Paying More and Getting Less - How $8 Billion for Transportation Could be Better Funded

Just this week the US House of Representatives overwhelmingly passed a bill to provide the Highway Trust Fund with $8 billion from general revenue. The fund is expected to have a multi-billion dollar shortfall in 2009 because it is not bringing in enough revenue from the gas tax to cover all of the projects for which it is supposed to pay. This shortfall is a result of two things, and although the House bill postpones an inevitable reckoning it does not address the problematic lack of vision in the 2005 transportation bill. That 2005 bill predestined the current shortfall by authorizing more spending than the gas tax could fund (because it did not raise the gas tax), and it doomed the fund to shortfall when oil prices rose and driving declined (thus depressing gas tax revenue, which is fixed and not tied to the price of gas). The White House has threatened to veto the bill, saying it is a gimmick and shifts costs away from users to taxpayers in general. They recommend moving money from the mass transit account to the highway fund. This is also an inadequate response.

The basic problem in funding our transportation system today is that there is little public or political recognition of three truths:

1. Good infrastructure costs money.
2. People are not currently paying the full cost of their transportation, whether it is by vehicle or transit.
3. The best projects are not being funded because no prioritization process exists.

Of most importance in this current blog is truth number two. This is the situation, in very broad strokes: Drivers are not paying the full cost of driving. They create external costs in terms of environmental damage, congestion, injuries, and the national security harm of oil dependence. Transit users also don’t pay the full cost of their movements, and transit systems are generally quite subsidized, yet they create external benefits in that they are often more environmentally friendly, ease road congestion by diverting travelers, and can boost real estate value around subway stops, etc. Both have additional costs that are not mentioned, and both provide other benefits. The key though is that transit’s additional benefits outweigh its externalities, whereas highway’s do not. Funding these systems should stem from that context.

If there was no Highway Trust Fund then obviously there would be a public value in paying for transportation from the general fund. But that’s not the most efficient way to run the system. Charging users an accurate, true-cost price for their driving and transit not only helps maximize the use of already built infrastructure but ensures that enough funding exists for new infrastructure, both roads and transit. Getting the prices right holds a lot of promise for improving the system.

But getting the prices right also means people need to come to terms with the true cost of transportation. In short, it probably means paying more. If they don’t want to directly pay the full cost of moving about, then the system needs to be subsidized, and that means money must be diverted from uses like education, healthcare, and defense. A good transportation system is not free. But funding the system from the general tax fund does not get the same bang for the buck as when users pay directly for their use, either through vehicle-miles-travelled charges, gas tax, pay as you drive insurance, congestion pricing, or combinations of those charges and others. If users pay more directly for their transportation, they really do end up paying less for better system performance in the long run.

-Daniel Lewis

The Future of Cars

In earlier posts we have commented on how high gas prices appear to have a densifying effect, encouraging people to live closer to where they work and play so that they can avoid the cost of driving. Transit ridership is up. Home prices in urban centers appear to be holding their value better than those in the suburbs. Yet while these trends may develop permanence, it is also important to note that the high gas prices driving this shift are having an equally potent impact on vehicle technology. As technology improves vehicle fuel efficiency, it would make sense that the densifying power of gas prices will be moderated to some extent.

Most people have heard that more hybrid and several new plug-in electric vehicles are coming to auto showrooms in the next few years, signifying a step change in car technology. But there are also significant developments occurring in conventional cars that run on gasoline. And most experts agree that gas will still be an important source of fuel for years to come. It will likely take both innovations to conventional engines and the increasing use of electric cars to wean the country off of oil. Importantly, for vehicles running on gasoline, reductions in fuel consumption translate directly to greenhouse gas reductions: each gallon of gas avoided prevents the emission of about 20-25 pounds of carbon dioxide.

To improve efficiency car makers are focusing on all aspects of a vehicle: its engine, transmission, weight, drag, and rolling resistance. Surprisingly, only a fraction of the energy stored in a gallon of gasoline ever makes its way into the actual powering of a vehicle’s wheels. In fact, more than two thirds of the energy in gasoline is lost by the engine to heat, friction, and idling. More still is lost to the transmission. Automakers are turning to a host of new technologies to fight these losses.

Similar to how the airplane technologies developed for fighters and bombers in World War II led to the first jet-powered passenger aircraft, high gas prices are driving innovations in vehicles that only a few years ago were unimagined or seemed futuristic. Automakers are in some ways facing their own war time situation. Locked in struggle with their competitors, a weak economy, and producing a portfolio of cars that don’t meet consumer’s fuel efficiency needs, it literally is a battle for survival for companies like General Motors. The only way to stay afloat is to innovate and create cars that consumers want – that is, cars that can get more miles per gallon. Whether produced by Ford, Honda, Toyota or GM, it is likely that better cars will emerge from these tough times.

So while transit is alive and healthy, it is also possible cars may emerge from this mess looking better than ever. Which brings up interesting policy questions – assuming we reduce or eliminate the negative environmental externalities associated with automobiles, what should their role be in our future transportation network? How will growth patterns continue to change? Would we seek to infinitely expand roadway capacity? Or would a multimodal approach still be necessary? We’re a long way from needing to answer these questions, but they are worth pondering.

-Daniel Lewis

Washington, DC Transportation and The Future of Metropolitan Regions

The Washington Post ran an article on Sunday that rekindled old and lingering divisions in the debate about what the future holds for metropolitan transportation, as can be seen in Alan Pisarski’s response. The article points to some of the strategies the District of Columbia is considering for improving transportation safety and increasing revenues. These include their successful bid to change Constitution Avenue NE from a one-way street to two ways, as well as proposals to remove a reversible lane on 16th St. NW, closing the I-395 tunnel, expanding the use of speed cameras, increasing parking fees, and increasing fines for crosswalk encroachment.

The merits of these proposals are debatable, but instead of having a reasoned debate on the subject, those involved seem to have fallen into the trap of the typical cars versus transit, suburbs versus city dispute that has paralyzed transportation policy for decades. Pisarski argues that these types of proposals are “suicidal” for DC because they attempt to consciously make the city less welcoming to vehicles. The city admitted as much, saying that they want to put the needs of their residents and businesses before those of suburban commuters.

This argument misses the point that both the city and the suburbs are part of one large economic engine for the region and the nation. The flow of people and goods through and throughout the region is essential for both the local and national economy. Attempts to separate the economies are pointless. Inner city, inner suburb, outer suburb, and exurb – these are all components that work together to create a vital economic unit of labor and jobs.

The real question that needs to be asked of each of these proposals is “would this proposal benefit the metropolitan area?” (and by extension, the region and the nation). Unfortunately, there is no one to ask or answer this question effectively because there is little impetus for comprehensive regional planning in this country. Neither the federal nor state government effectively encourages the type of regional cooperation necessary to make good decisions about these types of proposals. The end result is a counterproductive clash between city and suburb for resources.

So what would a regional planning body do if it had the power to do it? We actually know the answer to that question because Ron Kirby of the local Council of Governments is quoted in the article as essentially agreeing with the regional policy of trying to get more people living in the District and downtown. This is not at all surprising. When overarching goals such as energy and climate change are considered, of course it makes sense to encourage more people to live and work downtown rather than commute from the suburbs. It is economically and environmentally more efficient to redevelop downtown areas than to build more and more suburban developments dependent on non-existent cheap gas. Moreover, the true cost of driving and parking in cities has been vastly underpriced for decades.

That said, closing roads and raising prices for commuters without making corresponding improvements in mass transit and affordable housing within the city is not a good economic strategy for metro areas. But this is the type of incomplete planning that will continue to occur in the absence of regional planning bodies with the power of the purse. With real power, these bodies could provide comprehensive solutions that, instead of pitting us against each other, could unite us around common goals.

-Joshua Schank

Can buses compete with trains?

This week, the Metropolitan Transportation Authority (MTA) and local officials in New York announced the beginning of the “Select Bus Service”, the city’s first Bus Rapid Transit (BRT) line. The new line replaces existing limited stop operations on the heavily-travelled Bx12 route across the central Bronx. In other words, it is an express bus that only stops at major stations. The BRT includes a combination of technologies that planners hope will provide faster and more reliable travel. It integrates clearly-marked “stations” with unique street furniture, dedicated bus-only lanes, signal preemption and more widely spaced stops than the service it replaces. Importantly, riders will need to swipe their farecards or deposit coins in curbside machines located at each stop and receive a proof-of-payment before getting on the bus. By reducing boarding times and delays due to traffic congestion, the MTA hopes to eventually shave 10 to 12 minutes off of the 58 minute trip, a roughly 20% reduction in travel time. Since the trip will now take less time, each bus can make more trips, improving efficiency.

This new service is just the most recent example of the fresh ideas that planners are using to spice up the most unglamorous of transit technologies—the bus. While novel to New York, cities across the world have been implementing BRT systems and technologies to considerable success for more than a decade. Bus speeds of up to 25 mph (on average) and subway-like reliability on Bogota’s TransMilenio system have garnered that network global recognition. Today, more than 63 BRT systems operate on six continents, and as many as 93 more are planned worldwide. By integrating new technologies, exclusive rights-of-way and novel service policies, the goal of BRT is to approach the customer satisfaction and service quality of rail transit while avoiding the often prohibitive fixed costs of such systems.

There are some good reasons why the general public is often more favorably predisposed to rail service than buses—particularly local and collector routes. Rail cars are usually more spacious, offer more freedom of movement and are easier to board and exit. The ride on rail is often smoother with fewer sharp turns, no potholes and gentler stops and starts. More importantly, however, rail has a reputation for reliability and frequent service – most subway and light rail riders don’t typically check a schedule, they just show up at the station and wait for the next train. Rail riders generally feel confident that the system will get them where they’re going on time and in relative comfort.

As a result of the inherent operational differences of bus service (running in mixed traffic, often lower operating frequencies, on-board fare collection), it has been difficult for traditional buses to compete with rail in terms of service quality. However, in order to retain the influx of new transit customers driven to bus systems by $4 gas, transit operators need to innovate. By integrating BRT-like technologies on more routes in their networks, transit operators can decrease the uncertainty involved in bus travel—capturing new segments of the market in the process. Particularly on low-frequency collector or suburban routes, providing easily-accessible real-time service data—so that riders can minimize their wait times—may be more important to improving service quality than adding an extra bus or two. In the same way, adding a dedicated bus lane and/or signal preemption along a heavily-travelled corridor will make it easier for buses to keep to a reliable schedule that users can depend on.

As a result, though transit operators in the US can engage in concerted efforts to roll out comprehensive BRT systems along major corridors where they are appropriate, they should not neglect the local service that feeds much of the network. The same technologies and procedures that make BRT a unique and increasingly important transport option can play a significant role in increasing user satisfaction and service quality on all of the other elements of a regional bus network—finally putting rubber and steel on a more even playing field.

-Contributor Andrew Lukmann