Taking Responsibility — Locally

» A reliance on federal aid may not be a realistic approach in a budget-constrained future.

Like it or not, U.S. transit agencies are incredibly reliant on the federal government when it comes to funding their capital needs. In Chicago, for instance, over half of funds expected to pay for new capital investments over the next five years are supposed to be handed in from Washington. Every major city around the country relies on aid from D.C. for the purchase of new buses and trains, the maintenance of existing infrastructure, and the construction of new rights-of-way.

The current state of things in the nation’s capital, however, should put in question just how much local agencies can rely on federal funds to go about their business. Congressman John Mica’s proposal for a six-year transportation reauthorization bill — currently the only such legislation that has actual funds attached to it* — would cut annual federal expenditures on transport by 30% to match revenues being taken in by the national fuel tax; the wording of the bill implies that urban transit’s share could be cut even more decisively. That would be devastating. Take Los Angeles, where 10 to 20% of all of Metro’s funds are derived from federal sources; such a bill would result in a $1.44 billion cut over six years.

With debt ceiling negotiations continuing to focus in on reductions in long-term discretionary spending — that includes transportation — there is little reason to expect that the picture will improve even in the medium term.

Though President Obama and many members of the Congress have proclaimed their support for expanded national investments in infrastructure like public transportation, they have been unable to identify actual methods by which to fund it. Nobody in power wants to raise the gas tax, apparently. Nor do they want to install a vehicle miles travelled fee. Or, for that matter, make a strong claim for using debt today to make investments in tomorrow’s needs.

Faced with these terrible circumstances, the nation’s transit providers will have no choice but to increase fares or cut service in the short term and look for improved efficiencies in management over the next several years. If implemented correctly, these reforms could produce public agencies that are more effective and less wasteful than they have been in the past. Having to live with constrained resources can — can — lead to innovative thinking about how to provide the best quality service at the most reasonable price.

But there is only so much you can do to improve service delivery with a declining budget — and transit agencies have already tightened their collective belts considerably over the past few years. Thanks to genuine interest in reinvestment in our urban cores, a significant need to focus public policies on subduing the effects of climate change, and a frustratingly high rate of poverty, transit must play an increasingly important role in the provision of mobility not only in our biggest cities but also in medium-sized cities throughout the U.S. So reducing public transportation provision cannot be an option.

While Washington may be a morass of inaction, it is thankfully not the only source of public funds; there are local, regional, and state governments out there that already collect taxes and that could step in — if their leaders felt up to the task.

At the lower levels of America’s federal system, we have already stepped in many times to improve our transportation networks; operating funds are covered either by fare revenues or dedicated taxes. And while the national government continues to contribute a major proportion of overall spending on new rail transit lines, local agencies must contribute a significant match in order to win approval for their plans. But it may be time to take the existing pattern a step further — that is, if the national government does not sweep in at the last minute to save the day, something it can hardly be expected to do.

This means states and municipalities must make a far clearer commitment to the long-term health of their transportation agencies by establishing new guaranteed annual capital funds to replace lost federal revenues. This means submitting far more significant proposals to referenda than the 1/2¢ sales tax increases every decade or so that constitute the most ambitious policy moves on transportation finance usually undertaken today. No, we need property tax enlargement, or an inflation-aligned growth in the state fuel tax, or income tax surcharges. With the decline in federal revenue collection, states and municipalities need to fill in the gap, or let the needs of their transportation agencies go unfulfilled. This will require significant political leadership.

There are downsides to this approach. One of the great advantages of federally sourced funds is that they can be distributed along egalitarian lines. A large poor city may contribute fewer tax revenues to the central government than a small wealthy one, but a redistribution-oriented federal system allocates collected funds along population lines and gives the more populated city more funding, making the situation more fair from a proportional perspective.

Similarly, Washington’s involvement may now come across as too intrusive, requiring too much regulation and the like, but valuable environmental and public consultation rules enforced at the national level may not be taken seriously more locally. Attaching the rules to the awarding of federal funds ensures that they are.

Most problematically, by encouraging states and localities to tax themselves to pay for the public resources they desire, a Tiebout mechanism will be put in order. You don’t want public transportation? Fine, don’t live in a state or city that doesn’t tax you to pay for it. Want transit? Be willing to put up the local funds to pay for it — and convince the rest of your neighbors to agree, or encourage them to move out.

For the least wealthy members of society, however, such a system is inherently classist, since it forces people who, for example, do not have a car to live in the places where they are taxed to pay for transit, which must be subsidized to operate. So not only are they put at a disadvantage because of their poverty, but they are also forced to bear the full burden of paying for the costs of their mobility needs, which are arguably a right. Federal funding, which taxes people at the same rates across the country, avoids that problem.

Overcoming these difficulties may be downright impossible. But in an age of cutbacks, we may have no other option but to act, whether Washington is ready to follow through or not.

* Senator Barbara Boxer’s two-year proposal, while a much more reasonable bill that would maintain federal spending at existing levels, has a $12 billion gap that no one has been able to fill thus far.

45 Comments | Leave a Reply »
  • Danny

    Sorry to point out reality, but you are making a huge error here.

    The federal government is capable of distributing funding in an egalitarian and fair way, but then again they are also capable of running balanced budgets or surpluses outside of recessions, capable of not giving out corporate welfare, capable of enforcing human rights, and capable of efficient regulation.

    That doesn’t mean they actually do it, or even that they can reasonably be expected to do it.

  • Progressive Capitalist

    If only transit projects anticipating federal funding hadn’t wasted so much already on the NEPA/New Starts process. But hopefully, future projects could be built cheaper and faster.

    And States would need to use their gas taxes for all forms of transportation. In many (most?) cases, the local match for transit projects is larger than state match.

  • I have to say, this is the least helpful, least constructive comment I have ever seen you make on this blog:

    “You don’t want public transportation? Fine, don’t live in a state or city that doesn’t tax you to pay for it. Want transit? Be willing to put up the local funds to pay for it — and convince the rest of your neighbors to agree, or encourage them to move out.”

    Many of the people who oppose transit investments have lived in their communities for a very long time — often their entire lives. Indeed, that’s one of the reasons they sometimes oppose transit: they view it as changing the character of the places that they love, where they raised their children, that they call home.

    While that is a very frustrating thing to deal with, simply telling them to move somewhere else is not only unhelpful but may in fact be counterproductive by stoking the fire of opposition.

    I live in Washington, D.C., for example. Some people say that if I want voting representation in Congress that I should just move to Maryland or Virginia. Is that fair?

    What about people who do want transit? Why don’t they just move to New York or Paris?

    Point being, living in a democratic society doesn’t mean simply moving yourself to a jurisdiction where everything is done to your liking, walling yourself off and associating only with people who think and live like you do. It means coming together in a civil discussion and coming up with a solution to our common problems.

    I would be the first to say that transit and other alternative modes of transportation have been shortchanged for far too long in the United States. (Indeed, shortchanged so long that we refer to them as “alternatives,” even though walking certainly long predates the automobile.) But telling people just to move somewhere else is not part of a civil discussion.

    • I think you misunderstood me: I was making a rhetorical point, not suggesting that we actually enforce such policy. The whole point of Tiebout is that you move to the place that best matches your personal consumption preferences of public goods. I am not encouraging that approach at all — which is why I described it as a downside.

    • RobertD

      “Point being, living in a democratic society doesn’t mean simply moving yourself to a jurisdiction where everything is done to your liking, walling yourself off and associating only with people who think and live like you do.”

      Explains gated communities and/or certain suburban neighborhoods.

  • Al S.

    I think that transit advocates may simply need to face the idea that for the next few decades at least, the prospect of ANY major investment in public transportation in the Unites States is going to be severely limited (excepting those few projects that already have their funding guaranteed…and even those, I’m not sure of…remember Gov. Christie killing the NJ/NY ARC Tunnel (flawed as the plan was) which was 25 years in process).

    We aren’t Britain which is investing billions in its Crossrail project, France which is building its Paris Orbital Metro and expanding its RER Commuter Train network, or China which is still building HSR like mad. This is a country where adding sidewalks or bike lanes to existing roads is somehow a contentious issue!

    Infrastructure money is going to be very tight, and what little there is will be spent on highways and not transit. No one now wants higher taxes…period. No want wants higher fees. No one wants congestion pricing. There’s not enough critical mass of voters who care about public transit as an issue to steer government investment (at any level of government) toward more spending. Suggesting that highways de-externalize some of their costs is met with abject horror by many people as some type of affront to American freedom.

    Of the two major parties, one is highly anti-public transit and the other is is very lukewarm and apathetic and gives it lip service during election years. The constant back-and-forth cycle of American politics and politicians playing games with public works projects for political points means long-term planning and execution today is almost impossible.

    Doesn’t look very promising.

    • Ocean Railroader

      When Oil starts to fall apart then thing will get going in transit’s favor. Or if the Middle East cuts production of oil by more then 10% over the next few years that will start a major push for transit.

      • Its not just production ~ with the US importing about 2/3 of its petroleum, what matters to the US is Arab exports, and with growing consumption inside the major Arabian oil producers, they can maintain steady oil production while exports still fall.

  • Dan Johnson-Weinberger

    Of course, many of us want higher taxes — like the majority of the electorate that voted for President Obama who explicitly ran on raising the marginal income tax rates on income above $250,000. It isn’t accurate to say that “no one wants higher taxes…period.”

    • Nathanael

      Polls say a majority of Americans want higher taxes on the rich.

      If the federal government won’t do it, I guess the states are going to have to step in. If the states won’t do it, well, we have even more of a problem.

  • Jasper

    What about those who work in the industry as planners and drivers and mechanics…my guess is that transit agencies will seek to be efficient by laying off folks…and then with consultants being let go…that industry market will become saturated…this seems to be bad all around is it?

    • Federico

      With a general long-term decline in infrastructure spending, there will be less need for the technical services that prepare and deliver these projects to the public (planners, engineers, construction workers, bus drivers, etc.). This means major industries simply contract in size and at least some people who have been working in them must find other industries/careers if they want to stay employed. Yes, it’s bad all around.

  • Chris

    Tiebout mechanisms would seem to work to the benefit of public transit here – the region where people are taxed to pay for roads and must own cars to get around is likely to spend a lot more money for a lot less mobility than the region where transit is dominant and road spending is much lower.

    The bigger issue for those in poverty is subsidy in general. As the federal teat dries up we’re likely to see users of all modes asked to pay significantly more for the transportation they consume – higher fares, higher fuel taxes, higher tolls. This is good for all modes of transportation, in my view, and especially good for public transit whose greater efficiency will become more and more apparent. But it’s bad for the poor vs. the status quo.

    That said, if you can save 25 cents in cash transfers or low-income tax credits for every dollar of transit you cut, the poor (especially the working poor) will probably be better off for the change.

    • Andre L.

      Tibeout effects might work or not. It is not reasonable to discard them altogether as “bad” or “good”.

      In respect of transit, it goes all down to the income makeup of a certain area. If the poor is concentrated in pockets of inner areas of a metro area, if their demographics is peculiar, you could easily see a replication of Detroit: aggressive zoning outside the poor areas meant to act as a barrier for poor people moving in, coupled with huge underinvestment on the central areas filled with poor people.

      If the transit-funded area doesn’t become a bastion of poverty and crime, then the result might be more interesting.

    • Nathanael

      What we have to avoid is the very common scenario where the rural-dominated state government uses taxes from city residents to pay for rural roads, but the city is on its own when it comes to public transport. That’s unfortunately the status quo in many places.

  • AI S. wrote “Infrastructure money is going to be very tight, and what little there is will be spent on highways and not transit.”

    This is one of the key problems, governments (not just in the US) are spending money making the peak oil and climate crises worse. If you are serious about public transit, take a look at highway spending. For example, do you have a 1950s era elevated freeway that is falling apart? If so, knock it down instead of spending billions replacing it. (This is a current debate in Seattle).

    The good thing about tight money is the opportunity to talk about priorities, and shift where money gets spent. It is time to recognize that the era of cheap oil is over and go on the offensive against freeway spending.

    • Andre L.

      Many European countries are rediscovering highway investments. Sure, not central urban elevated freeways, but massive widening and enlargement.

      • Eric G

        Can you elaborate?

        The only “European rediscovering of highways” that I’m aware of (and I spend a lot of time in Europe) is building a basic network of intra-urban freeways, not the dense INTRA-metro networks that we have in the US. And this is mostly happening in countries that didn’t have comprehensive freeway systems until recently (so, not Germany, obviously).

        Multi-lane highways will always be needed around the world, but the United States has reached the point of diminishing returns. We already have a dense network…building a new freeway won’t solve many of the problems we have.

  • Federico

    The call to energize the local and state government levels to step up and fill in the growing gap in public services is noble, but unfortunately likely to produce any positive results. Local governments– at least those large enough to have the revenue-producing capability to make a difference in providing transit service– are beholden to unionized employees, especially in public safety. Any windfalls they realize (especially from property tax) go either to meet ever-growing demands for pensions and benefits or to patch up unfunded pension liability from past budget emergencies. States aren’t much better off, and states dominated by suburban and rural politicians tend to be the least inclined to support what they see as social welfare benefiting urban populations.

    To me the answer is dedicated funding tied directly to the inefficiencies in the transportation system– namely taxes on parking. This is how MUNI is funded, and the logical nexus is clear. Too bad it’s the business community most likely to object to such an idea, ensuring most elected officials won’t touch it.

    • Andre L.

      Local governments are also subject to tax-shopping. No town can raise taxes that much without seeing a flight to neighboring areas, and I doubt states would be keen on towns imposing commuter taxes.

  • orulz

    Agreed about the need to reduce the federal role in funding transportation.

    The feds tend to redistribute money not from rich cities to poor cities, but from ALL cities to rural areas. This is also true at the state level in some states, but certainly less so at the local level.

    • Al S.

      The only real solution is to allow urban regions to do their own planning, taxation, and funding independent of the existing Federal and State governments. Much like the Federal Government, most State governments are heavily tilted towards rural and agrarian interests and funnel large amounts of money toward sparsely populated areas (witness Virginia, for one).

      Simply devolving power down to the state level may actually be worse for public transportation than the current Federal government-centered system. The real issue is the U.S. Constitution, which by design or otherwise serves to minimize the power of large cities to make sure that rural interests weren’t ignored. This may have been fine in the 1780′s, but makes for dysfunctional government today, particularly in the realm of urban-oriented transit infrastructure.

  • I believe limiting federal transportation expenditures to just the amount generated by the federal gas tax and other taxes (like tire fees, etc.) is the best long-term hope for a raise in revenue generation, as the consequences of lagging investment in transportation infrastructure will no longer be hidden by money being transferred from the general fund.

    Smaller cities will be more impacted than large cities, because they obtain both capital and operating funding from the federal government. I believe L.A. Metro will be somewhat able to offset the loss of capital funding by extending the useful life of their buses.

    Really, the greatest possible loss is in the New Starts area. I believe that in the end any project currently in the pipeline will be built but there could be a long period of time in which no new projects will be built with federal assistance.

  • Tim E

    A place to look at is Missouri, yes transit and rail is going to take a hit but roads are going to also. Missouri made big cuts across the board in DOT funding to meet reality of a voter body who wants cheap gas tax no matter how bad the roads are or how much business desires needed infrastructure.

    As far as arguments, you still have to articulate an agreement that wins over voters and second, find a way to pay for it. Thats true at the local level as well as federal. I might not agree with Mica’s path at the moment but he is proposing a position that matches revenue where as my support for a two year plan that keeps levels the same requires a supporter as myself that a mechanism to increase revenue needs to be put forth and agrued for. Every chance I get I like to comment that if Reagan could raise gas tax why can’t we do it now and why can’t politicians who favor infrastructure also make the same argument he did – infrastructure is vital the nations economy and national defense.

  • Tim E

    In short, their is no political backbone to speak of. Its either take the path of least resistence as Mica proposes or the rhetoric of $53 billion dollar in HSR investment for a good state of the union sound bite.

    Lets see some hard ball horse trading for once instead of these pathetic idealogical positions, open up more offshore oil development in return for closing loopholes to fund more infrastructure spending, If we won’t increase the gas or oil tax why not have a National Infrastructure bank in the short term for yearly TIGER grants and HSR/Amtrak tied to oil revenues instead. Heck, transportation is one of our biggest users of energy.

    • Nathanael

      “In short, their is no political backbone to speak of. ”
      … except among the lunatics who want to “drown the government in a bathtub”, leave the poor to die on the street, and sell everything off at fire-sale prices to their cronies. They seem to have backbone.

  • The basic problem: local governments are no more competent than the federal government, and no more willing to embrace tax increases to build new infrastructure. There have been great advances coming from referenda, but hoping that Albany, Springfield, and other capitals known for their intransigence and hatred of the state’s urbanity to do what’s right is almost as remote as hoping the same of Washington.

    • Nathanael

      Remember that this is a redistricting year. I’m hoping for progress in Albany after that; we’re very close to upsetting the ‘status quo’ through sheer demographics, and that may shake loose more changes.

  • Progressive Capitalist

    Some local initiatives will succeed. Some will fail. That’s the experiment of democracy.

    Houston was extremely successful with its locally funded starter line. St. Louis wasn’t so successful with its locally funded branch extension.

    The secret to states remaining in love with their urbanity is the size and growth of their population base. Blue states are largely states with an established urban voting base. But even purple (like NC and FL) and populous red (TX) states can be urban-minded on transit, when their growth is within cities. Conversely, red states with a largely rural voting base, or purple states with declining cities (like MO) are indeed at risk of neglecting transit.

    • Nikko P

      Maybe it would be nicer to have states with large urban populations that are dedicated to “urbanity” be able to concentrate their own tax bases on themselves rather than contributing to a federal government that will distribute the funds to other states that are less dedicated.

      • Andre L.

        There is more differentiation between the rural and urban areas of any state than between urban areas of different states, with exception of DC and, maybe, only maybe, Rde Island.

        • Nikko P

          Sorry, I guess I don’t quite see your point.

          I think a state’s willingness to spend on urban projects is going to depend on the percent of the voting population in urban areas. Therefore, states with large urban populations will be more willing and capable of concentrating on their own urban development.

          • Nathanael

            “I think a state’s willingness to spend on urban projects is going to depend on the percent of the voting population in urban areas.”

            Gerrymandering and distortions from bicameralism make that not strictly true. And remember, the rural voters STARTED OUT in control back in the 18th and 19th century. Turns out the urban voting population has to get well over 50% before it can have the expected impact in the legislature.

        • First, not just Rhode Island – also a few other very urbanized states, such as Massachusetts, Connecticut, and New Jersey. (P.S. Rhode Island is a net tax recipient; Greater Providence just isn’t that rich, not by the standards of the metro areas around it.)

          Second, in the big urban states – New York and California – the central urban areas are a large portion of the state’s population. Two thirds of New York State’s population lives Downstate, and three quarters of California’s population lives in the metro areas of Los Angeles, the Bay Area, and San Diego. The political differences in those states are more within urban areas than between urban and rural areas: there’s a lot of city-suburb tension in New York, and coastal city-inland exurb dynamics in California.

  • Eric G

    Yonah,

    Everything you mention is wonderful..yes cities should be more efficient in how funds are used, stretch the dollar, fight corruption, attach high public service to taxes (making city-living worthwhile), etc…but what about the big elephant in the room?

    …Metropolitan areas -and increasingly city propers- give more to federal and to their respective states, than they get back from either. And cities are also screwed over -again and again- by their respective states and suburbs. You mentioned Chicago and Los Angeles which struggle to maintain and expand their public transit systems, meanwhile these cities (alongside NYC, San Francisco, Boston, Minneapolis, and DC) are constantly treated as ATMs -ever since they’ve managed to bring back affluent people and businesses over the past 20 years- by the red states/counties who then complain about it.

    Central cities (and certain suburbs) are also screwed over by exclusionary zoning, which is *part* of the reason why poorer people are forced into certain municipalities, giving them a socioeconomic disproportionate ratio. Clearly, socioeconomic discrimination.

    Here’s a proposal that countless urbanists have made, from Jane Jacobs to Saskia Sassen: cities (or metro areas) should just secede from their respective states, and form their own subnational units. There are just so many reasons for this, but just so that I don’t type an endless post, I think that SOME of the reasons that secession would be a good idea are clearly obvious. THEN, cities and metros can compete with exurbs on equal footing…instead of state and federal robbing the city, and then looking down on it.

    • Nathanael

      The only reason against secession is food supply. In case the US in general starts falling apart, I suspect NYC will be eager to reconnect to the upstate farmland and lay claim to its produce.

      • Wad

        So, you believe that when panic sets in, the burghers of New York City would form a standing army or militias and sack the upstate hinterlands?

        Food always seems to find its market. As long as NYC can outbid others and pay its way, it will always find food without adventurism.

        • Nathanael

          What would NYC be bidding with?

          It’s not like it (a) has factories, (b) is a crucial port, (c)…well, you get the picture.

  • EngineerScotty

    Portland Transport has a somewhat different take on the subject of austerity and transport.

  • City secession would certainly show the city-hating transit-hating ex-urban and rural politicians where the money is coming from. A similar proposal – but one where the ex-urban area is seceding from the city – is getting some play in California. The proposed new state “South California” would consist of all the inland Republican counties from Sacramento south through rural east California to the Inland Empire, Orange County, and San Diego. Of course, what would the incentive be for San Diego and Orange County to subsidize Riverside, San Bernardino, and the other poverty stricken counties in the proposed state?

    Be careful what you wish for also applies to the new proposal by Utah Senator Hatch and others to allow states to secede from the Highway Trust Account and keep all of the federal gasoline and diesel taxes collected in their state. Considering how Utah has a lot of freeway miles and little traffic, it is hard to understand how they would come out ahead in this proposal.

    • EngineerScotty

      Secession might benefit California, if then Prop 13 could be repealed. Of course, how to divy up the state’s enormous debt would be a big sticking point.

      That said, looking at the map of which California counties would form the new state, it seems that “East California” would be a better name.

      Of course, the irony is that the teabagger half of the state is the half that shares a border with Mexico…

      • Wad

        EngineerScotty wrote: “it seems that “East California” would be a better name.”

        A colleague suggested Methifornia.

        Hilarity ensued.

  • Ann Onymous

    “but valuable environmental and public consultation rules enforced at the national level may not be taken seriously more locally. Attaching the rules to the awarding of federal funds ensures that they are.”

    As transportation professional, I can say this is rubbish. The rules do not lead to better results. They drive up costs and they often result in outcomes that are socially, economically, and environmentally suboptimal. ISTEA and SAFETEA-LU only partly redressed this. All sorts of federal policies unbalance the transportation system; most blatant are federal funding inequities between highway and transit projects (80/20 and even 90/10 splits vs. 50/50) and the incredible federal red tape that transit and even bike-ped projects are subjected to (e.g. New Starts, Safe Routes to School) vs. the relative dearth of oversight for highway projects. Both lead to favor highways, cars, and the better-heeled at the expense of other modes and the less advantaged.

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