Category: Social Justice

» Are public transportation operations too much of a redistributive function to be funded by local governments?

Since 1998, Congress has banned the use of federal funds to pay for public transportation operations in communities of more than 200,000 people, effectively requiring transit agencies to pay for all of their salary, electricity, and fuel costs using local or state revenues. Meanwhile, the U.S. government has continued to sponsor a majority of costs for capital expenses, including the construction of expensive new fixed-guideway bus and rail lines.

This split in funding has resulted in a number of particularities in the American transportation system — during the recent recession, transit agencies actually received more money to pay for new construction programs from the federal government’s stimulus and steady transportation allocations, but less to sponsor services from fluctuating state and local revenue sources. This has produced a situation in which many cities are actively building new rail lines even as they’re cutting offerings on their bus operations.

Should Washington be asked to help find a way out?

Since last year, when the full effects of the recession were making themselves clear, some agencies have been clamoring for the federal government to take a bigger role in operations funding; they’ve argued that the stimulus would have little effect if they’re forced to fire drivers and technicians. Recently, several Democratic Senators have suggested promoting a two billion dollar emergency operations aid plan and several agencies have been asking for the flexibility to use capital funds for operations, though the American Public Transportation Association and several other agencies argue that this would limit their ability to adapt to changing fiscal conditions; they prefer their operations and capital budgets separate.

In the past, I’ve argued against federal aid for operations, suggesting that such policy would reduce local funding responsibility and ultimately diminish the ability of the U.S. government to fund investments in new corridor construction programs. Federal Transit Administrator Peter Rogoff suggested last month that local agencies must find more local funding before the federal government will commit to sponsoring their expansion schemes.

Nonetheless, it may be worthwhile to consider the possibility of entirely reversing the current equation — what if the federal government paid for operations costs while local governments invested in new capacity?

Paul E. Peterson — the urban political theorist whose views on most issues I hardly share — nevertheless provides an interesting approach to considering this question. In his seminal 1981 book City Limits, Peterson addresses the issue of what role urban governments should have within the U.S. federal system. He argues relatively persuasively that cities and their leaders should have only a minor interest in promoting policies that are designed to move wealth from that city’s wealthiest residents to its poorest; “The local interest in economic growth all but precludes a commitment to redistribution,” he suggests (93). “Broad-scale redistributive policy proposals are inappropriately addressed to local governments. For example, if a city-wide minimum wage is passed, it will drive business outside the city’s boundaries. If good quality, subsidized housing is built with local funds, not only must it be paid for out of local tax dollars, but it might very well attract low-income families from other places” (173).

The suggestion is that cities cannot in their own budgets commit to politics that aid the poor; these policies generally have the tendency to encourage the wealthy to leave cities and the poor to stay, ultimately resulting in a declining tax base. Rather, Peterson argues, cities will produce more benefit by investing in developmental projects that increase attractiveness and expand the tax base. Obviously, all of these arguments must be understood with a grain of salt — they’re not all-encompassing, and cities are affected by trends outside of their own making. We also must assume that it is in a city’s primary political interest to want to increase its tax base.

Also, Peterson does not argue against redistribution entirely — City Limits does leave room for higher levels of government to be involved in funding services designed specifically for the poor — he simply points out that it is not in a city‘s long-term interest to use locally raised funds on the lower class. After all, the net migration in and out of a city can be quite significant (the city of Baltimore, just to take an example, has lost a third of its population since 1950), while the country as a whole, and its tax base, will mostly remain constant.

If we take these assumptions as more or less true, what implications do they have for public transportation? The answer comes down to both whether we define transit operations as a redistributive resource or as a developmental one and whether the tax base of a transit district is sufficiently broad as to be able to ensure long-term revenue sources from middle and high-income populations.

The first question — whether transit operations are redistributive or developmental — is not easy to answer. If a bus or rail system serves almost entirely as mobility of last resort, used only by people in the lower class to get around, it is almost assuredly redistributive. Cities that provide such services are, according to Peterson, investing in something that will ultimately lower the local tax base (I’m not sure if I would go that far, but the argument still makes some since). In these situations, it would make complete sense for the federal government to pay for operations, because it is unfair to burden already poor cities with the need to raise local funds to cover social services.

The more progressively oriented Washington’s political climate is, in other words, the more local transit operations would be subsidized. The question of how many services to provide comes down to how much we want to help the lower class.

On the other hand, if transit proponents are to suggest that bus and rail operations in themselves produce economic benefit — i.e., if you have more buses on the same line, you get an increase in economic activity — than there is an argument for local funding based on Peterson’s assumptions. If the transit system is used by a whole spectrum of the population and increases overall efficiency of the local economy, it isn’t really redistribution. In these cases, it seems highly advantageous for cities to invest local money in their day-to-day transit, even if it means taking out loans to do so.

But the other problem posed by Peterson’s arguments is where the money is coming from; the basis of the city “limits” relies on the idea that the wealthy can leave (presumably into the suburbs) if they feel overburdened by taxes to support the local poor. Yet if a transit district is large enough, this poses less of a problem. For example, if a district covers everyone in a metropolitan region and taxes them all, there is no problem with paying for redistributive transit services — assuming the taxes aren’t so high as to encourage people to leave the region entirely.

On the other hand, if that district fails to grow with an expanding population, it may lose its ability to perform these redistributive functions. Take Dallas as an example: Though the local DART agency includes a number of suburban jurisdictions within its tax base, it hasn’t expanded to encompass the region’s far exurbs, ultimately reducing its ability to maintain necessary budgetary growth. This means that it has less of a capacity to invest in essential transit services that don’t necessarily ensure long-term economic benefit.

Is a potential answer to ask Washington to pay for operations as cities and their metropolitan regions invest in new rail and bus capacity as a developmental tool? Perhaps: If cities investing in new public transportation projects can prove that that spending will increase their tax base over time, there may be advantages to taking out loans to pay for new projects and then paying them back using the corresponding increase in local tax revenues. On the other hand, because cities have a whole variety of circumstances, some places may be more capable of doing do than others; whereas a fast-growing metropolis like Phoenix may have no problem seeing immediate return in its capital investments, cities with falling populations like Detroit may not. In those situations, it should be the federal government’s role to step in, even on construction spending.

It may be in the federal government’s interest to provide adequate operations funds to ensure (or even require) a minimal level of transit services in every community of a certain size. That idea, however, requires federal intrusion into policy that is overwhelming affected by state and local decision-making; this could pose insurmountable obstacles to this concept. That said, it may be time for cities to take more responsibility for the funding of new transit capacity through capital construction. If these investments do produce a measurable return on investment — and that’s an argument made frequently by proponents of new light rail lines, for instance — then municipalities should have an economic interest in using local funds to pay for them.

Image above: New York City’s George Washington Bridge Bus Terminal, by Yonah Freemark

» How will automobile-dependent suburbs handle an influx of the poor?

A new Brookings Institution report by Elizabeth Kneebone and Emily Garr puts in dramatic clarity the rise of suburban poverty in the United States. Not only do a plurality of impoverished Americans now live in the suburbs of major metropolitan areas — 1.5 million more than in their respective central cities — but in many regions, central city poverty fell in the period between 2000 and 2008, even as it rose in the surrounding suburbs.

In the time period studied, 5.2 million more individuals descended into poverty, which in 2008 included 13.2% of the population — before the most recent recession and its devastating economic effects.

In most regions described by the study, which documented changes in the nation’s 95 largest metropolitan areas, poverty rates in suburbs and central cities mirrored one another — and overall growth statistics roughly replicated trends we’ve been seeing for years. Central city poverty rates were nearly twice as high as those in the suburbs, 18.2% versus 9.5%. Meanwhile, suburbs grew by 12.5% overall, compared to urban cores, which grew only by 3.9%. The nation suffers from growing economic inequality: more than 30% of the population fell below 200% of the poverty line by 2008. The situation has undoubtedly grown worse over the past year.

But poverty is clearly shifting outwards: the number of people living in poverty grew by 25% overall in the suburbs, compared to only 5.6% in central cities. In eighteen of the 95 metropolitan areas studied, inner-city poverty decreased or remained the same even as suburban poverty increased or remained the same. This was true of Northeast U.S. regions as a whole. The old assumptions about American cities being home to the poor and their suburbs housing the wealthy are quickly falling by the wayside.

I wrote about Paris’ investment in its suburban transit capacity on Tuesday to show how regional officials have prioritized improving public transportation in areas outside of the inner city. The French example — spurred by abundant transit within the city of Paris but insufficient services virtually everywhere else in the Île-de-France region, despite high densities and elevated social needs — may be increasingly relevant for the U.S.

I mentioned Boston, San Francisco, and Washington as three places that could benefit from expanded investments across the suburbs, and indeed, all three feature decreasing poverty rates in the urban core and increasing rates in the suburbs, as noted in the table below. Each has an old, relatively small central city and a focused transit system, fast-regenerating urban cores, in addition to a number of built-up, somewhat dense suburbs. (Note, however, that “suburbs” like Cambridge, Oakland, and Arlington are considered “central cities” by the Brookings report.) The same could be said for Baltimore, New York, Providence, and St. Louis, each of which are experiencing similar trends.

In these regions, the socio-spatial geography of a gentrifying core with less-wealthy surroundings stereotyped by Paris is coming closer to reality — though of course there is still plenty of poverty in American inner-cities. Thus far, few metropolitan areas have responded adequately to the transportation concerns that will progressively manifest themselves; while central-city-oriented transit networks are promoted vigorously, the concerns of suburbs are sidelined (including by this site). This condition seems unlikely to improve, with few metropolitan areas actually planning as a region, unlike Paris, where transportation planning and financing is conducted from the regional level.

There are major differences between the U.S. and France: American suburbs are incredibly sprawled-out, which means that high-quality, high-capacity transit would be both inefficient and inappropriate in most places. Indeed, U.S. poverty can increasingly be defined as a car-dependent one — which means that expecting to address transportation needs of the least well-off in the suburbs through better public transportation will be a failure in the short-term. This also means, unfortunately, that policies that increase costs of driving will fall directly on a large number of the working poor.

The development of a more equitable and sustainable transportation system demands an intense effort to densify and pedestrianize the same suburbs that are rapidly becoming economically diverse. We cannot continue allowing — and often subsidizing — people to live in isolated cul-de-sac neighborhoods completely inaccessible to anything by anything but a private automobiles. We must construct new town centers in suburban communities with essential services and mixed-income housing accessible via transit to urban cores. The current trends, enforced by local, state, and national planning decisions, are producing a lower class that spends far too much on private transportation.

It’s a reckless course barreling straight towards increasing inequality.

Metropolitan Areas where Center City Poverty Decreased while Suburban Poverty Increased between 2000 and 2008 (table is sortable)

Cities with the largest number of transit commuters. Place Transit commuters 2014 Transit share 2014 Change in transit commuters 2005-2014 Percent change 2005-2014 New York City 2,231,978 57% 359,638 19% Chicago 354,088 28% 59,963 20% Los Angeles 197,771 11% 26,561 16% Philadelphia 171,117 27% 31,974 23% San Francisco 163,539 34% 38,650 31% Washington 123,845 36% 29,646 31% Boston 114,861 34% 34,596 43% Seattle 81,278 21% 29,988 58% Jersey City 62,672 49% 16,676 36% Baltimore 49,603 19% 1,426 3% Remainder of the U.S. 4,034,522 3% 700,877 21% Source: U.S. Census, means of transportation to work.

Note: Poverty levels are defined by the U.S. government and equal $21,834 or less annually for a four-person family in 2008 dollars. Chart based on data from the Brookings Institution.

» California Governor proposes cutting state support for transit to balance the budget.

The most stormy period of the recession may have passed us by, but states and cities continue to face the devastating consequences of the millions of jobs lost over the past two years. Unlike the national government, which is able to maintain a budgetary deficit, lower-level governments in the U.S. federal system have a legal requirement to produce a balanced budget each year — a difficult task to fulfill when raising taxes is political suicide even as citizens expect a minimum standard of minimum public service.

As falling tax returns have become standard, that’s bad news. It’s especially troubling for transit systems in California, which may face a collective $1 billion cut in support if Governor Arnold Schwarzenegger gets his way on the state’s next budget.

California’s legislators faced down a massive budget deficit earlier this year, closing a gap of $43 billion in February and $26 billion more in July only by cutting aid to schools, health care institutions, and prisons. For next year, it has another $21 billion for which to account, and there are fewer and fewer places from which to skim the fat.

The Governor is expected to argue that the state’s commitment to mass transit ought to be one such casualty when he announces his proposed budget early next year. His plan would transfer about $1 billion in annual funds currently devoted to public transportation operations to other essential services, basically leaving local transit agencies to fully sponsor their own services. The gap would have an immediately destructive effect: Los Angeles’ Metro transit agency, for instance, has come to rely on $50-100 million in yearly state appropriations. This is compared to the system’s roughly $3.8 billion budget for FY 2010; in other words, this is no minor loss, and the same principle applies to the state’s other bus and train networks.

Mr. Schwarzenegger has been fighting to reduce funding for transit agencies for years, despite his claims to be a “green” politician at the recent Copenhagen Climate Conference. Since 2007, he has led the state legislature in redistributing transit money towards other programs, though that effort was declared unlawful by the State Supreme Court in June, leading to the repayment of $3 billion in missing tax revenues to needy transit systems.

Another such transfer would be similarly against the law, so the Governor has invented what his staff sees as a novel policy to get around the issue: get rid of the source of the problem. Mr. Schwarzenegger would simply eliminate 5¢ of the state’s sales tax currently pointed towards transit programs and replace it with a new excise tax of an equal sum designed to go to the general fund. Protections for highway spending, of course, would remain entirely in place. The Governor plans to ask Washington for aid, but no support has yet materialized. Offshore oil digging is an additional element of the plan.

Whether the Governor will get his way in his last year of office is up for question — particularly since he currently has a 27% approval rating. Yet the legislature will have to find spending cuts somewhere, since the assembly’s Democratic majority isn’t large enough to vote for increased taxes that would be necessary to prevent any service reductions. California’s constitution makes it very difficult for the legislature to agree to new sources of revenue.

The proposal would strike at the heart of the state’s transit systems after a difficult year. Generally poor economic conditions resulted in an overall decline in ridership nationwide of 3.8% in the first nine months of the year, according to the American Public Transportation Association. That statistic will not improve if transit agencies continue to make service cuts as a result of fewer revenues — before the state cuts spending any further. Already planned for next year: AC Transit in Oakland will reduce operations by 8%, San Francisco’s Muni will increase fares, San Jose VTA will delay the purchase of dozens of buses, and San Diego will cut more than half its services on Sundays. This is no easy time for the state to reduce aid.

Last Christmas, I wrote of the need to use transit as a tool to encourage social justice, and I maintain that public transportation must fulfill a role beyond that of simply increasing “mobility.” Reducing public transportation service is an outrageous idea when driving is simply too expensive for a large percentage of the population, as the environmental consequences of carbon emissions mount, when the lives of our cities demand alternatives to the automobile.

California’s predicament is no easy one: it could maintain state financing for transit, but it would have to reduce spending somewhere else, probably just as important. The state’s politicians have a responsibility to their constituents: to be courageous enough to fight for increased taxes to pay for the vital needs of their communities. That may require altering the constitution, or it may necessitate convincing a few Republicans of the need to augment revenues. Either way, something must be done; a cutback in services is no way to celebrate the new year.