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Virginia’s Transpo Future: Charge Drivers Less to Build More Roads

Congratulations are owed to Bob McDonnell. He’s scored a victory on his transportation funding plan, cementing his legacy (though infuriating conservatives, including his hand-picked successor). His achievement is being called the first bipartisan initiative to pass in Virginia in decades. And what does this great deed accomplish? Secure revenue to fuel a new era of wasteful road-building in the commonwealth of Virginia.

McDonnell's new transportation funding plan will pay for the wasteful and unnecessary expansion of Route 460. Photo: Doug Kerr/flickr

Virginia’s state House and Senate both voted this weekend to approve McDonnell’s funding plan for transportation, despite opposition from anti-tax activists. McDonnell’s original proposal to eliminate the gas tax entirely got massaged a little bit, turning into a 3.5 percent tax on the wholesale price of gas.

His proposal to raise the sales tax survived the legislature, as did the $100 tax on alternative fuels – an idea that is somewhat less backward now that some semblance of gas tax remains. Democrats hate it, though, and McDonnell has already signaled a vague willingness to “review” it.

The sales tax hike, however, is as backwards as ever. McDonnell is raising the sales tax 0.3 percent in most parts of the state but 6 percent in the populous Hampton Roads and northern Virginia areas. Much of the extra funds raised in those areas will go to local projects, but it still means the most urban and transit-rich areas, where most of the state’s non-drivers live, will pay more for a plan that disproportionately funds rural roads.

Drivers will pay five cents per gallon less than they did under the old gas tax, given current prices — shrinking their contribution by about 30 percent. Rather than strengthen the gas tax’s small but important incentive to drive less, McDonnell’s plan turns it the other way.

The other reason the sales tax hike won’t do the trick is that sales taxes aren’t an appropriate tool when what you need is a stable source of funding.

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Fiscal Cliff Deal Leaves Big Questions on Transportation

The most significant part of the fiscal cliff deal for transportation was the bump that some transit riders got in the form of a commuter tax break that’s now on par with what drivers get. There are two more minor elements in the bill for transportation — both of them random enough to fit into the Washington Post’s list of “weird” provisions in the deal — but Congress punted on the bigger questions for another two months.

Electric motorcycle enthusiasts got a tax break in the fiscal cliff deal, but there wasn't much else for transportation. Photo: Engadget

Here’s what they did decide:

Extension of the Railroad Track Maintenance Credit. This provision has been around since 2004 but expired last January. It gives a tax credit to shortline railroads for maintenance work they do on their tracks. The fiscal cliff deal extends this tax credit until next January.

The credit encourages shortline railroads to invest in repair, rather than abandon the lines that serve 11,000 rail shippers in 49 states.

“This bill is not about saving short line railroads,” lobbyist Adam Nordstrom told a trade magazine. “It is about keeping short line railroad customers connected to the national railroad network with adequate and safe rail service, which is why this provision has such broad appeal.”

Extension of Credit For 2- or 3-Wheeled Plug-In Electric Vehicles. This tax credit, which can cover up to 10 percent of the vehicle’s cost up to a maximum of $2,500, applies to electric motorcycles but not electric bikes. To qualify, the vehicle has to have a 2.5 kilowatt-hour battery and be capable of speeds higher than 45 miles per hour. Electric bikes top out at about 20 miles an hour by law.

Meanwhile, the fiscal cliff agreement between Congress and the White House postponed the day of reckoning for the “budget sequester” two more months. The cuts in the sequester included an 8 percent reduction in all discretionary spending, which would have taken a bite out of new transit construction and Amtrak funding. The threat of those cuts still hangs over the next round of budget negotiations, which face a March 1 deadline.

At that time, the debt ceiling will need to be raised again and the interim federal budget will be expiring. So don’t expect a measured, thoughtful debate over solutions to long-term policy and economic issues. Expect another frenzied bout of negotiations, characterized more by finger-pointing and name-calling than substance, and another punt of some kind.

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What Do Anti-Density NIMBYs and Road-Wideners Have in Common?

Matt Yglesias made an excellent point about NIMBYs over at Slate yesterday. Writing about opposition to multifamily residential construction in the tony neighborhood near Lake Calhoun in Minneapolis, Yglesias wondered how much value residents really place on keeping the area a “single-family residential community.”

The Alaskan Way Viaduct will cost 20 times more than drivers themselves will pay. So everyone else will pay instead.Image: WSDOT

Just because there’s value in something doesn’t mean people are willing to pay for it. Yglesias likens it to his third-generation iPad. “There would undeniably be a value in upgrading it to a fourth-generation iPad,” he says, but “it’s not worth what it would cost.”

So how much do the residents of Lake Calhoun value keeping their neighborhood single-family? Enough to let the entire rest of the city pay for it. But enough to pay for it themselves? Not a chance. Yglesias lays it out:

One thing [the] neighborhood group could do is look at the land they don’t want to see developed and buy it, thus leaving them free to do what they want with it. But they don’t want to do that, presumably because even though there’s “a value” in getting their way it’s less than the value of using the land for higher-density construction. What they want to do instead is get the city government to block the high-density construction, because that way the cost is spread across the entire population of Minneapolis in the form of foregone tax revenue.

The Minneapolis housing example reminds me of debates around the value of congestion-free roads. When roads are congested, many commuters jump to the “let’s build a wider road” approach, meaning all the taxpayers should pick up the tab to make their morning drive to work faster. But would these same commuters pay directly to speed their commute?

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Why It Can Be More Affordable to Live in an “Expensive” City

So, how did Washington, D.C. — widely perceived as one of the most expensive cities in the country — end up topping a “most affordable” housing list?

First and most importantly, adjust for average income levels. Then, factor in transportation costs. Using that formula, the D.C. region is tops among 25 American metro areas in a new study from the Center for Housing Policy and the Center for Neighborhood Technology that looks at the ability of moderate-income households to shoulder the burden of housing and transportation costs [PDF]. The notoriously pricey Boston and San Francisco also make it into the top six.

The joint study came up with some other surprising findings. For example, it turns out it’s more affordable to live in New York City than it is to live in Cincinnati, based on the metrics used. And in general, renters fare better than homeowners in covering their costs of living.

In all 25 cities, middle-class households spent more than half of their incomes on combined housing and transportation costs between 2000 and 2010. Miami had it worst, with housing and transportation eating up 72 percent of the average income.

The study, titled “Losing Ground,” focuses on the disparity between income levels and steadily rising housing and transportation costs. Over the decade, researchers found, for every $1 in income gains, combined housing and transportation costs rose $1.75.

“Losing Ground” follows a 2006 study from the same organizations that took the novel approach of factoring in transportation costs to gauge the affordability of different metro areas. Measuring affordable living by looking strictly at housing costs, without including transportation, “tends to mislead people,” said Scott Bernstein, president of the Center for Neighborhood Technology, in a teleconference yesterday. Gathering this information comprehensively, he said, “has profound implications for a set of policy choices.”

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Pro Walknomics/Pro Bikenomics

CicLAvia  10-9-11

Increased business for a cafe on CicLAvia route benefiting from higher foot traffic and bicyclists stopped for a break.

In order for our society to tackle the challenge of creating a more walkable and bikeable North America, with the appropriate devotion of money, resources and public space, we have to build a solid political consensus. Unfortunately, some of the compelling reasons to prioritize active transportation have been unnecessarily politicized into partisan issues. We can approach this dilemma by attempting to trek up the hill of overturning deeply imbedded political opinions, or we can find universal common ground and build up from there.

The fact that issues like deliberate policy measures to cap or tax carbon dioxide emissions as part of climate change mitigation are untouchably controversial in much of the United States doesn’t mean we can’t move forward on an active transportation agenda sold under less controversial banners. This is why I love the growing dialogue around the economic benefits of bicycling and walking.

When it comes to walking, many businesses understand pretty intuitively the value of fostering good foot traffic — the ones that are surviving, anyway. With bicycling, however, a lot of business owners and political decision-makers just don’t get it at all. When Elly Blue wrote “Why an additional road tax for bicyclists would be unfair,” which was later followed by a series of posts on Grist under the banner of bikenomics, I started to view bicycling under a completely different lens. This view and emphasis on economics has influenced my own writing and advocacy ever since.

Elly Blue (left) & April Economides (right) At Pro Walk-Pro Bike

April Economides, principle of Green Octopus Consulting, who headed up the program to create bicycling friendly business districts in Long Beach, is another voice in the bike movement who has been emphasizing economics. She was recently hired by Bike Nation to manage their bike share program proposed in Long Beach. Blue and Economides got together for the first time for a presentation at Pro-Walk/Pro-Bike titled “Bikenomics & the Business Case for Bike-Friendly Business Districts”.

Their presentations complemented each other very well, with Blue setting up some of the conceptual framework for why looking at the economics of bicycling is important, while Economides outlined the nuts and bolts of the outreach and programs done so far in Long Beach. April encouraged people early on in her talk “to engage the business community; we can’t just preach to the choir”. Read more…

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Tennessee DOT Moves Past Road-Widening as a Congestion Reduction Strategy

In the late eighties and nineties, every traffic issue the Tennessee Department of Transportation faced was assigned the same solution: a bypass. But over the years, the department has come around to a new way of doing things, according to 40-year TDOT veteran Ralph Comer. Comer says the current commissioner, John Schroer, wants to become known as the “no-bypass commissioner.” He simply believes there are usually more cost-effective ways of solving transportation problems.

"Context sensitive solutions" preserve main streets like this one in Franklin, Tennessee instead of turning them into high-speed thoroughfares. Photo: Westhaven

This way of thinking led Schroer, Comer, and the department into a conversation with Smart Growth America. They teamed up to examine the state of Tennessee’s transportation system and devise a path forward, bringing together an impressively diverse coalition, from the Tennessee Disability Coalition to the Sierra Club, the public transit association to the road builders association. One irrefutable fact brought them together: The TDOT project pipeline would cost nine times more to construct than available funding would permit. Something had to change.

Tennessee is in better fiscal shape than most states and is one of a small handful of states with zero debt – meaning it pays zero percent of its budget toward debt service, leaving a lot more for infrastructure. That’s a luxurious position in today’s economic context. So if a close examination of cost-effective transportation strategies can be transformative for Tennessee, just imagine what it can do for states even more desperate to get costs under control.

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How State DOTs Got Congress to Grant Their Wish List

Bike and pedestrian funding got slashed. Federal assistance for transit operations was rejected. Even the performance measures – arguably the high point of the recently passed federal transportation bill – are too weak to be very meaningful. For Americans who want federal policy to support safe streets, sustainable transportation, and livable neighborhoods, there were few bright spots in the transportation bill Congress passed last month.

AASHTO Director John Horsley is thrilled with the new transportation bill, which gave state DOTs just about everything they wanted. Photo: International Transport Forum

But state transportation departments are celebrating. They scored victory after victory, getting a bigger share of federal funding with fewer rules and regulations attached.

In the Senate, advocates were able to work some reforms into the bill and mobilize grassroots support for amendments like the Cardin-Cochran provision, which put funds for street safety projects in the hands of local governments, not state DOTs. But the House never managed to pass a bill of its own, and the opaque conference committee process was an exercise in horse-trading that advocates found difficult to penetrate.

The final product, which included measures like raising the federal contribution for certain highway expansions, seemed finely tailored to benefit DOTs in several ways. “This is a bill written by and for the benefit of state DOTs at the expense of both federal oversight and regional and community outcomes,” wrote David Burwell, director of the climate change program of the Carnegie Endowment for International Peace, in an email shortly after the bill passed. He said the policy changes “are too elegantly crafted and specific in their effect to have been written, or even conceived, by members of Congress or their staff.”

For state DOTs, access to lawmakers is a given. “We worked very closely with the House and Senate to craft those measures,” AASHTO Director John Horsley confirmed to Streetsblog in an interview yesterday. He said that while AASHTO offered recommendations, no text written by AASHTO made it into the bill verbatim, as far as he knows.

According to Horsley’s account, AASHTO followed a pretty standard script when it came to advocating for their interests on the Hill. Every stakeholder and special interest under the sun had its lobbyists knocking on lawmakers’ doors, offering their two cents – everyone from gravel producers to equipment manufacturers to environmentalists to free market fundamentalists. It’s just that the state DOTs seemed to get everything on their wish list.

Horsley said AASHTO had been laying the groundwork for many, many months before conference started, working with Republican House Transportation Committee staffers as well as aides of both parties in the Senate. (He didn’t mention working with House Democrats, who were shut out of the process from day one.)

The House is where the magic happened for AASHTO. “We’ve been very pleased with where the Senate bill started,” Horsley said. “And we were even more pleased when the House and the Senate in conference agreed to incorporate a lot of the House provisions that were even better for states.”

What were those House provisions? Horsley went through the list:

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A New Bill Passes, But America’s Transpo Policy Stays Stuck in 20th Century

The House of Representatives approved the transportation bill conference report this afternoon by a vote of 373 to 52. [UPDATE 4:00 PM: The Senate has also approved the bill, 74-19.] This is a bill that’s been called “a death blow to mass transit” by the Amalgamated Transit Union, “a step backwards for America’s transportation system” by the Rails-to-Trails Conservancy, “a retreat from the goals of sustainability and economic resiliency” by Reconnecting America, “a substantial capitulation” by Transportation for America, and “bad news for biking and walking” by America Bikes.

Remember the empty highways that symbolized the House Republicans' vision of America's transportation system? The final transpo bill might as well have the same unfortunate cover.

After more than 1,000 days of waiting since the last transportation bill expired, the nation’s new transportation policy is a grave disappointment to people seeking to reform the current highway-centric system.

The fact that the House GOP tried and, for the most part, failed to reverse the progress made under presidents Reagan and Bush the elder offers a small degree of consolation. “Some of the worst ideas pushed initially by House Republicans went nowhere – funding the highway system with new oil drilling revenues, taking transit out of the highway trust fund, de-federalizing transportation funding – to mention some of the most radical proposals that were seriously being put forward,” wrote Deron Lovaas of NRDC this morning. “But… that pretty much exhausts the good news.”

So what does the bill actually do? Overall, it doesn’t change a whole lot, and the most significant changes tend not to benefit livable streets or sustainable transportation. Here’s a breakdown.

Length and funding. The bill lasts a year longer than the Senate bill would have, expiring at the end of September 2014. That gives states, cities, and the construction industry substantially more stability and allows them to move forward on projects that have been delayed for years because of the uncertainty surrounding federal funding. It maintains funding levels at around $54 billion a year, as did the Senate bill, which is roughly current levels plus inflation.

While some have criticized the complex funding mechanisms that prop it up and its departure from a user-pays model, the Congressional Budget Office reported this morning that the bill actually reduces the deficit by $16.3 billion.

Everyone seems to understand that Congress won’t be able to pull this kind of magic for long and will soon have to deal with the long-term insufficiency of current Highway Trust Fund revenues to cover the nation’s transportation needs. However, the gas tax was not raised, and at the same time the House passed this bill, it also approved an appropriations bill that prohibits even studying the possibility of moving toward a VMT fee.

Non-transportation-related items. The Keystone XL pipeline and the EPA’s ability to regulate coal ash as a hazardous substance, introduced into the transportation negotiations by the House Republicans, were stripped out of the bill. The RESTORE Act to spend BP oil spill fines on Gulf Coast restoration is included.

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UPDATE: Where Did the Senate Get the Extra Money to Pay For Its Bill?

UPDATE: The final bill contained a $2.4 billion transfer from Leaking Underground Storage Tank Trust Fund to the Highway Trust Fund in June 2012 and three transfers from the General Fund to the Highway Trust Fund, totaling $18.8 billion. They were: $6.2 billion to the Highway Account of HTF in October 2012; $10.4 billion transfer to Highway Account of HTF in October 2013; and $2.2 billion transfer to Mass Transit Account of HTF in October 2013. They dropped the car tariffs change and the gas guzzler transfer. They replaced those smaller transfers and offsets with the pension provisions and a tiny bit from the roll-your-own-cigarettes change.

Congressional leaders announced opaquely last week that they’d “moved forward” on a deal on the highway section of the transportation bill. That means transit, rail, and safety programs are still being negotiated. And it means the financing of the bill hasn’t yet gotten the seal of approval from the House.

What do roll-your-own cigarette machines have to do with surface transportation? Photo: News Herald

Still, both houses of Congress have agreed to spend more on the transportation bill than the Highway Trust Fund itself can bear. (The House gave its green light a couple weeks ago when it nixed the Broun motion to keep transportation spending to HTF receipt levels.) To overspend the HTF but still plausibly deny that they’re deficit-spending, the Senate Finance Committee has done some pretty fancy footwork to offset the expenditures with other savings.

Chair Max Baucus (D-MT) squeezed blood from the stone of the U.S. budget, and many of his colleagues have lauded him as a miracle worker. But Taxpayers for Common Sense – and lots of other people with common sense – say the numbers don’t really add up. The information below comes from TCS’s report, released last week, on the Senate pay-fors.

Stick with me here – this is all a little convoluted, but understanding the funding is a key part of the process. While the Senate transportation bill may be a good stop-gap compared to the option of even shorter extensions, a look at the funding shows why it provides no long-term answers to the question of how to pay for transportation.

The sources of new Highway Trust Fund revenue Baucus et al came up with are:

A transfer from the general fund: $4.97 billion. This is the most obvious example of deficit spending – just taking money from the Treasury to pay for transportation. That’s on top of $34.5 billion the Treasury has already coughed up in the last four years to bail out the Highway Trust Fund – something no one wanted to repeat.

Dedication of imported car tariffs to the Highway Trust Fund: $4.52 billion. This revenue would no longer go to the general fund.

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The Value of Value Capture

Cross-posted from Strong Towns blog.

Today we spend money on infrastructure in the hopes of creating growth. That’s backwards. Infrastructure should not be a catalyst for growth but something that emerges in support of productive patterns of development. There has to be a relationship between the infrastructure we build and the value that is created.

Altoona, Pennsylvania is a classic railway town, built using a traditional value capture method that helped railroads finance their investments. Image: ePodunk

Late last month I wrote about the return on investment of our highway projects (Paved with good intentions, April 30). I pointed out what is obvious to anyone who thinks it through: Even if modern transportation improvements really did create a lot of wealth, we capture too little of it to be able to continue this system as we have built it.

The example I used was a diverging diamond in Colorado, a high return investment by today’s standards. The official numbers were that this $7.2 million investment would generate $157 million in wealth and prosperity. Instead of debating that — demonstrating the fiction of such numbers is old hat for us – we simply pointed out that $157 million in GDP growth would only return $260,000 to the federal coffers for highway projects.  Since $260,000 is substantially less than $7.2 million, repeating this great wealth generation trick, not to mention maintaining this diverging diamond, is going to be difficult.

I was really disappointed that nobody took me up on my challenge to defend the value of the overall system. I did receive a second hand rebuttal that essentially argued that my analysis was too simplistic, that I’m overlooking all of the (unidentified) second order and third order growth effects. This is what I call the “it’s the system, dude” argument. Sure, we may lose money on each project that you measure, but the overall effect of the system generates more than enough wealth to keep it all going.

This is what I call the Infrastructure Cult. We have no proof for our belief that highway spending creates prosperity, we just believe it to be true. We believe it so strongly that we can easily dismiss evidence to the contrary.

I’m going to repeat my challenge: Someone demonstrate how highway funding, and American post WW II development in general, is not simply a large Ponzi scheme, where spending generates the near term illusion of wealth in exchange for massive, unfunded, long term obligations. Show us how it is making the country financially stronger. I’m dying for someone to make this case as opposed to simply spout the belief.

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