Orphan Road

The Urban Land Institute states what should be obvious: if you keep voting down transportation funding, sooner or later you're not going to have any money to spend on transportation:

Among U.S. cities/metro areas studied, the Seattle-Puget Sound area's infrastructure-funding gap was nearly twice that of Dallas-Fort Worth, which was second at nearly $400 per capita. ULI, a nonprofit education and research institute that focuses on land-use, population growth, urban planning and the environment, worked with financial consultants Ernst & Young to produce the 60-page study.

"By 2040, the population of the Seattle area is projected to grow by 1.7 million new people, with 1.2 million new jobs ... that's like dropping the population of greater metropolitan Portland into the Puget Sound area," John Hempelmann, co-vice chairman of the Reality Check Task Force for ULI Seattle, said Wednesday.

I-695, Prop 1, the monorail... the list of transportation projects ultimately rejected by Puget Sound voters is long (going back to the Bogue plan in 1911 and Forward Thrust in '68).

But the really maddining thing is that the Seattle Metro area has generated an absolutely astonishing amount of wealth in the last decade or two. We're home to two of the richest men on planet Earth, not to mention the highest number of millionaires per capita in the country. And yet, despite all this, we can't fund an infrastructure project (and don't get started on funding for other priorities like education).

At the end of the day, then, this is our own fault. After all, we have no state income tax, so our taxes end up being more regressive than most places. Partly, of course, it's a leadership issue. But at the end of the day, trying to lead people in the Northwest is like herding cats. This part of the country, tucked away in the corner, appeals to (and breeds) a certain kind of loner, a do-it-yourself type. As such, we're pretty skeptical of mass movements and big organizations. That's too bad, because we have the resources (natural, intellectual, and financial) to really show America (and the rest of the world) how to do things right.

(via CIS)

The conservative Heartland Foundation argues that taxing land -- not the buildings or improvements, but the land itself -- to fund transit makes sense, since proximity to transit increases land values:

As dozens of studies across the globe have shown, the benefits of transit show up as increased land values. Land served by public transportation is worth more than land not served. The amount varies, of course, depending on the quality of service, type of development, general standard of living, etc., but the effect is large.

A study published in 1997 for RTA, "The Effect of CTA and Metra Stations on Residential Property Values," by Gruen Gruen & Associates, implies that just the existing rail system adds land value in excess of $1.6 billion a year.

Another study, published in Regional Science and Urban Economics in 1995, considered land prices before and after construction of CTA's Orange Line and calculated the line added 17.4 percent to land values.

But we've known that since the Union Pacific days, haven't we?

(via The Overhead Wire)

Exempting the state from paying itself sales tax on transportation projects seems eminently reasonable:

The tax exemption would apply only to transportation projects that use tolls to pay for at least $1 billion of the total cost or use tolls to pay at least 50 percent of the cost. The $735 million Narrows bridge qualifies because more than 90 percent of its cost will come from tolls that will be paid through 2030.

For the replacement Highway 520 bridge across Lake Washington, the exemption would cut $180 million from the cost of a project that is now estimated at $4.38 billion.

Other projects that could be eligible for the sales tax exemption are a new Interstate 5 bridge across the Columbia River, which will cost $3 billion to $5 billion, and the north-south corridor in Spokane, which is expected to cost between $2 billion and $2.5 billion.

The reason this matters for the Columbia River Crossing, of course, is that WSDOT would have otherwise bought the bridge in Portland to save the sales tax.

The Seattle Times editorial board is generally opposed to taxes. People who use Zipcar/Flexcar are specifically opposed to the extra-high taxes they pay to use that service. So, naturally, the two agree that taxes on car sharing services are bad.

(Mike from CIS reports on the bill after spending the day in Olympia)

I'm generally supportive of the view that the state should incentivize car sharing. But I gotta say, I find the exorbinant taxes we levy on people who don't vote -- 9.7% on car rentals, a staggering 15.6% on hotels, etc. -- kinda annoying. I can't say I blame the legislature too much. It's hard to raise revenue, and apparently Tim Eyman neverrents a car or stays in a hotel in Seattle, so that's what gets taxed. And the revenues do fund worthy local institutions, after all.

EvergreenRailfan asked in the comments section here what the difference was between Tax increment financing (which is illegal in WA) and Local Improvement Districts (which funds the SLU streetcar). There's a clear answer in the .pdf I linked to in my previous streetcar post:

Tax increment financing approaches (TIFs) are similar to LIDs in that they define areas within which private property owners will benefit from future infrastructure improvements. In the case of LIDs, the private sector is assessed a direct tax to support the development of the new infrastructure. In the case of TIFs, the public sector is able to increase its borrowing powers on the basis of the added tax revenues that can be anticipated as a result of the improvements.

So TIF is the government saying, "we're going to make captial improvements in this area, the property values will rise because of that, and so we can float a bond to pay for the improvements and pay it off as the higher tax revenue come in." LID says "we're going to make improvements by taxing the residents of this area directly, but they also will probably see their property values rise, which will make the tax more palatable to them."

TIF doesn't require you to actually levy a tax on the land owners, but it assumes the city will have more revenue down the road because property values go up. So it's riskier. But it doesn't require you to have an existing tax base in the area you're going to improve. This is why it's probably used most often with eminent domain cases, where the government is coming in and condemning a whole bunch of land for a big project.

A Sounder rider wants to know why Sound Transit wasn't checking tickets more agressively on a train to the Seahawks game. ST responds that this was an atypical situation, but the question serves to illustrate the different attitudes people have towards transit here in the Northwest.

Growing up in New York, I'd occasionally notice that the afternoon commute on the Long Island RR was just so packed that the conductors would give up on checking tickets. Most of the riders had monthly passes, so it didn't really make a difference. But for a kid like me, who was sneaking into the city to go hang out in the East Village and pretend to be cool, I could sometimes get away with a free ride. Of course, they charged an extra $2 to buy the ticket from the conductor, so it wasn't really worth the risk. Better to just buy the ticket and maybe re-use it if they didn't punch it.

Across the pond, Matt noted that most European transit systems are similarly lackadaisical when it comes to collecting tickets. Transit is just part of the social compact there, and so many people ride it that the operating costs all come out in the wash anyway.

The costs of collecting and processing tickets are nontrivial. Skagit transit spends more collecting fares than it makes from the fares themselves. And the honor system seems to work in Houston, TX when it comes to fare collection.

Perhaps, as we build more and better transit systems in the region, and as more no-good transplants like myself move in, our collective attitude towards transit will move from "costly government pork project that I refuse to 'subsidize' " to "indispensible element of urban public life." I certainly hope so.

In thinking about the viaduct, I realized that one way to finance at least part of a surface-street alternative would be through tax-increment financing, or TIF.

TIF is used in almost every state in the union to finance local infrastructure projects, except Washington, where it's illegal. The legislature keeps trying to bring it back, but they keep running into a number of statutory and constitutional hurdles, the biggest of which is I-747, the Tim Eyman initiative that caps property tax increases at 1%/year.

"Overall, the biggest wrench thrown into the gears here is I-747," says King County assessor Scott Noble.

If I-747 sounds familiar, that's because a court threw it out last week as unconstitutional. The Governor and the Democratic state legislature, inexplicably weak-kneed at the prospect of confronting Eyman, has vowed to implement the 1% cap anyway.

I think it's ridiculous that the legislature allows themselves to be strongarmed like this (it encourages irresponsible initiatives, like this year's I-960), but if they're going to do it, they might as well get something in exchange. They ought to make an exception for TIF in the process of instituting the 1% cap. Even if 747 isn't the only thing standing in the way of TIF (there are a few other significant barriers), it could provide a political opportunity to get it back on the agenda.

There's some interesting discussion on STB on what a revised Sound Transit initiative might look like. Scaling back to Northgate and Bellevue sounds reasonable, but it would really hurt ridership.

The real issue, it seems, is how you design a package inside the Sound Transit RTA district that spends so much on King County in particular. Subarea equity dictates that you raise the same amount of money from all sub-areas and re-invest it in those areas (RTID has a similar policy for roads -- funds raised in each county are re-invested in that county).

Obviously King County gets more because it contributes more, but even that doesn't account for the disparity of building light rail to Northgate and Bellevue while investing in nothing that crosses the Pierce or Snohomish County lines.

This gets to why subarea equity is a double edged sword. While it allows the different subareas to feel like they're all getting their money's worth, it hamstrings the planning process. Planners can't just make investments where they're best for the region, they have to make sure the projects get doled out equally among the subareas, regardless of whether that's the best use of the funds.

This came into sharp relief in the Prop. 1 debate. We all thought we were voting on a $17B (or $47B) package, but in truth, each subarea was really voting on its own, smaller package that got reinvested in its area. The "yes" folks didn't really do a good job of getting that particular message out. And I don't blame them -- it's legitimately confusing!

Either we're one region or we're not. This solomonic solution seems to be giving us the worst of both worlds. Prop. 1, following this strategy, tried to walk the line between being a holistic, regional plan and being a targeted, local plan, and it succeeded at neither.

CIS is thinking about how to message congestion pricing to road warriors. All the ideas he puts forward are intersting jujitsu moves -- designed to use free-marketers own strengths against them.

Let me suggest another, that might be even simpler: congestion pricing is a use tax. Conservatives like use taxes. Many, for example, expect bus tickets to cover 100% of the cost of the bus (ignoring the fact that bus service has positive externalities that justify the taxpayer subsity). The common refrain I often hear is, "I'm never going to ride the bus, so why should I pay for it?"

Well, that argument cuts both ways. Congestion pricing simply lines up the supply and the demand to make you pay for what you use, as I've written before.

Here's something ironic: the increase in gas prices this year is causing a projected shortfall in gas tax revenue. Why? People are using less gas.

Actually, that's not ironic at all -- it's exactly what you'd expect: supply and demand. It is, however, instructive in the over-reliance on a single source of revenue to fund transportation. It also highlights just how divergent gasoline consumption and road use are becoming.

Back, say, 50 years ago, when all the jobs were in the cities, every household had one car, and all those cars were basically interchangeable Fords and Chevys that all got roughly the same gas mileage, the gas tax would have been a fairly equitable and reliable way to fund road construction and maintenance.

Today, however, the picture is different, and only getting more so. With hydrogen, biofuels, and ultra-efficient electric cars on the horizon, consumption of gasoline will soon cease to be a useful predictor of road use.

Which leads us to other types of "use" taxes, such as static (i.e. toolbooth-based) or dynamic (radio transponder) tolling. Sen. Ed Murray elaborates:

"Almost worldwide after the end of World War II, gas tax was a way that transportation was funded. We are now moving into a period of time where we have to explore what is going to ... replace the gas tax," he said.

Murray, D-Seattle, said the state needs to look at tolls to fill the gap but added, "That's going to be a long debate."

It's a debate well worth having.