items in scope ranging from construction of school buildings to homestead exemptions, mostly good projects but irrelevant to transportation. By pushing to dedicate all revenue to transportation, both one-percent of a four percent gasoline sales tax, and gasoline sales for special purposes around the state, the state can generate almost a billion dollars in additional revenue a year. The legislation includes additional bonding and an electric vehicle fee but it is mostly revenue neutral. In fact, for many people, it will be a tax decrease. The gas tax assumes a sales tax on gasoline of 6 percent. But the average sales tax in Georgia is actually 7.2 percent with many counties paying 8 percent.

Of course not everybody in Georgia get the message on choosing option two over option one. Special interests want an additional $5 billion per year which would represent a 250 percent funding increase. Some of these interests suggest that Georgia would cease to be competitive if transportation does not receive all of this $5 billion.

The plan still needs to pass both state houses and be signed by the Governor. And some tweaks would make it even stronger. But it is good to see a state that realizes it does not need a massive tax increase to fund its transportation system and a government that actually takes that advice to heart.

 

Feb 09, 2015 | Leave a Comment | by

Senators Plan to Raise the Gas Tax

The American public may be cheering falling gas prices, but they have Congress talking. Democrats and Republicans alike have started tossing around the idea of increasing the gas tax. This controversial proposal, while not exactly new, is gaining attention on Capitol Hill.

How much money are we talking?

According to the U.S. Energy Information Administration, household gasoline expenditures are set to be the lowest in 11 years, with the average family spending around $550 less in 2015 than in 2014.

The current gas tax sits at 18.4 cents per gallon for gasoline and 24.4 cents per gallon on diesel. Proposals have been floated by congressman and economists alike to raise the tax by around 12 cents per gallon, bringing the tax up to 30 cents per gallon for gasoline.

Who supports the tax, and why?

While much of the support for raising the gas tax comes from the left side of the aisle, it’s gaining support on the right as well. In June, Senators Bob Corker (R-TN) and Chris Murphy (D-CT) proposed raising the gas tax by 12 cents per gallon. Back in 2011, Senator Lamar Alexander discussed raising the gas tax to fill transit fund gaps.

Additionally, Senate Environment and Public Works Chairman James Inhofe, Senate Finance Chairman Orrin Hatch, and Senate Commerce Chairman John Thune have all expressed openness to discussing increasing the tax.

Most supporters of raising the tax suggest that the extra income should be used to compensate for the dwindling Highway Trust Fund to pay for much needed road and bridge work around the country. Supporters argue that the gas tax is less of a “tax” and more of a “user fee,” shifting the cost of road repairs to the people who use the roads.

Yet opponents to raising the tax argue that while it may seem fair, innovations like increasing miles-per-gallon and fuel efficiency reduce the uses for the tax. Senator Roy Blunt at a business roundtable:

They thought the people using the roads were paying for the roads, and everybody that’s trying to keep this transportation network in place is concerned about more miles per-gallon, more fuel efficiency standards, all actually put the same amount of traffic and weight on the road, but they reduce the amount of money you have to do anything about it. It’s a concern at all levels.

Jan 14, 2015 | 2 comments | by

U.S. Regulations Limit Private Transit

Many large, urban communities are interested in offering high-quality low-cost private transit service. But federal regulations and union rules make providing such service cost prohibitive. The following story examines transit service in an Atlanta metro county with the highest percentage of transit-dependent riders in the state. It shows how the private market offered high-quality service but could not succeed under the current regulations.

Clayton County voters were stuck with two mediocre options on November 5th. They could either vote to increase their sales tax by 1% and receive bus service and future high capacity transit, or vote no and receive no service. Consequently, Clayton residents voted for what they viewed as the best subpar option.

Clayton County used to have bus service. Back in 2001 The Clayton County commission entered into a contract with the Georgia Regional Transportation Authority (GRTA) — a statewide entity that provides transit service — to provide fixed-route bus service in Clayton County. In 2001, GRTA contracted with the Metropolitan Atlanta Rapid Transit Authority (MARTA) to run several bus routes in Clayton County. However, in 2004 upon examination of MARTA’s high costs, GRTA opened a competitive request for proposals to solicit alternative bids. At that time First Transit, a private operator, took over operations of the system. While First Transit ran a more efficient, more effective system, some folks clamored for a bigger system. With the assurances of MARTA that it could run a better system, Clayton County commissioners switched back to MARTA service in 2007. Soon after assuming control MARTA significantly increased the cost of providing its service. The Clayton County commission went along with this increase although it took money out of the budget for other priorities. However, after MARTA wanted another significant increase in funds in 2010 to provide the same services, the county commission balked and public transit service was discontinued.

After public transit service was discontinued, private transit services began operations. In 2010 Quick Transit, a private transit service, began operating service along four of the former C-TRAN routes. South Side Transportation and several other companies also began offering transit service in Clayton County using 7-15 person vans. While these companies were able to fill part of the gap in service, most operated illegally and were unable to market themselves. As a result, many Clayton County residents did not know such service existed. Private sector operations are not illegal because of safety or equity issues but because government regulations subject privately run services to pointless regulations such as uniform color and transit vehicle size that make it challenging for private services to compete with government services. Such laws provide government services a near monopoly and guarantee that private agencies will be unable to fill the void.

The best option, short of private service, is contracted service. Many transit agencies throughout the country contract out service. Ridership and cost data show that such service is both cheaper and of better quality. Agencies that contract out service have farebox recovery rates of over 40% while the typical in-house rate is less than 30%. Outside agencies have a higher percentage of their vehicles on time and a smaller breakdown rate. While this option is not as ideal as true private service, it offers significant advantages to the status quo.

 

Dec 17, 2014 | Leave a Comment | by

Metropolitan Planning Organization Long Range Plans Should Focus on Mobility

All metropolitan areas around the country are required to draft a long-range transportation plan. Congress mandated long-range plans when it passed the Intermodal Surface Transportation Equity Act (ISTEA) of 1991. Congress’ intent was for metropolitan areas to plan for the regional movement of people and goods.

Unfortunately, many of today’s regional transportation plans include all sets of non-measurable goals that have nothing to do with transportation. Parts of the planning process have been captured by special interests that are seeking to use transportation funds for non-transportation purposes. Let’s examine one of the more “realistic” plans — Los Angeles — in more detail.

The planning framework is one of the biggest problems. Past plans would focus on quantitative goals to improve mobility such as decreasing the travel time from Los Angeles to Anaheim by five minutes or increasing transit service coverage to 50 percent of the region. But the 2012 plan focuses on “feel-good” goals centered on what political leaders want Los Angeles to become. Further, the plan deemphasizes mobility and congestion relief to focus more on Livability, Prosperity and Sustainability.

Predictably, this lack of focus does little to reduce congestion. Despite spending one half a trillion dollars over the next 20 years, truck delay on freeways is expected to worsen significantly. Truck delay on arterials will also deteriorate significantly. Both freeways and arterials are expected to remain at least as congested as today. The only relief will be in high occupancy vehicle lanes, where congestion will decrease slightly.

Worse, there will be 30 freeway segments where average speeds are less than 15 miles per hour during afternoon rush hour. These slow segments are not just a roadway problem but a transit problem as well. Since many of these freeways lack HOV lanes or express toll lanes, transit buses and vanpools are stuck in the same congested travel as everyone else.

The next problem is state mandates. California SB 375, in particular, makes congestion worse. The bill — The Sustainable Communities Act — sets regional targets for greenhouse gas uses. Yet, most scientists calculate that California has already met the 2025 standards set in the bill. Today’s vehicle fleet generates 98 percent fewer hydrocarbons, 96 percent less carbon monoxide and 90 percent fewer nitrous oxides than vehicles 30 years ago.

The biggest problem may be the region’s funding or lack thereof. SCAG estimates that the L.A. region has $305 billion in current revenue. However, $119 billion of this is local sales tax revenue that is subject to major swings based on the economy. $33 billion of this total is federal funding. Since federal government transportation funding relies on declining fuel tax revenue and general fund bailouts there is no guarantee federal funding will remain consistent after two years time, let alone 20 years. Finally, SCAG is counting on $220 million in new revenue. The assumption that any new revenue sources will be approved is questionable.

So how do we reform the planning process? First, transportation planning should be reformed so the primary goal is mobility. To the extent that environmental issues are real, they can be incorporated into the plan. But they should not unrealistically constrain development. Finally, plans should be required to be fiscally realistic without the need for unrealistically large new revenues.

 

Dec 15, 2014 | Leave a Comment | by

Developing a State Free Market Transportation Policy

In my last post we examined how to create a local free-market transportation policy. This posting will examine how to create a similar policy on the state level where Republicans will control 32 governorships in 2015, almost 2/3 of the U.S. total. Most states lack a comprehensive transportation vision. Many depend on Washington D.C. for more than 50% of their funds. Yet with federal budget challenges, most policy makers expect federal funding to decrease. As a result, states need to create a transportation vision and ensure that they have the budget to implement such a vision.

States should focus on funding statewide assets. What is a statewide asset? Generally, it is a transportation asset that serves intrastate movement. Most national systems which transport people throughout the country transport people throughout the state and qualify as state assets. These systems include Interstate highways and other major roads that are part of the National Highway System, class one railroads and certain aviation routes. Railroads typically are self-funded so states can merely need to coordinate freight needs with the railroads. Intrastate passenger rail services should also receive some state-level funding assuming the corridors are commercially viable. Statewide and regional transit systems also merit some funding, although the majority of funding should come from the regional, county or city level. While it may be popular to fund non-motorized transport, bicycling and walking are primarily local activities that should be funded at the regional, county or local level.

How should states fund such a system? Similar to at the federal level, the most economically efficient method is a user-pay/user-benefit system. For highways this means transitioning from a partial user-pay/user-benefit gas tax system (some of the money gets diverted to other uses) to a complete user-pay/user-benefit mileage based user fee system (MBUF). An MBUF is the best option because it could be set up to include no revenue diversions. Further, it allows states to vary rates based on type of road and level of congestion to provide a more advanced system. Oregon allows its drivers to choose from one of three models. The most advanced option monitors driving habits and charges rates based on the type of road and the time of day. But for those wary of government intrusion Oregon also offers the option of an annual fee with neither destination nor time-of-day monitoring for motorist travel. Oregon also refunds gas tax revenue so motorists are not paying twice.

 

Dec 08, 2014 | Leave a Comment | by

Developing a Local Free Market Transportation Policy

In my previous blog post we examined how to create a national free-market transportation policy. This posting will examine how to create a similar policy on the local level. Unlike the federal and state levels, the make-up of local government varies by location. While major cities, close-in suburbs, and some small towns tend to be under Democratic rule, other suburbs, exurbs and the remainder of small towns tend to be under Republican rule. While Republicans are most likely to adopt free market reforms, moderate Democrats can be convinced to adopt such reforms as well.

Municipalities should focus on funding local assets. A local asset is any transportation infrastructure that serves residents of a city or region. For highways, cities should focus on funding minor arterials and local streets. Regional governments may still fund some freeway and major arterials if these systems move people throughout the region. For passenger railroads and airports, governments may provide some funding if the assets serve a major regional purpose, but such systems are better funded at the national and state level. While freight rail is better funded at the national or state level, regional coordination is important. Local governments are the best units to fund transit systems, although governments should insist on a farebox recovery rate of 50% and a professionally-operated system. Local governments are the best unit to fund bicycling and walking. However, governments should spend transportation resources on bicycling and walking used for transportation purposes not recreational purposes. Recreational uses should be funded by the park/general budget.

How should such a system be funded? We detailed the user-pay/user-benefit argument for highways, aviation and freight rail in the national post and the principle of mileage based user fees (MBUF) in the local post. Transit is best funded by a combination of farebox revenue, value capture and sponsorships. These funding mechanisms typically struggle to provide half of the funds for transit, often because service is priced too low. A better option is charging the full market rate for transit service and offering vouchers for low-income riders. Well-operated transit systems should be able to receive a minimum of 50% of operating expenses from tickets, value-capture and sponsorships. Bicycling and walking are the most challenging modes to fund. Ideally, a city will enact some form of small charge for bicyclists such as a tire fee. While such a sum raises only a small amount of funds it retains the user-pay/user-benefit principal. Using general funds on non-motorized transport may be necessary and is acceptable as long as significant numbers of commuters bike or walk.

 

Dec 01, 2014 | 1 comment | by

Developing a National Market-Oriented Transportation Policy

The recent congressional elections and the Republican’s new majority in the Senate mark a good time to analyze U.S. transportation policy. The U.S. has not had a comprehensive transportation vision since the completion of the Interstate system in 1991. Although the three most recent six-year transportation acts, the Intermodal Surface Transportation Efficiency Act (ISTEA), the Transportation Efficiency Act for the 21st Century (TEA-21) and the Safe, Accountable, Flexible, Efficient, Transportation for Equity Act: A Legacy for Users (SAFETEA-LU) all spent increasing gas tax revenue on transit, non-motorized transit and active transportation, the most recent two-year bill Moving Ahead for Progress in the 21st Century (MAP-21) reversed that trend. With surface transportation policy set to expire in May, policymakers are threatening (promising) a new long-term bill. What aspects should a free market transportation policy on the national level contain?

First, only national systems should be funded. What is a national system? Generally, it is a transportation asset that is not naturally confined to one state. Interstate highways and other major roads that are part of the National Highway System and transport people and goods between various states are national assets. County highways and local streets that move people and goods between counties or cities are not. Class one railroads are national assets (most freight rail is private and does not need or want government funding and interference). Passenger rail that is commercially viable is also a candidate, but the only potential passenger rail line is the Northeast Corridor. Aviation, both passenger and freight, clearly fit the bill. While it has become sexy to fund transit and non-motorized transit from federal funds, both are locally oriented and should be funded at the state, regional, county or local level.

How would such a system be supported? The most economically efficient method is a user-pay/user-benefit system. For highways this means transitioning from a partial user-pay/user-benefit gas tax system (some of the money gets diverted to other uses) to a complete user-pay user-benefit mileage based user fee system. For aviation this means continuing the use of passenger facility charges (PFC) and allowing airports to set whatever PFC level is appropriate. For freight rail this means allowing freight rail lines to self-fund the system without government interference. And for passenger rail, this means only operating service in corridors which are commercially viable.

Next week we will examine transportation policy on a state level.

 

Nov 17, 2014 | 1 comment | by

Concept of Induced Demand Twisted to Promote Environmental Agenda

The concept of induced demand where widening highways increases the number of cars that use those highways is true. However, some smart growth groups are twisting the concept just to validate a goal. Just because more people will use widened highways, improving highways is not always bad policy. In fact widening highways is often the best solution.

Economic researchers have noted the many benefits from highway construction: enhanced economic activity, reduced travel time in the short-run, decreased greenhouse gas emissions in the short-term, improved safety, etc. State Department of Transportations are very aware of induced demand; in most cases they choose to widen the highway because the economic benefits outweigh the increase in additional traffic. Furthermore, highways can be widened without inducing demand by using pricing or tolling.

Robert Cervero of the University of California-Berkeley proved induced demand was rule on selected California highways. But after Cervero’s research there was a proliferation of studies claiming induced demand where the phenomenon was not happening. The problem was so severe that Cervero wrote a paper pointing out some of the research flaws in these subsequent papers. Yet despite a thorough review and a detailed explanation of what is and what is not induced demand, many of the same groups are making many of the same claims. Streetsblog was up in arms last month with the news that a new freeway in Dallas will not decrease the number of lane miles that are congested. A smart growth ally uncovered the project’s environmental impact statement and because area leaders are not talking to the media, Streetsblog is convinced there is some grand cover-up not seen in Texas since the Kennedy assassination.

Let’s take a look and see what the EIS actually says. It details that between 2013 and 2035 traffic speeds on the corridor are going to increase by two miles per hour and that congestion is going to decrease by 7.1%. Considering Texas’ rapid population growth, decreasing congestion is a significant improvement. And the project has many other benefits. The new highway will provide a fixed reliable guideway for express buses and provide a non-congested alternative to emergency vehicles; with the new lanes buses will not be sitting in traffic. These new lanes will make buses more dependable, increasing bus ridership and likely increasing bus options for commuters, something environmental groups should support. The roadway will increase economic development and tax revenues in the city of Dallas. Further, because it is a tollroad, real induced demand will be limited. In fact one way that traffic on I-30, I-35E and I-45 would really decrease is if the new road were free. Why? Because people are more likely to divert to free roads than toll roads and more likely to take additional trips on these roads.

Does Streetsblog really want more free roads? It seems unlikely. Rather some groups have decided that transit expansion is good and any roadway expansion — free roads, tolled roads, priced roads — is bad. If that is your viewpoint, why let the facts concerning induced demand vs. non-induced demand and their relationship to good public policy interfere?

Nov 10, 2014 | Leave a Comment | by
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