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Neither rail or infrastructure-spending will save America

October 31, 2008 in Blog

Here are two studies that are relevant to the discussion on infrastructure spending to create jobs and the cost/benefits of rail.

More Transportation Spending: False Promises of Prosperity and Job Creation, by Dr. Ronald Utt, Senior Fellow at the Heritage Foundation

The vast majority of
independent academic and federal government studies on the
rela­tionship between infrastructure spending and eco­nomic activity
have found that the impact is very modest and long in coming.

High Speed Rail: The Wrong Road for America, by Randal O'Toole, Senior Fellow at the CATO Institute

High-speed rail proposals are high cost, high-risk megaprojects that
promise little or no congestion relief, energy savings, or other
environmental benefits. Taxpayers and politicians should be wary of any
transportation projects that cannot be paid for out of user fees.

You might remember Dr. Utt was the featured speaker at our annual transportation event earlier this year and spoke about performance-based policies in transportation.

Container Tax update...

October 24, 2008 in Blog

From the RAMP blog, here is a good update on the proposed container tax being considered studied:

There have been some significant developments in the container tax
debate in Washington State this week. As some may recall, the
legislature considered a bill to impose a $50 per twenty-foot
equivalent unit tax in 2007 (most containers passing through
Washington's ports are 2 TEUs in length). That bill was amended to
create a study of potential diversionary impacts of a container tax, as
well as other potential alternatives for funding freight
infrastructure. The Legislature retained Cambridge Systematics to
conduct the study.

Earlier this year, Cambridge's
subcontractor, Dr. Robert Leachman, validated industry's arguments that
significant diversion would result if a tax were adopted—a 30 percent
drop in volumes with a $30/TEU tax. What would this mean for Washington
state? A loss of 9,415 jobs and $58.5 million in lost wages.

week Cambridge concluded that even on major freight corridors, such as
a completed SR-167, passenger vehicles, and not freight, received the
majority of the benefits from each of these projects. They also found
that heavy trucks, a subset of which carry containers, received the
least amount of benefit.

Responding to this information, key
legislators on the state transportation committees have said it is
difficult to provide the linkage necessary to justify a container tax,
especially given the potential diversionary impacts.

Sound Transit Wants To Spend $22.8 Billion To Serve Only 0.4% Of Trips

October 17, 2008 in Publications

This November, voters in King, Pierce and Snohomish Counties will again decide on whether to expand Sound Transit’s regional mass transportation system. The new Sound Transit proposal (ST2) would add 36 miles of light rail, expand the Sounder commuter rail by four daily round trips between Tacoma and Seattle and expand the Express bus system by 17 percent.

Sound Transit's Prop. 1 spends much, delivers little

October 16, 2008 in Blog

This column appears in today's Seattle Times and is based on our Citizens' Guide to Sound Transit, Phase 2 and a piece written for the Heritage Foundation, Reforming State Transportation Policy: Washington State's Efforts to Implement Performance-Based Policies.

Guest columnist | Sound Transit's Prop. 1 spends much, delivers little

Sound Transit's Proposition 1 would disproportionally spend large
amounts of public resources on a transit program that will serve less
than 1 percent of all trips.

By Michael Ennis
Special to The Times

Nov. 4, voters in King, Pierce and Snohomish Counties will again decide
on whether to expand Sound Transit's regional mass transportation
system. The new Sound Transit proposal (ST2) would add 36 miles of
light rail, expand the Sounder commuter rail by four daily round trips
between Tacoma and Seattle and expand the Express bus system by 17

Sound Transit estimates the cost would be about $22.8 billion over the next 30 years.

The agency's officials also estimate that if ST2 passes, it will
carry only 0.4 percent of all daily trips and 2.4 percent of all daily
work trips by 2030. Sound Transit officials also show ST2 would only
reduce the region's carbon-dioxide emissions by about 1 percent.

There is no doubt mass public transportation is part of the solution
to reduce traffic congestion, especially in dense population centers.
But Sound Transit's plan would disproportionally spend large amounts of
public resources on a transit program that will serve less than 1
percent of all trips.

Public-sector spending decisions typically are based on perceived
value and whether taxpayers believe they are receiving a proportional
benefit for the money spent. In other words, the social value of $22.8
billion should be equal to its economic costs. The difficulty is
defining the social value. Is a transit system that carries less than 1
percent of all daily trips worth more or less than doing something else
with $22.8 billion?

In Sound Transit's case, there is a large space between costs and
benefits because the agency's goal is not to reduce traffic congestion
or to reduce carbon-dioxide emissions. In fact, Sound Transit's only
official objective is simply to collect taxes and build a mass-transit
system, regardless of costs or performance.

In other words, there are no performance measures or benchmarks as a
condition to Sound Transit's taxing authority. Oh sure, Sound Transit
officials do have some limitations on how taxes can be spent, but in
terms of measuring success, they are only judged on building and
operating a transit system. It doesn't matter to Sound Transit how few
people they serve or how few pounds of carbon dioxide are reduced. So
it is not surprising that Sound Transit's own analysis shows how poorly
it would perform in these areas.

Spending billions of dollars in public money on a transportation
system that has no relationship to market demand or other performances
goals is only a public construction and employment program. In fact,
supporters tout job creation as a benefit of passing the measure.

As with any public-works project, spending public money to create
jobs is not economically efficient and does not lead to a net social
benefit. Sound Transit officials would only shift $22.8 billion from
one sector of the economy to another.

In economic terms, offsetting the temporary growth in the
construction industry and the permanent expansion of government with
the losses in other sectors would not simply be a neutral shift of
resources. It is well understood that the value of money is always
worth less in the hands of government because public-sector costs are
generally higher and the spending is not based on economic forces.

Either way, while Sound Transit officials are spending $22.8 billion
in the name of transportation policy, traffic congestion will continue
to double or triple over the next 20 years.

Whether or not Sound Transit's ballot proposal passes, policymakers
should change the current system in which transportation spending is
based on other agendas and instead apply a performance-based policy
where value and effectiveness determine where spending takes place.

In business, measuring performance is a way of life. It is viewed as
an indispensable tool that shapes decisions about how resources are
distributed. In the public sector, however, performance measures are
treated as an inconvenience, because they can oppose how policymakers
want to distribute resources.

In Sound Transit's case, the agency exists only to build a
mass-transit system, regardless of objective public need, costs or

While the legislative process should have the final authority,
basing transportation decisions on anything other than measurable
outcomes inevitably leads to a fragmented collage of spending that has
no relationship to relieving traffic congestion.

Performance-based policies that tie spending to specific benchmarks,
like traffic-congestion relief, is the key to allocating transportation
resources in a strategic and efficient way. Otherwise, government
agencies such as Sound Transit will continue to propose plans that have
no relationship to the one solution citizens want most,
traffic-congestion relief.

The cost of light rail and buses

October 15, 2008 in Blog

Joe Turner over at the TNT has a post about how Light rail isn't always cheaper to operate than buses. Most supporters claim that light rail, once built, is cheaper to operate than a traditional bus service.

Turner draws from an explanation from John Niles, a local transportation consultant and a recent WPC Policy Brief, The Facts on Light Rail.

In the study, we conducted a comparative analysis of the six existing light rail systems on the West Coast that have been operating for at least ten years. The cities include Los Angeles, Portland, Sacramento, San Diego, San Francisco, and San Jose.

As it turns out, operating light rail is more expensive than buses in some cities and less in others. On average:

The total annual operating costs (not including capital) for the six light rail systems on the West Coast was about $439 million in 2005.The total trips for the same systems in 2005 were 167.6 million.

This means the operating cost for the six light rail systems on the West Coast was $2.62 per trip.

The total operating costs for traditional bus service in the same six agencies was about $1.5 billion and annual trips were about 642 million. The operating cost for traditional bus service in 2005 was about $2.34 per trip.

When accounting for passenger demand, light rail on the West Coast is
12 percent more costly to operate than buses in the same six cities.

Niles looked at some other cities, substantiated our findings, and made the following conclusion:

Light rail in big cities like LA, San Francisco, and Dallas is more expensive to operate than buses in the same city.

This is the counterpoint to the Prop 1 Yes campaign and Sound Transit observation that in Portland, light rail operates at lower cost per boarding than buses.

Financial Crisis???

October 10, 2008 in Blog

Taxpayers are now paying  $20 per month to everyone who rides a bicycle to work, thanks to the national financial crisis and the $700 billion federal bail out.


Gas Tax projects facing another funding hole and Eyman could hold the key for the bail out

October 9, 2008 in Blog

As the projected $3.2 billion general fund budget deficit continues to loom over the upcoming legislative session, let us not forget about the projected revenue slowdown in the state's transportation budget.

The Office of Financial Management recently released its quarterly revenue forecast for the transportation budget. It shows that over the next 16 year construction horizon, (an important time frame for the Nickel and TPA gas tax projects) transportation revenues are $1.352 billion lower than projected from the baseline, which was updated during the 2008 legislative session. And this does not yet include the labor and material cost increases that are expected to drive the shortfall even higher.

While it's not clear what the precise shortfall will be for the Nickel and TPA projects (OFM has not broken that out yet), it does mean the legislature will be facing another significant hole.

Earlier, I wrote about how the legislature funded the previous holes in the gas tax projects. In just the last two years, cost increases and slower revenue growth created a $3.8 billion hole in the Nickel and TPA projects. Through a series of budget maneuvers and project delays, the legislature was able to fund the deficits.

But after bridging $3.8 billion, the Legislature is probably out of tricks. They will either have to outright cancel some projects or fund them from a different revenue source, like the general fund. Both of which are highly controversial.

Ironically, as much as some lawmakers dislike Eyman's Initiatives, one of them would unwittingly offer a solution. According to the analysis in our 2008 Citizens' Guide to I-985, if the initiative passes, it would create more than a billion dollars for the Reduce Traffic Congestion Account within the first decade. The legislature controls the account and can allocate the money to projects that reduce congestion, which probably all of the Nickel and TPA projects do.

Another option is bonding. Since the primary revenue stream of the account would be sales tax, the state could leverage it through debt and produce enough to cover the shortfall. While this money does originate from the general fund and adds to its overall projected deficit, the voter approved initiative would provide cover for legislators who choose to support such a move.

Certainly, neither Tim Eyman nor those who vote for I-985 intend to bail out the Nickel and TPA projects. But given how Olympia has overspent the general fund, lawmakers will probably consider all options.

It's also important to consider that the projected hole in the transportation budget is not the result of less revenue but rather a result of a slower projected growth. Both overall revenue and gas tax revenue are higher than the previous biennium. The transportation budget ended the 2005-07 biennium with total revenue of $3.634 billion. This biennium is projected to end with $4.132 billion. Gas tax revenues are also higher. Last biennium had $2.215 billion and this biennium is projected to have $2.524 billion in gas tax revenues.

So the funding hole is not a taxpayer problem but a planning problem.

I-90 gets two new lanes but...

October 8, 2008 in Blog

...they are restricted HOV lanes. The WSDOT is adding an HOV lane in each direction on I-90, connecting Bellevue and Seattle.

In this article I wrote last year, If the Roads and transit Package Fails, What Next?, I argued that it doesn't make sense to restrict the two new lanes when there are already two underutilized HOV lanes in the center of I-90.

The Eastbound and Westbound general purpose lanes are over capacity during the peak commute periods. The center HOV lanes are not. So, restricting the two new lanes guarantees traffic congestion will continue in the mainlines.

As cross-lake congestion continues to increase and buildable space becomes limited, a better idea would be to open the two new lanes as General Purpose. This would increase capacity by 20% without any additional infrastructure, and significantly improve traffic across Lake Washington.

This concept draws from our 5 Principles of Responsible Transportation Policy, which says spending should be proportional to demand and tied to congestion relief.

New Study by Sound Transit Shows Light Rail Brings Minimal CO2 Reductions

October 8, 2008 in Publications

In Washington State there is little debate that any goal to reduce greenhouse gas (GHG) emissions must include a conversation about transportation. Nearly half of all GHG emissions in Washington come from the transportation sector, with cars and trucks accounting for about 36 percent of the total CO2 emissions.