Washington Policy Blog

Vanpool Fact-of-the-Day #15

October 15, 2009 in Blog


In
the seven years between 2000 and 2007, the six vanpool agencies in the Puget
Sound area spent $50 million in capital infrastructure. This is 18 times less
than the same six bus agencies, 12 times less than Sound Transit’s Express bus
system and 20 times less than the Sounder Commuter Rail.

A Noble Solution to the Tragedy of the Commons

October 14, 2009 in Blog

Congratulations to Elinor Ostrom, the first woman to win the Nobel Prize in Economics. Like the prizes for chemistry and physics, the economics laureates are selected by the Royal Swedish Academy of Sciences. Her work focuses on solutions to what is known as the "tragedy of the commons," where the lack of clear property rights leads to unsustainable environmental practices. The most clear example is that of fisheries which become over-fished because nobody has an incentive to leave fish behind for next year because those fish will simply be caught by a competitor.

The Academy of Sciences, writes this about her work finding ways to solve this problem effectively:

...active participation of users in creating and enforcing rules appears to be essential. Rules that are imposed from the outside or unilaterally dictated by powerful insiders have less legitimacy and are more likely to be violated. Likewise, monitoring and enforcement work better when conducted by insiders than by outsiders. These principles are in stark contrast to the common view that monitoring and sanctioning are the responsibility of the state and should be conducted by public employees.

Her work is both theoretical and empirical, citing examples of non-governmental environmental solutions across the world and explaining how those structures work. It is more evidence that even as government tells us that we can't do it without them, creative people working together often find a way.

Vanpool Fact-of-the-Day #14

October 14, 2009 in Blog

Puget
Sound area vanpools are 2½ times more efficient than Sound Transit’s Express
bus program.

WPC reaches Arkansas

October 14, 2009 in Blog

Arkansas State Representative Mark Martin has adapted our 5 Principles to a Responsible Transportation Policy to fit his state. You can read his blog here: Off the Marble

Notice how easy it was for him to transition our material to fit Arkansas. It shows how pervasive the problems in transportation planning have become.

Oklahoma looking at offloading workers' comp agency

October 13, 2009 in Blog

Last week, Forbes published yet another case of a state government debating whether or not to ditch its state-run industrial insurance system in favor of more private competition. (Read about West Virginia's effort here)

Oklahoma's CompSource, a nonprofit insurer that receives heavy state and federal tax breaks based upon its status as a unit of the state, insures over 26,000 policyholders -- most of them engaged in dangerous industries such as oil, natural gas and construction. The Forbes article says that CompSource "specializes in small firms or those who workers have dangerous jobs in fields...which private insurers won!
't take because the chance of paying claims is too high."

However, also according to the article, CompSource "has been criticized over the years by those who believe its status as a state agency gives it an economic advantage over private insurers and that the state should not be in the business of writing insurance."

Skeptics of the sale of CompSource say that it will be a difficult process because the agency has a loss rate of nearly 100 percent, meaning there will be few buyers of a business that generates no profit.

It is not unusual for skeptics of private competition to tout "market failure" or "thin markets" or "public good" as a reason to forgo turning state assets or programs over to for-profit entities that might be able to squeeze some benefit out of the operation. The fear is often that a for-profit business will not act in the public good and will cut services or raise rates to squeeze out the m!
ost vulnerable.

But these fears are unfounded and econo!
mic reality belies their fears if there is a competitive marketplace, and it appears that Oklahoma benefits from multiple industrial insurance providers. Competitive pressure forces firms to offer better products at lower prices and keeps runaway costs in check because otherwise the companies offering the industrial insurance services will not make money.

The problem with rationalizing that government gains nothing by running an industrial insurance agency, as opposed to a for-profit entity, is that government does in fact benefit. Government, like any non-profit or for-profit business, is always interested in growing in size and influence or by generating surplus revenue to subsidize other state operations.

Case-in-point: if CompSource really is a 100 percent loss agency, that means it must rely on subsidies from other Oklahoma state agencies to make up losses in order to provide the policies. Private sector businesses, non-or-for-profit, cannot do that and m!
ust look for efficiencies or other ways to remain solvent. The benefit to taxpayers is that they are not subsidizing other workers' industrial insurance.

Sunshine Committee recommends sunset review for new records exemptions

October 13, 2009 in Blog

The state Sunshine Committee this morning unanimously adopted a recommendation that any new exemptions from public disclosure undergo a sunset review. Here is the recommendation as adopted by the Committee:

The Committee makes the following recommendations for new legislation:
1. The Legislature incorporate all existing and further exemptions into the Public Records Act by express reference.

2. The Legislature limit all future exemptions to a term of five years and be that such exemptions be examined by JLARC (Joint Legislative Audit Review Committee), the Sunshine Committee, or other competent body, a year prior to their expiration on a case by case basis to determine if they merit reauthorization or should be eliminated or revised.

The recommend!
ation adopted was an amended version of this proposal first introduced on May 12:

Be it Resolved that it is the sense of this committee that all
exemptions to the Public Records Act and any statutory basis to
withhold information or records be eliminated after two years unless
specifically reauthorized by the Legislature with the exception of
those ten included in the original legislation; and that the
Legislature examine all of the eliminated exemptions individually, and
Further, that all future exemptions be limited to a term of two years
and be examined by the Legislature upon their expiration on a case by
case basis to determine if they merit reauthorization or should be
eliminated or revised.

The Committee also discussed the other recommendations from its draft report to the Legislature. Those recommendations concern:

Here is the full agenda for today's Sunshine Committee meeting.

Vanpool Fact-of-the-Day #13

October 13, 2009 in Blog


Puget
Sound area vanpools served four times more passengers for one-seventh the cost
of Sound Transit’s Sounder Commuter Rail. King County's vanpool program alone carries more riders than Sound Transit's entire commuter rail, and for $1 billion less.

Vanpool Fact-of-the-Day #12

October 12, 2009 in Blog


Traffic congestion in the Seattle region is predicted to double and
reach the levels of present day Los Angeles by 2030, with or without light
rail.

Vanpool Fact-of-the-Day #11

October 11, 2009 in Blog


Sound Transit is spending more than thirty
years and nearly $40 billion to build a system that will only serve about 2.4
percent of all trips.

Vanpool Fact-of-the-Day #10

October 10, 2009 in Blog


Despite
a global recession and unemployment rates doubling to nearly 10 percent the
following year, passenger demand in the first quarter of 2009 grew to about 1.5
million trips, a 16 percent increase from the first quarter of 2008.

Sound Transit loses money but doesn't reduce service?

October 9, 2009 in Blog

In today's Seattle Times, Mike Lindblom has a story about the impact of the recession on Sound Transit. The agency now expect to come up $3.1 billion short in revenue over the next 15 years.

But the agency is also quick to claim they will not reduce service promised to voters.

Why does it take a global recession to force Sound Transit to find $3.1 billion in efficiency?

Vanpool Fact-of-the-Day #9

October 9, 2009 in Blog


Puget
Sound vanpool agencies reported passenger demand grew by 52 percent between
2000 and 2008.

Real Cost of Baucus Bill - $2 Trillion

October 9, 2009 in Blog

The Congressional Budget Office (CBO) scored the Senate Financial Committee health care reform bill this week. Never mind the fact the bill is only a summary and is not in legislative language, which made the CBO disclaim the cost of an actual final bill.

Total cost is reported at $829 billion with $81 billion in savings over the first ten years. Unfortunately, as published in a Micheal Cannon report for CATO, the cost would be closer to $2 trillion over the first ten years. So why the difference?

First, the CBO omitted $75 billion in new federal spending and $33 billion in unfunded mandates on state governments. Second, the nonpartisan CBO assumed Congress would allow the "sustainable growth rate" cuts in Medicare provider reimbursement starting in 2012. Congress has never let this happen. And finally, the CBO omitted the cost of the individual and employer mandates which represent 60% of the cost of Massachusetts' health care reform.

Therefore, to do the math: $829b + $75b + $33b = $937 billion (which is 40% of some number).

40% x N = $937 billion    N = $937 billion divided by 0.4 = $2.34 trillion.

So the Baucus bill is not budget neutral, let alone a deficit reducer. Instead, it is a colossal budget breaker that has the potential of bankrupting this country in just the first decade of application.

Treasurer worries about state's credit rating

October 8, 2009 in Blog

Earlier this year State Treasurer James McIntire highlighted the state's strong credit ratings. Now, however, he is worried the state may have to pay millions more to borrow money. According to the Seattle PI:

Tim Eyman's initiative that would limit government spending could hurt Washington's credit rating, which would cost the state tens of millions of dollars, state Treasurer James McIntire says . . . McIntire said credit ratings consider numerous factors, including initiatives like Eyman's.

"They want to know how your economy is doing, they want to how your revenues are doing, they want to know what your balance sheet looks like...and they ask about things like initiatives," he said in an interview. "Any!
thing that restricts taxes or spending, that's going to have a long-term structural impact to come to resolution about financial management, is something that they worry about."

Credit raters like Moody's say "Voter initiative activity adds element of fiscal uncertainty,” and is a challenge for the state, but the adoption of a tax or spending restriction did not make Moody's list of things that would reduce the state's credit rating. According to Moody's July 10 report on Washington's credit outlook:

What would change the rating - UP
  • Sustained trend of structural budget balance, plus restoration and maintenance of strong reserve levels.
  • Economic expansion and improved industry diversification.
  • Reduction of debt ratios to levels closer to Moody's 50-state medians.

What could change the rating - DOWN

  • Deeper and longer recession that restrains consumer confidence, leading to prolonged revenue weakness and employment erosion.
  • Protracted structural budget imbalance.
  • Increased reliance on one-time budget solutions.
  • Cash flow narrowing, leading to strained liquidity.
  • Failure to adopt plan to cover expenditures once federal fiscal stimulus monies are no longer available.

Perhaps the reason adoption of a tax or spending restriction didn't make the list is the fact Washington already has both. In fact, the state's credit rating didn't drop after passage of I-601 (tax and spending restriction) in 1993 or I-960 (tax restriction) in 2007.

Based on the criteria described by Moody's, it looks like the biggest devil for the state’s credit rating will be whether or not the state lays out a plan for balancing the budget once the federal bailout funds are gone and stops resorting to one-time fixes. 

Additional Information
Summary of state's credit history (provided by Office of State Treasurer)

Vanpool Fact-of-the-Day #8

October 8, 2009 in Blog


An
average vanpool passenger traveling between Tacoma and Seattle would save about
28 percent in annual commuting costs compared to taking a bus, 45 percent compared
to taking Sounder Commuter Rail and 61 percent compared to driving a car.