Categories
Elections Finance Infrastructure

Should the U.S. spend $1 trillion on new infrastructure?

» Donald Trump wants to make a big splash by supporting a huge new infrastructure bill. But we don’t want to end up with the construction of massive new highways from coast to coast.

After six years of proposals for significant new transportation funding being proposed by President Obama, and then being shot down immediately by intransigent Republican Congresspeople, infrastructure is suddenly the talk of Washington. Both Donald Trump and Hillary Clinton proposed major infrastructure packages during the campaign, and the Trump transition team includes a proposal for transportation investment as one of its top priorities. As I’ll describe below, this proposal would likely primarily fund transportation projects that exacerbate climate change and encourage exurban sprawl.

We must remember that the primary goal of transit advocates should not be to simply get projects built. It should be to create more livable, less carbon-intensive cities by shifting the country’s transportation system away from personal automobiles.

The nascent administration has offered few details other than a 10-page fact sheet released by a consultant in October. This proposal would release $137 billion in tax credits over ten years to private companies spending on infrastructure; in exchange, those companies would be expected to raise $167 billion in total equity, supporting a potential $1 trillion in total new construction, amounting to the largest U.S. infrastructure binge since the construction of the Interstate Highway System. In contrast to the vast majority of public works in the U.S. today, projects would have to raise user fees to pay back initial loans and corporate equity contributions.

This proposal, though not fully developed, has been widely critiqued.

Most importantly, perhaps, Ben Fried contends in Streetsblog that supporting any Trump Administration proposal is suspect; “There is no moral basis for collaboration on Trump’s infrastructure agenda—because enabling any aspect of the Trump policy platform will grease the skids for enacting the entire Trump worldview. No piece of infrastructure is worth that risk.” Whatever the benefits of new infrastructure, Fried suggests, the Trump Administration is so problematic that we must fight any of its initiatives.

From a financial perspective, the tax credits would do nothing to support projects that don’t make money, meaning all hope is lost for fixing Flint’s lead-in-water problem through this legislation, for example. The plan would provide automatic 10 percent pretax profits to contractors, just as a matter of general policy. Credits could be distributed even to projects that were already planned, meaning that there is no guarantee that the investment would actually increase investment or produce new jobs. Meanwhile, the proposal provides no source to actually pay for those tax credits, meaning they could be “weaponized” to “justify future cuts in health care, education and social programs,” as Ronald Klein has put it.

Writing in The New York Times, Paul Krugman focuses on the proposal’s secondary effect, which would be shifting infrastructure from public to private hands. This is “not a plan to borrow $1 trillion and spend it on much-needed projects,” he writes. “It is, instead, supposed to involve having private investors do the work both of raising money and building the projects—with the aid of a huge tax credit that gives them back 82 percent of the equity they put in.” Krugman’s point is that the proposed tax credits are, in reality, giveaways to companies that will then own and operate infrastructure permanently at little to no costs to themselves. The plan, in this way, is privatizing future public assets.

These are, undoubtedly, important concerns that put into question not only Mr. Trump’s motivations on the development of this infrastructure bill, but also his policy agenda on several fronts.

Beyond the financial mechanisms and the question of whether to invest in public or private construction, though, the issue of what a new infrastructure bill might fund has been little mentioned in the press. And the reality is that, for the future of the transportation system, the types of projects funded may ultimately have more of an impact than the way they’re funded.

At the heart of the infrastructure proposal is the requirement that new projects built should be self-funding in some form. All the loans that government equity-through-tax-credits are supposed to support will have to be paid back through some sort of user fee. What consequence will this have?

For one, as noted above, many of the projects funded will probably have already been planned, meaning that government funding will replace private-sector investments that would have occurred anyway. Two, this package will massively preference projects that are designed to be profitable—not projects that may serve the greater good. In such, it wouldn’t be particularly surprising for the primary beneficiaries of this legislation to be oil and gas pipelines.

In the transportation space, as many have noted, profit-motivated investments will mean, overwhelmingly, toll highways. Given that the vast majority of transit lines—perhaps all of them in the U.S.—are deficitary, and the fact that it is inconceivable to imagine developing pedestrian and biking projects that charge customers to use them, a transportation investment structured on these lines seems likely to be very auto-oriented, at least compared to current federal transportation expenditures, which are distributed 1-to-4 transit-to-highways.

But I’ll take a step further. What if, somehow, the infrastructure bill were focused on transportation and required that investments followed a similar modal ratio as they do today? If the bill guaranteed $200 billion in transit investments and $800 billion in highway spending over ten years,* would it be worth it?

I am skeptical. We must remember that the primary goal of transit advocates should not be to simply get projects built. It should be to create more livable, less carbon-intensive cities by shifting the country’s transportation system away from personal automobiles.

At the heart of the issue is that fact that new transit infrastructure is typically only moderately successful in encouraging people to get out of their cars, while new highway infrastructure is usually very good at getting people into their cars. In other words, the net effect of a tripling of the nation’s expenditures on transportation—even if those expenditures were spent in similar proportion as today—would be not a reaffirming of the status quo; it would represent a dramatic incentive to get many more people driving.

Why am I convinced that a massive increase in overall transportation expenditures would do more than just reinforce existing trends? For one, the reality is that exurban or interurban highways are simply much cheaper to build than urban transit. Take Texas’ SH 130, a four-lane toll highway that was extended by 40 miles in 2012 for a cost of a bit more than $1.3 billion.—that’s about $33 million a mile. For comparison, Denver’s 12.1-mile West light rail line, which opened in 2013, cost $707 million, or about $60 million a mile. Minneapolis’ 9.5-mile Green Line light rail, which opened in 2014, cost $957 million, or about $100 million a mile.

In other words, for the same transportation dollar, an investment in new highways can produce dozens of miles of multi-lane, grade-separated highways in rural areas while an investment in urban transit can mean relatively little new capacity.

No new investment of any sort would likely encourage better use of existing infrastructure, thereby improving the performance of existing transit lines and supporting infill development rather than greenfield construction.  

Two, given the fact that a Trump transportation bill requires projects to contribute user fees, it seems very unlikely to contribute to the reconstruction of the Interstate System, since political and public support for the tolling of existing roads is basically nonexistent. This means funds will go to new projects, not renovations.

What would be the direct consequences of thousands of new miles of grade-separated highways? Massive incentives for increased sprawling, unwalkable development, destruction of greenfield and agricultural land, and disincentives for investment in urban infill. Significantly more vehicular travel generated through induced demand. Massive new carbon emissions.

What would be the direct consequences of hundreds of new miles of new transit investments, funded through the same mechanisms? Potentially significant additional transit ridership—but maybe not; what is more likely in most cases is a redirection of riders from buses to trains. New transit-oriented development might surround many new lines, but given that most public investment is being directed to suburban highways, and the simultaneous political resistance to increased density, there likely wouldn’t be much new development from a relative perspective.**

Where does this leave us? For the good of our environment and for the good of our cities, doing nothing would likely be better than supporting this infrastructure package—even if we ignore the potentially disastrous political and financial concerns about this infrastructure bill noted by others. More transit investment simply isn’t worth it in the context of far more massive new highway spending that would overwhelm any potential benefits being derived from transit projects. Indeed, no new investment of any sort would likely encourage better use of existing infrastructure, thereby improving the performance of existing transit lines and supporting infill development rather than greenfield construction.

Ironically, losing out on the massive stream of potential federal funding doesn’t mean that new transit projects have to grind to a halt. Indeed, the results of local referenda this election reinforced the notion that when presented with a generous transit plan, voters in many cities will jump at the opportunity to tax themselves to pay for it. Indeed, the large majorities that came out to support better transit—and pay for it—in Atlanta, the Bay Area, Indianapolis, Los Angeles, Raleigh, and Seattle*** were voting for more livable, less car-dominated communities. Even though each of those plans rely on federal funding to support full implementation, even without support from Washington, much of what they propose can be completed.

Transit agencies will make the reasonable argument that they need funding to bring their systems back to a state of good repair. But this infrastructure bill won’t be of much use to address that problem, since it focuses on expansion projects. And new highways that suck ridership out of the transit system won’t help much, either.

Suggesting that new infrastructure funding isn’t worth it given what will be funded comes close to heretical in a political environment in which such investment has suddenly been identified by politicians on both the right and left as the solution for whatever it is that supposedly ails America. But we need to think long and hard about what kind of society we want before spending billions of dollars for new transportation projects all over the place.

* This would represent roughly a tripling of federal transportation spending, since the U.S. Department of Transportation currently distributes about $50 billion in surface transportation funding annually.
** Of course there are many benefits of investing in public transit projects, and many transit projects will in fact result in many additional riders. But maximizing the benefits of new transit projects—particularly in a short time horizon—is difficult because of the realities of land use.
*** In Atlanta, Los Angeles, and the Bay Area, more than 70 percents of voters expressed themselves in favor of the referenda.

Categories
Elections Infrastructure

On the ballot 2016

screen-shot-2016-11-03-at-13-29-56

» If passed, referenda in dozens of cities could expand funding for transportation across America.

This year’s U.S. election has overwhelmingly focused on the dynamics between the two presidential candidates, and for good reason: As I documented earlier this year, the policy differences between Hillary Clinton and Donald Trump on infrastructure are substantial. Control of the presidency and the U.S. Congress could dramatically alter the availability of funds for public transportation and active transportation projects; it is worth emphasizing that the Republican Party has repeatedly argued for the elimination of federal funding for transit, bike, and pedestrian programs while maintaining federal support for highways. At the state level, party control matters for transit as well; North Carolina’s GOP, for example, cut off most funding for light rail last year through a legislative maneuver.

But more is at stake, thanks to dozens of referenda offering voters the opportunity to support billions of dollars in new expenditures on public transportation. The largest referenda are Los Angeles’ Measure M, which would raise $120 billion for a huge expansion of that county’s transit network, and Seattle’s Sound Transit 3, which would fund one of the nation’s most extensive light rail networks. Many other metropolitan areas have smaller plans under review, from Raleigh to Atlanta.

Based on recent elections, we can expect between 70 and 80 percent of these referenda to pass.

In this post, I profile the most significant referenda for public transportation investments. Interestingly, though the majority of measures described here allocate more than half of their proposed revenues to transit, the argument put forward by many of the referenda supporters has been that these projects will address traffic congestion. As Laura Nelson documented in the L.A. Times, the traffic-reduction benefit of transit investments is limited at best, and often takes decades to be realized. Nonetheless, what many of the referenda will do is fund improved local bus services and new fixed-guideway projects, whether BRT or light rail.

For transit supporters, the real question is whether to support referenda that–even as they expand funding for transit significantly–nevertheless also invest in considerable highway expansion. Is it worth voting for new light rail lines if that also means voting for new highway capacity? In places like San Diego, for example, Measure A would pay for better transit, but also more road funding, and that’s provoked some in the environmental movement to oppose the measure; a similar dynamic is at play in Charleston. On the other hand, referenda in Detroit and Indianapolis fund transit alone.

Note that there are dozens of additional referenda on ballots countrywide. Many provide funding for highways only, or would reserve money collected through gas taxes to transportation uses, and others are for small cities that I do not provide details on here. Check out the Eno Center for Transportation’s ballot measure database for all referenda.

The following table lists the major public transportation-related referenda on this November’s ballots; details are provided further down in the post. I will update this page as election results come in on November 8. Live tracking will be here on this Google Sheet.

Referendum (click for details) Share in favor Passed?
California Proposition 53 49.0%* x_cc_naim_red
Alameda-Contra Costa CA Measure C1 82.1% check_cc_kimmi_studio_green
BART CA Measure RR 70.5% check_cc_kimmi_studio_green
Contra Costa CA Measure X 62.7% x_cc_naim_red
Los Angeles CA Measure M 69.9% check_cc_kimmi_studio_green
Sacramento CA Measure B 65.1% x_cc_naim_red
Santa Clara CA Measure B 71.5% check_cc_kimmi_studio_green
San Diego CA Measure A 56.9% x_cc_naim_red
San Francisco CA Measures J/K 66.9/34.9% x_cc_naim_red
Broward FL Sales Tax 51%** x_cc_naim_red
Atlanta GA MARTA Sales Tax 71.3% check_cc_kimmi_studio_green
Indianapolis IN Income Tax 59.4% check_cc_kimmi_studio_green
Detroit MI Region Property Tax 49.5% x_cc_naim_red
Wake County NC Sales Tax 52.7% check_cc_kimmi_studio_green
Central Ohio Region Sales Tax 73% check_cc_kimmi_studio_green
Toledo OH Property Tax 58.5% check_cc_kimmi_studio_green
Charleston SC Sales Tax 51.6% check_cc_kimmi_studio_green
Kitsap County WA Sales Tax 51.7% check_cc_kimmi_studio_green
Seattle Region WA Sales Tax 54.0% check_cc_kimmi_studio_green
Spokane WA Sales Tax 55.6% check_cc_kimmi_studio_green

* “Failure” in this case is good for transit, as it prevents having to undergo referenda for each major bond sale in the state.

** However, a related sales tax did not pass, so this funding will not go forward.

California (Polls close at 11 PM EST)

California Statewide Proposition 53 (constitutional amendment) [2/3 of voters must approve to pass]

  • Would require voter approval before state issuing of $2 billion of bonds or more that would require an increase in taxes or fees for repayment.
  • This would slow projects such as California’s High-Speed Rail by forcing new bonding capacity necessary to support the project to undergo voter approval.
  • Supporters | Opponents

Alameda/Contra Costa Counties Measure C1 [2/3 of voters must approve to pass]

  • Parcel tax ($96 per panel) extension for 20 years (does not raise existing taxes).
  • Would raise approximately $30 million annually; all would go to transit.
  • Maintains existing AC Transit services and continues low fares for youth, seniors, and people with disabilities.
  • Supporters

Bay Area region (Alameda, Contra Costa, San Francisco Counties) (BART) Measure RR [2/3 of voters must approve to pass]

  • Bond funded by property taxes
  • $3.5 b
  • Funding for more frequent and reliable service through the Better BART plan. BART infrastructure renewal would occur between 2017 to 2038. All funding would go to transit.
  • 90% of funding will extend to repairing critical infrastructure, with 10% aimed at potential expansion to relieve congestion.
  • Supporters | Opponents

Contra Costa County Measure X [2/3 of voters must approve to pass]

  • 1/2-cent sales tax
  • $2.9 billion/30 years
  • Would fund Keep Contra Costa Moving Transportation Plan.
  • 27% of funding would fund improvements to BART, bus, ferry, and train networks. Funds will aid in the acquisition of new BART trains, improved local bus service, and initial funding for a potential future East Contra Costa Transit Extension. The remainder of the funding would go to non-transit transportation projects.
  • Supporters | Opponents

Los Angeles County Measure M [2/3 of voters must approve to pass]

  • 1/2-cent sales tax
  • $120 billion/40 years
  • Would fund Los Angeles County’s long-term transportation plan
  • 27% of funding would go to transit operations; 35% would go to transit construction projects; 2% would go to state of good repair; 1% would go to regional rail; the remainder would go to active transportation, roadways, and local governments. Major new transit projects funded by the plan include extension of Foothill-Gold Line light rail extension; West Santa Ana light rail; Sepulveda Pass transit corridor; Green Line extension; Vermont transit corridor; Crenshaw light rail extension; and several BRT projects.
  • Supporters | Opponents

Sacramento County Measure B [2/3 of voters must approve to pass]

  • 1/2-cent sales tax
  • $3.6 b/30 years
  • Would fund Sacramento Go mix of transportation projects, including road, transit, and other projects. 26.35% of funding ($952 m) would be distributed to Sacramento RTD, including expansion of Green Line light rail to airport and BRT from Cosumnes River College to the Southeast Planning Area. Remainder of funding would go to highway and other non-transit projects.
  • Supporters | Opponents

Santa Clara County Measure B [2/3 of voters must approve to pass]

  • 1/2-cent sales tax
  • $6.5 b/30 years
  • Would fund Envision Silicon Valley.
  • Projects funded would include $1.5 billion for BART extension to downtown San Jose and Santa Clara; $1 billion for Caltrain grade separations and capacity improvements; $500 million for improvement of local transit service; the rest would fund highway projects.
  • Supporters | Opponents

San Diego County Measure A [2/3 of voters must approve to pass]

  • 1/2-cent sales tax
  • $18.2 b/40 years
  • Would fund transportation projects throughout the county, including highway, open space, transit, and other infrastructure projects.
  • Transit component is $7.5 billion and includes a new light rail line from San Ysidro to Kearny Mesa and more than a dozen new Rapid routes (arterial rapid transit lines). The remainder of the funding would go to highway and other non-transit projects.

San Francisco County (City) Propositions J and K [1/2 of voters must approve to pass]

  • 3/4-cent sales tax (Proposition K)
  • $150-155 m per year/25 years
  • 2/3 of funding will be dedicated for transportation (Proposition J); of this funding, 12.4% would be distributed to Muni transit service improvement and reduced fares; 18.8% would be distributed for Muni maintenance and infrastructure; 9.4% would go to expansion; 14.1% would go to regional projects; and the rest would go to street projects.
  • The two propositions interact; without the passage of Proposition J, the passage of Proposition K would mean funding would go to the general fund.
  • Supporters

Florida (7 PM EST)

Broward County sales tax

  • 1-cent sales tax
  • $12.6 billion/30 years
  • Half of the tax would extend over 30 years for regional transportation projects; the other half would extend over 20 years for municipal projects, with the last 10 years shared between municipalities and the county.
  • At the county level. bus service would be improved; BRT service would be added to several routes throughout the county; light rail between the airport and the convention center; east-west light rail would also be completed.
  • Supporters

Georgia (7 PM EST)

Atlanta City MARTA sales tax

  • 1/2-cent sales tax
  • $2.5 b/40 years
  • Would fund MARTA expansion projects ($6.3 billion in capital costs, $4 billion in operations costs in total). All funding would go to transit.
  • Projects planned include 7 light rail lines connected to Beltline, 2 BRT lines, a heavy rail extension, 5 infill stations. Clifton Corridor light rail, which extends into DeKalb County, would require additional funding. Local bus service would be improved, and new arterial rapid transit routes would be added.

Indiana (6 PM EST)

Marion County/Indianapolis Proposal 145

  • 0.25% income tax
  • $1.68 b/30 years
  • Would fund the IndyGo Marion County Transit Plan. All funding would go to transit.
  • Projects planned include three BRT routes, including the 35-mile, electric BRT Red Line, and improved local and express bus service. Project would be completed by 2021.
  • Supporters | Opponents

Michigan (8 PM EST)

Detroit Region (Wayne, Oakland, Macomb, Washtenaw Counties)

  • 1.2 mills property tax increase
  • $4.6 b/20 years
  • Would fund the Regional Transit Authority Master Plan. All funding would go to transit.
  • Projects planned include four BRT lines (Gratiot Ave, Michigan Ave, Washtenaw Ave, Woodward Ave), a commuter rail line from Ann Arbor to Detroit, and improved local and express bus services.
  • Supporters | Opponents

North Carolina (7:30 PM EST)

Wake County (Raleigh)

  • 1/2-cent sales tax
  • $1 b/10 years
  • Would partially fund the Wake County Transit Plan ($2.3 billion in total). All funding would go to transit.
  • Projects planned include a commuter rail line between Durham and Raleigh; new BRT lines extending in four directions from downtown Raleigh; and additional local and express bus service.
  • The plan would plug in directly to the already-passed sales taxes in Durham and Orange Counties, which are also funding transit improvements.
  • Supporters | Opponents

Ohio (7:30 PM EST)

Franklin County (Columbus) and portions of surrounding counties sales tax (Ballot Issue #60)

  • 1/4-cent sales tax
  • $62-65 million/year for 10 years. All funding would go to transit.
  • Renews dedicated sales tax for Central Ohio Transit Authority. Primarily funds operations for transit in the area.

Toledo City Issue 18

  • Renewal of existing 1.5 mil property tax.
  • $7.9 m/10 years. All funding would go to transit.
  • Supports Toledo Area Regional Transit Authority, funds a quarter of the agency’s operations.
  • Supporters

South Carolina (7 PM EST)

Charleston County sales tax

  • 1/2-cent sales tax
  • $2.1 b/25 years
  • 29% of funding would be distributed to public transportation projects. The remainder would be spent on road projects.
  • Opponents

Washington (11 PM EST)

Kitsap County Fast Ferries

  • 3/10-cent sales tax
  • Tax expected to raise $33 million/year. All funding would go to transit.
  • Funding would support faster, passenger-only ferry service from Bremerton, Kingston, and Southworth to Seattle, as well as improving bus service. Overall travel times would be reduced dramatically. Service would begin between 2018 and 2020.

Seattle Region Sound Transit 3 – Proposition 1

  • 1/2-cent sales tax; License tab increase of 0.8%; Property tax increase of 25 cents per $1,000 of assessed valuation.
  • $27.7 billion/25 years.
  • Would support Sound Transit 3 (full cost $53.8 billion). All funding would go to transit.
  • Plan would support 62 miles of new grade-separated light rail, including new lines to Everett, Ballard, West Seattle, Redmond, Issaquah, and Tacoma; BRT would be added on I-405 corridor; commuter rail would be extended south to DuPont; express bus service would be improved.
  • Supporters | Opponents

Spokane County Proposition 1

  • 1/10-cent sales tax beginning in 2017; additional 1/10-cent sales tax in 2019; both taxes would extend to 2028.
  • $20 million/6 years
  • Would fund STA Moving Forward plan. All funding would go to transit.
  • Plan would increase service on local routes, creation of BRT routes between downtown Spokane, community college, University District, Gonzaga, and Browne’s Addition. Additional routes would be added.
  • Supporters

Image at top: Flickr user Mary (cc). Icons: Naim, Kimmi Studio, Austin Condiff (cc).