Reason Foundation - Policy Areas > Transportation

Atlas Shrugged, Railroads and Warren Buffet

sam.staley@reason.org (Samuel Staley) — Tue, 03 Nov 2009 08:53:00 EST

I couldn't help but notice the irony of Berkshire Hatthaway's $34 billion offer to take Burlington Northern Santa Fe railway private. Berkshire Hathaway is the investment arm of financial mogul Warren Buffet, widely regarded as one of the world's most prescient investors ("The Oracle of Omaha"). Railroads were also the central business of the Taggart family in the famed Ayn Rand novel Atlas Shrugged.

So, is Warren Buffet showing entrepreneurial leadership during a period of increasing government intrusion into the economy? According to the New York Times:

The deal, which will also include the assumption of $10 billion in Burlington Northern debt, represents what Mr. Buffett said was a big bet on the United States. He told CNBC in an interview that railroad operators cannot do well unless American businesses were producing goods and customers were buying them.

“It’s an all-in wager on the economic future of the United States,” he said in a written statement. “I love these bets.”

Only time will tell, but railroads are also slated to be beneficiaries of government largesse as we enter a new era of federal subisidy to support intercity passenger rail (and high-speed rail in particular). Railroads will benefit directly from federal and state taxypayer subidies that upgrade track and operations. So, Buffet's investment makes sense from the view that paper profits will increase because of these subsidies even as the basic economic viability of the industry deteriorates.

So, we actually may be witnessing the further erosion of private industry via railways similar to the way Rand characterized the process in her novel.

Reason Foundation is devoting the entire week to the legacy of Ayn Rand, including an overview of her impact on popular culture and insights from co-founder Bob Poole.

More Travel = Higher Income = Lower Energy Use

sam.staley@reason.org (Samuel Staley) — Sat, 31 Oct 2009 09:00:00 EDT

The Cascade Policy Institute in Portland, Oregon has released a report that will become must reading for those involved in the transportation, climate change, and energy debate. Written by Randall Pozdena, a former research vice president for the San Francisco Federal Reserve, the study found that increased mobility as measured by car use (vehicle miles traveled, or VMT) is strongly related to increased economic growth. This relationships wasn't just statistical, but causal. Moreover, higher incomes led to innovations in automobile technology that actually reduce energy use. Thus, attempts to limit automobile use will work against very policy goals of those wanting to limit it.

From the executive summary:

The VMT-economy causality investigation finds that, indeed, VMT is a large and statistically significant driver of GDP. It finds also that, historically at least, the price of energy has not been an important driver of innovation in vehicle efficiency. If fuel efficiency could be improved, there would be positive economic effects, but limited, long-run effects on VMT. Specifically, the causality analysis reveals the following:

Although the causality between VMT and GDP is bidirectional, the primary one is for VMT to “cause” GDP growth. In the short run (2 years), an exogenous (an outside influence, such as regulation), downward shock to VMT results in a reduction of GDP of 90 percent of the size of the VMT shock. In the long run (20 years) the link is weaker, at about 46 percent.

In contrast, endogenous (an influence from within the model, research- or discovery-based) improvements in fuel efficiency appear to have a positive effect on GDP. A 10 percent increase in fuel efficiency yields only a 1 percent GDP increase in the short run, but a 6 percent effect in the long run.

VMT is not particularly sensitive to shocks to fuel price alone. The values calculated by the analysis predict well the effects of recent gasoline price increases on VMT. Increases in fuel efficiency cause positive rebounds (increases) in VMT. Although the effect is modest in the short run, after 20 years, exogenous increases in fuel efficiency cause completely offsetting increases in VMT, and thus, energy use, everything else equal.

This does not bode well for strategies such as regulated fleet fuel efficiency standards having a persistent effect on VMT or energy use. It suggests that much of the positive effect of fuel-efficiency improvements on GDP may flow from rebound effects on VMT.

Florida High-Occupancy Toll (HOT) Lanes Win 2009 Award

shirley.ybarra@reason.org (Shirley Ybarra) — Mon, 26 Oct 2009 10:43:00 EDT

From the American Association of State Highway and Transportation Officials (AASHTO) annual meeting:

“The American Association of State Highway and Transportation Officials (AASHTO), AAA, and the U.S. Chamber of Commerce are proud to announce that the I-35W Bridge in Minneapolis, Minnesota has been selected as the 2009 America's Transportation Awards Grand Prize winner. Florida DOT's 95 Express Miami Project won the People's Choice Award.”. (emphasis added)

The competition recognizes outstanding transportation projects in three categories: "On Time," "On Budget," and "Innovative Management." The ten projects that scored the highest during four regional contests competed for both the Grand Prize and the People's Choice Award.

It is understandable why the reconstruction of the Minneapolis Bridge won the award.

“In the aftermath of the catastrophic, August 1, 2007 collapse the Minnesota Department of Transportation implemented a plan to detour 140,000 vehicles, address public concerns, and begin immediate construction of the new $234 million, I35W Bridge. The massive design-build project, which included 10 lanes for traffic, several local side streets, and interchanges, was completed in 13 and half months; three months ahead of schedule.”

The People's Choice Award winner is the Florida Department of Transportation’s High-Occupancy (HOT) lanes project know as 95 Express Miami Project. A $62.9 million High Occupancy Toll (HOT) lanes project was the award winner after over 200,000 votes were cast.

This is a project that we at Reason have been following and written about here and a history of HOT lanes is here.

HOT lanes are being implemented in many states such as California, Texas, Washington state, Minnesota and Virginia. These are the wave of the future and it is great that the “People’s Choice Award” recognizes the importance of better efficiency in our transportation system.

New Zealand's Guidance for Public Private Partnerships

shirley.ybarra@reason.org (Shirley Ybarra) — Tue, 20 Oct 2009 11:17:00 EDT

The National Infrastructure Unit of the Treasury of New Zealand has published a new report entitled “Guidance for Public Private Partnerships (PPPs) in New Zealand”. This is a report that can provide significant insights to the PPP market not only in New Zealand for those working and thinking about the next steps for the PPP market in the United States.

The purpose of this guide is to outline for government agencies, potential bidders and the public the general direction and principles that will be adopted, the processes that are to be followed and the rationale for them. It also provides a framework for assessing whether a PPP is to be preferred over other forms of procurement in any given situation.

As noted in the report for New Zealand:

Public Private Partnerships (PPPs) can refer to many different kinds of relationships between the government and the private sector, but these guidelines use the term to refer to long-term contracts for the delivery of a service, where the provision of the service requires the construction of a facility or asset, or the enhancement of an existing facility.
The private sector partner finances and builds the facility, operates it to provide the service and usually transfers control of it to the public sector at the end of the contract. These contracts are sometimes also referred to as concession agreements.
The long-term nature of PPP contracts, the fact that these contracts are usually used for large and often complex projects which individual government agencies will engage in only infrequently, the importance of financing arrangements and the typically large bidding and contracting costs make it desirable to develop specialist expertise to support departments and agencies in the development of PPPs. In New Zealand, this role is played by the National Infrastructure Unit of the Treasury.

The guide looks at the well developed Australian guidance, but recognizes that New Zealand’s circumstances are different and therefore looks at what can be followed and what needs to be changed. The report looks at when/why a PPP should be considered, risk assessment, project management structure, project delivery structure, the bidding process, project negotiation, financial impacts and project review upon final negotiation.

Most importantly, the report states, “Finally, readers should note that these guidelines should not be substituted for common sense, judgement and experience. Expert advice should therefore be sought wherever appropriate.”

PPP’s are complex and there are no cookie cutters available to any country or any state in the USA. This report is well worth a review.

(Preliminary) National Rail Plan from Federal Railroad Administration

shirley.ybarra@reason.org (Shirley Ybarra) — Tue, 20 Oct 2009 10:15:00 EDT

Last Friday, the Federal Railroad Administration released a preliminary National Rail Plan as reported by Progressive Railroading.

“The Passenger Rail Investment and Improvement Act of 2008 (PRIIA) directed the Administrator of the Federal Railroad Administration (FRA) to develop a Preliminary National Rail Plan (PNRP or Preliminary Plan) to address the rail needs of the Nation. The PRIIA also directed FRA to provide assistance to States in developing their State rail plans in order to ensure that the Federal long-range National Rail Plan is consistent with approved State rail plans. Subsequent to PRIIA, the American Reinvestment and Recovery Act of 2009 (Recovery Act) sets the framework for the development of true high-speed rail in the United States. This Preliminary Plan is, therefore, an important first step in an ongoing process.”

The entire report from FRA is here.

For those following the discussion of rail, high(er) speed rail etc, this is a report worth taking a look at.

It is important to note that the report states:

“The role of public-private partnerships for these endeavors should also be explored. In this regard, FRA stands ready to work with all stakeholders who want to contribute to a comprehensive national rail plan that incorporates the needs of the States, the traveling public, the freight railroads and their customers, and promotes the National goal of a safe, efficient, and sustainable transportation system. Together, we can improve safety, foster livable communities, and improve the economic competitiveness of the United States.”

States Reject Stimulus Road Signs

leonard.gilroy@reason.org (Leonard Gilroy) — Wed, 14 Oct 2009 12:29:00 EDT

It's bad enough that current and future taxpayers have to pay for the stimulus. Luckily, drivers in some states won't have to be reminded of it every day. According to Michael Cooper at The New York Times:

The Great Depression had its red, white and blue "U.S.A. Work Program" signs and the ubiquitous "We Do Our Part" blue eagle emblems, which can still be seen in the credits of films of the era. This recession has green highway signs telling drivers when construction work was paid for by the stimulus program — but not in Georgia, which just became the latest of at least half a dozen states to forgo the signs as a waste of money.

The signs, which proclaim "Project Funded by the American Recovery and Reinvestment Act" over the red, white, blue and green logo of the stimulus, cost an average of $1,200 apiece in Georgia, said David Spear, the press secretary for the Georgia Department of Transportation. With the state putting up two signs at each project and 119 construction contracts awarded through September, the cost of the signs was adding up. The sign issue became a lightning rod for critics of the stimulus, and many of them complained to the department about their cost.

"The more we reflected on it, the more we realized they were absolutely right: it's not the best use of the money," said Mr. Spear, who added that the decision would save tens of thousands of dollars that could be spent on more construction work. [...]

The sign question has taken on partisan overtones. Some Republicans say the signs are essentially publicly financed advertisements for one of the Obama administration’s signature programs. [...]

At the local level, though, the issue seems to be more about red ink than red states. Georgia, which made the decision this month to stop buying the signs, is led by Gov. Sonny Perdue, a Republican. Texas, another largely Republican state, also banned the signs. But Virginia, which decided from the beginning not to use any of its stimulus money on signs, is led by Gov. Tim Kaine, the chairman of the Democratic National Committee.

Florida, whose Republican governor, Charlie Crist, broke ranks with his party to support the stimulus, decided not to use the signs. And New York, a largely Democratic state, stopped requiring them this summer after it was embarrassed by reports that contractors were asking for more than $4,000 for the largest signs.

At a time when states like Florida, Georgia, Texas and Virginia face massive transportation funding shortfalls, the notion of spending $1,200-$4,000 a pop for unnecessary road signs—temporary political monuments, really—is simply unconscionable.

Hopefully we won't be asked to bail out the sign makers.

Mary Peters Comments on Current Transportation Policy

sam.staley@reason.org (Samuel Staley) — Thu, 08 Oct 2009 18:04:00 EDT

Former U.S. Secretary of Transportation Mary Peters is the subject of a lengthy interview by the National Journal. In the interview, she comments on a wide range of issues, from current transportation reauthorization legislation, to aviation policy reform, to the need to move to a new funding mechanism.

Currently a private consultant, Ms. Peters favors the 18-month extension asked for by the Senate and White House because it's important to get transportation reauthorization "right". She also comments on the importance of returning to true user fees as a way to fund transportation programs, both surface transportation as well as aviation. The interview is well worth a full read.

Governor Rendell (PA) says "Help Me Kill the Office of Public Benefit"

shirley.ybarra@reason.org (Shirley Ybarra) — Sun, 04 Oct 2009 00:09:00 EDT

Cezary Podkul reports here about Pennsylvania Governor Ed Rendell’s speech at an Infrastructure Investor Conference last Thursday in New York City
.
Governor Rendell urged investors to oppose the creation of an Office of Public Benefit to oversee public-private partnerships (PPP) which is included in Chairman Oberstar’s proposed $500 billion 6-year transportation authorization bill.

“We must stop the Office of Public Benefit from being created,” as it will have a “chilling effect on private investment in infrastructure”. Rendell said the powers of this office would essentially amount to a veto power over PPP’s on the nation’s highways, posing a hurdle to private investment just at the time when the US needs it most.

My colleague Bob Poole wrote about the proposal's flaws here in June. He also looked at the Office of Public Benefit saying ” there is the glaring contradiction in the bill claiming to favor sensible use of tolling and public-private partnerships but creating new federal regulation of same” and “the proposed powers of the new Office of Public Benefit, Tolling Requirements, and Public-Private Partnership Requirements goes far beyond that. “

We would all agree with the Governor, "We have got to unleash the power of private investment in every way possible.”

Telecommuting Can Add to Our Mobility

Thu, 01 Oct 2009 17:56:00 EDT

In a new Reason Foundation commentary, Senior Transportation Policy Analyst Shirley Ybarra discusses the advantages of telecommuting:

In recent weeks, telecommuting has been in the news as a result of policymaker’s efforts to encourage both public and private sector employees to telecommute. Virginia state officials promoted a “telework” day on August 3, 2009. A story about the event appeared in the Washington Post shortly after, and last week the Post reported that the United States Office of Personnel Management has been pushing federal government employees to telecommute.
The renewed interest in telecommuting makes sense: Telecommuting has a positive impact on many of the most prominent political and cultural issues dominating popular discourse today. In a 2005 Reason Foundation study titled The Quiet Success: Telecommuting’s Impact on Transportation and Beyond, my colleague Ted Balaker notes a number of these effects. Balaker writes:

Telecommuting may be the most cost-effective way to reduce rush-hour traffic and it can even improve how a weary nation copes with disasters, from hurricanes to terrorist attacks. It helps improve air quality, highway safety, and even health care as new technology allows top-notch physicians to be (virtually) anywhere. Telecommuting expands opportunities for the handicapped, conserves energy, and—when used as a substitute for offshore outsourcing—it can help allay globalization fears. It can even make companies more profitable, which is good news for our nation’s managers, many of whom have long been suspicious of telecommuting.

Read the whole thing here.

Telecommuting Can Add to Our Mobility

shirley.ybarra@reason.org (Shirley Ybarra) — Thu, 01 Oct 2009 17:40:00 EDT

‘Telecommuting’ became common parlance in the mid-1970s, when advances in communications technology began to close the gap between the home and the workplace. Since then, telecommuting has become increasingly popular. No longer seen as an exception to the rule, telecommuting has become a readily available—and often coveted—option for workers in a growing number of industries. Many of the benefits of telecommuting have remained constant over the years, but evolving technologies and changing cultural attitudes have paved the way for a number of the hidden benefits of telecommuting to finally be realized.

In recent weeks, telecommuting has been in the news as a result of policymaker’s efforts to encourage both public and private sector employees to telecommute. Virginia state officials promoted a “telework” day on August 3, 2009. A story about the event appeared in the Washington Post shortly after, and last week the Post reported that the United States Office of Personnel Management has been pushing federal government employees to telecommute.

The renewed interest in telecommuting makes sense: Telecommuting has a positive impact on many of the most prominent political and cultural issues dominating popular discourse today. In a 2005 Reason Foundation study titled The Quiet Success: Telecommuting’s Impact on Transportation and Beyond, my colleague Ted Balaker notes a number of these effects. Balaker writes:

Ted’s insights about the advantages of telecommuting are true today on an even larger scale, as technology has advanced to extend the availability of low-cost broadband, personal computers, high-performance collaboration tools, and virtual meeting software. All of these tools are adding to the popularity of telecommuting.

Telecommuting significantly reduces travel costs while reducing commuters’ environmental impacts. According to the report, The Perfect Storm: Driving Telework in State and Local Agencies [PDF], congestion wastes 2.9 billion gallons of gas in the United States each year, creating a $78 billion annual drain on the economy. Higher levels of cultural awareness about the effects of climate change coupled with the latest downturn in the economy have made telecommuting an appealing alternative.

Today, telecommuting also has support from both the public and private sector, which provide assistance in establishing telework networks. According to the Office of Personnel Management Report to Congress [PDF], dated August 2009, 78 federal agencies reported a total of 102,900 out of 1,962,975 employees teleworking. Forty-eight agencies (61%) reported an increase in their overall telework numbers and 27 agencies reported cost savings/benefits as a result of telework. The greatest benefit reported was to morale (24 agencies), then productivity/performance and transportation (22 each), then human capital (21) (note: agencies could select all that apply).

Besides driving, telecommuting is the only commute mode to gain market share since 1980. The Census Bureau notes that from 1990 to 2000 the number of those who usually worked at home grew by 23 percent, more than twice the rate of growth of the total labor market. Since 2000, telecommuting has continued to grow in popularity. Roughly 4.5 million Americans telecommute on most work days. Twenty million workers telecommute for some period at least once per month, and nearly 45 million telecommute at least once per year.

The major barriers to telework have not changed: resistance from management, organizational culture, and IT security and funding. However, these barriers are clearly being lowered.

The number of teleworkers increased from 94,643 in 2007 to 102,900 in 2008 (8,257 more teleworkers, an increase of 8.72%) and the percent of total employees teleworking increased from 5.12% to 5.24%. The frequency of telework also increased both in number of employees and number of days.

A Telework Exchange report [PDF] summarized the results of the August 3, 2009 telework day promoted particularly in Virginia:

95% of participants were located in Virginia
4,267 employees participated in Telework Day
22% of participants had never teleworked before Telework Day
25% of participants previously only teleworked on an ad-hoc basis
Almost 60% of the participants were in the Richmond area reflecting the encouragement of the governor.

A great deal of the effort in Virginia is aimed at convincing the businesses of the benefits of telecommuting, in order to reduce managerial uncertainty about telecommuting. The report found that the top benefits to the business of providing telecommuting options for employees include:

Work/Life Balance for Employees
Productivity
Recruitment and Retention
Environmental Impact

Telecommuting can be another tool adding to the options of relieving traffic congestion. According to the Telework Exchange review of Virginia’s telework day, “In one day, Virginia participants collectively: Avoided driving 140,000 miles, removed 75,890 tons of pollutants from the air, saved $113,000 in commuting costs.”

The study estimates that “if all interested teleworkers with suitable jobs teleworked one day per week (50 weeks per year), in a year, teleworkers in the Commonwealth would collectively: Avoid driving 602 million miles, remove 360,800 tons of pollutants from the air, save $807 million in commuting costs.”

The societal benefits of telecommuting will only continue to increase, as new technologies develop, allowing more and more people to join the teleworkforce. While we have already come a long way, my general the conclusions are the same as those made by Ted Balaker in 2005: “Technology has done its part to spread telework as an option and America’s workers have shown they are open to it. Now it is up to our leaders in politics and business to allow telecommuting to reach its full potential.”

Shirley Ybarra is senior policy analyst at Reason Foundation and previously served as Secretary of Transportation for the Commonwealth of Virginia.

Ford Beats GM, Chrysler in Retaining Sales

sam.staley@reason.org (Samuel Staley) — Thu, 01 Oct 2009 15:57:00 EDT

Ford Motor Corp., the American auto maker that get bought out by the Government, saw sales decline in the wake of the Cash 4 Clunkers program, but it's slide was much less steep than GM or Chrysler. According to CNBC:

"General Motors reported sales of 156,673 vehicles in September, 47.1 percent lower on an adjusted basis than the same month last year. CNBC reports monthly auto sales on an adjusted basis that accounts for the number of selling days in the most recent month compared with the same month a year prior."

In contrast, Ford sales declined overall by 8.9 percent, selling 109,939 vehicles, but posted increases in sales for its F-series pick up trucks and newly designed Taurus sedan. According to Ford:

Ken Czubay, Ford's vice president of U.S. marketing and sales, said that could be a key indicator that pickup sales are starting to recover among core buyers who need them for work, and it may be an early indicator that small business owners are experiencing a turnaround.

"It's two months in a row of F-series sales increases for us," Czubay told reporters during a conference call. "It's not the large commercial purchases, it's more the individual."

The F-series trucks usually are the top-selling vehicle in the U.S.

According to another report in the New York Times (reporting slightly different numbers):

"General Motors said it sales declined 45 percent, and Chrysler reported a 42 percent drop from September a year ago.

Sales were down 20 percent at Honda, 13 percent at Toyota and 7 percent at Nissan.

“Floor traffic was lousy all month,” Mark LaNeve, G.M.’s vice president for United States sales, said. “Every brand, every region of the country. It was a real post-clunker hangover. It was disappointing. I expected the month to be a bit stronger, but it just wasn’t.”

The Ford Motor Company said its sales declined 5 percent from September 2008. For the entire third quarter, though, sales by Ford’s three domestic brands rose 5 percent, marking its first quarterly increase in four years.

Ford said sales of its F-series pickup truck rose for the second consecutive month, a positive indication about the housing market and broader economy, as the F-series is frequently purchased by building contractors and other businesses.

TIF for Tat: The Folly of Tax Increment Financing

sam.staley@reason.org (Samuel Staley) — Wed, 30 Sep 2009 15:17:00 EDT

Tax increment financing, or TIF, has become an increasingly common and acceptable form of "innovative financing" for state and local governments. The idea is simple: public investments should improve the economic viability of cities and neighborhoods, increasing property values. The property taxes generated from the increase in the property values (the tax increment) can be used to finance government investments in neighborhoods. In theory, TIF has the potential to increase transparency and reduce general tax burdens by incorporating a user pays principle into government financing for targeted investments.

In practice, TIF has been used to finance boondoggles and subsidize businesses. The potential pitfalls of adopting TIFs are becoming legend, and Reason magazine had an article recently by Daniel McGraw that highlighted some of these excesses. Most recently, the Heartland Institute published a nice short piece highlighting the failiure of TIF to fund $200 million in subsidies extended to Sears to move their corporate headquarters to suburban Chicago.

Still, TIF may have a role in financing a limited number of public investments if they are designed properly. That's the rub. Most TIF programs are designed as elaborate schemes to funnel subsidies to private firms and organizations, or to promote various social welfare objectives such as affordable housing. The result is that cities that use TIF are no more likely to grow than those that don't use them, when other factors that contribute to growth are considered.

A good overview of the potential impact of TIF programs on economic development can be found in an article by economists Richard Dye and David Merriman for the Lincoln Institute of Land Policy. After analyzing hundreds of TIF programs in different cities and counties, they conclude:

"Tax increment financing is an alluring tool. TIF districts grow much faster than other areas in their host municipalities. TIF boosters or naive analysts might point to this as evidence of the success of tax increment financing, but they would be wrong. Observing high growth in an area targeted for development is unremarkable. The issues we have studied are (1) whether the targeting causes the growth or merely signals that growth is coming; and (2) whether the growth in the targeted area comes at the expense of other parts of the same municipality. We find evidence that the non-TIF areas of municipalities that use TIF grow no more rapidly, and perhaps more slowly, than similar municipalities that do not use TIF.

"Policy makers should use TIF with caution. It is, after all, merely a way of financing economic development and does not change the opportunities for development or the skills of those doing the development planning. Moreover, policy makers should pay careful attention to land use when TIF is being considered. Our evidence shows that commercial TIF districts reduce commercial property value growth in the non-TIF part of the same municipality. This is not terribly surprising, given that much of commercial property is retailing and most retail trade needs to be located close to its customer base. That is, if you subsidize a store in one location there will be less demand to have a store in a nearby location. Industrial land use, in theory, is different. Industrial goods are mostly exported and sold outside the local area, so a local offset would not be expected. Our evidence is generally consistent with this prediction of no offset in industrial property growth in non-TIF areas of the same municipality."

The point is not that TIF can never be a useful approach to financing a public investment. Rather, its value is limited, and the broader implications need to be considered. A TIF working on its own will not revitaize a city or neighborhood. The "preconditions" for growth still need to be in place. In addition, for commercial TIFs, the likely impact is to reshuffle growth. In short, a TIF does not necessarily (and is unlikely to) finance truly new development.

Where would a TIF make sense? In my view, TIF should only be considered to fund a long-term public investment, such as roads or other transportation infrastructure that improves access in a local area. These investments must have tangible, measurable, and localized benefits. The TIF would serve as an alternative to financing from general taxes and avoid the current practice of subsidizing improvements in one area at the expense of another. When designed properly, TIF can be a form of a user fee where the beneficiaries (land owners and businesses benefiting from the investment) pay for the infrastructure without burdening the rest of the community.

Transportation Funding at a Standstill, Rescission Looms and Then What?

shirley.ybarra@reason.org (Shirley Ybarra) — Sun, 27 Sep 2009 12:31:00 EDT

The House passed the 3-month extension to the highway funding authorization and the Senate still is looking at the 18-month extension as I reported here. The Senate bill has yet to be introduced. A repeal of the rescission was left out of the House measure because House rules would require an offset to pay for it through higher taxes or reduced spending elsewhere. The House couldn't find the $12 billion.

In the meantime, only two legislative days remain before the current program expires on September 30. Without legislation, the budget rules require that the FY 2010 federal-aid highway, highway safety, motor carrier, and transit programs be cut by $12.1 billion, $11.9 billion of which will come from the highway program. The states have had to plan on the cutback, so many programs and projects have been slowed.

And adding to the mix of slowing down the transportation funding are reports that Senator Barbara Boxer (D-CA) and John Kerry (D-MA) will introduce the Climate Change bill with mark up scheduled by the Senate Environment and Public Works Committee in October. The funding allocations are not expected to be released until closer to the committee markup date. This could well be another contentious issue. For the transportation sector to play a greater role in reducing emissions and fuel consumption, the Senate bill will need to dedicate far more than 1% of its revenues to advance clean transportation projects.

All of this being said, state transportation departments remain up in the air and gasping for air....errrrrrrrrrrr funding.

Update (10/2) - I wasn't as clear as I should have been in the original post above and a recent post by Stephen Lee Davis at the Transportation for America blog got the wrong idea about I was trying to say, so let me clarify the point I was trying to make.

I wrote that, at 1 percent, the Senate bill underestimates the funding commitment they would need to seriously advance "clean" transportation projects. But in no way did I mean to imply that the federal government should actually be funding these types of projects-in fact, they shouldn't.

On the question of whether the transportation sector should be focused on reducing emissions and fuel consumption. The answer is a resounding "No," as explained by Bob Poole in his excellent commentary explaining the issue. The highway transportation sector should be focused on providing mobility and eliminating the congestion.

A second question that arises is whether the federal government should be funding "clean transportation projects" such as transit and rail. Again, the answer is "No." This is nothing but further diversion of monies from the federal Highway Trust Fund, which has had severe financial problems. The Highway Trust Fund has become the source of funding for all sorts of projects unrelated to highway users-such as transit, rail, enhancement grants, rails-to-trails, to name a few-that cost a lot but do little to enhance mobility.

If policymakers are going to prioritize "green projects" (transit, rail etc) ahead of infrastructure that efficiently moves goods and people, then they should stop looting highway funds to do so. Lawmakers should fund these green projects with general fund monies. At least this change would restore the original user-pays/user-benefits principle to the Highway Trust Fund. The trust fund should be used for projects that produce mobility and solve the congestion problems for the highway users. See Bob Poole's thoughts on this here.

Transportation News Links

sam.staley@reason.org (Samuel Staley) — Sat, 26 Sep 2009 08:23:00 EDT

The American Dream Coalition, a grass roots free market organization, distributes news links on transportation, land use, and Smart Growth issues. Here are the newest links from the American Dream Communicator:

Mobility & Transportation
Traffic Congestion, Time, Money & Productivity – Wendell Cox, New Geography
HOT Lanes Show Diverse Benefits – Sam Staley, Reason Foundation
Honda unveils 'Segway-style' unicycle that travels in any direction you want – U.K. Daily Mail
An Electric Rolls Royce Phantom could be on the way – LimoBroker.com, U.K.
National Terror Alert for Mass Transit – KCBS, Washington D.C.
Metro Steps Up Patrols to Curb Violence at Transit Stations – Washington Post
Light-rail train hits car near Star Tribune building – Star-Tribune, Minnesota
Car collides with Tacoma Link light rail – Tacoma News Tribune, Washington
Light rail vote delayed a month by TAMC board – Monterey County Herald, California
Light rail noise becomes official emergency – NWCN Headlines, Seattle
Mayor makes pitch for light rail – MySanAntonio.com
AC Transit to Cannibalize BRT Program to Keep the Lights On – Action Alameda News
University sues Met Council over light-rail issues – Star-Tribune, Minnesota
Road choked to slow traffic – Times & Transcript, Canada
Quick Study: Unlocking Gridlock – Reader’s Digest
D.C. workers commute longer, more likely to use transit – Washington Examiner
Metro Turns To Suicide Prevention Groups for Help – Washington Post
Critique of Tom Vanderbilt’s “Traffic” – Randal O’Toole, Antiplanner Blog

The House Passes 3-month Transportation Funding Extension----Action Moves to the Senate

shirley.ybarra@reason.org (Shirley Ybarra) — Wed, 23 Sep 2009 21:23:00 EDT

The House passed legislation this afternoon sponsored by House Transportation and Infrastructure Committee Chairman James Oberstar, D-MN to extend the Federal law authorizing spending on federal-aid highways and transit projects which was set to expire on September 30. The House used an expedited procedure known as suspension of the rules. This process allowed the bill to bypass a committee markup and also precludes amendments to the bill. The vote was 335 to 85.

Most importantly, the legislation does not address a looming $8.7 billion rescission of existing contract authority (enacted in the 2005 transportation law known as SAFETEA-LU and amended by a 2007 energy law), which will be executed next week by the Federal Highway Administration if not repealed. Oberstar did not discuss the rescission issue on the House floor, but his spokesman said a repeal of the rescission was left out of the measure because House rules would require an offset to pay for it through higher taxes or reduced spending elsewhere.
.
The rescission issue is a very real problem for the state departments of transportation as they will be negatively impacted in a total of $8.7 Billion

"This rescission will amount to real dollar losses to programs and projects, and will have a devastating effect on many state departments of transportation and reverse the positive economic gains brought about by the recovery act," John Horsley, executive director of the American Association of State Highway and Transportation Officials. "For example, Missouri will lose $202 million in contract authority and the cut will have a disproportionate impact on local bridges and metropolitan planning organizations. Colorado would lose $115 million in contract authority. Michigan's share of the rescission is $263 million, which amounts to approximately a quarter of what that state received for highway and bridge funding through the recovery act. “

Now the Senate will need to address the extension. Three committees have approved an extension of 18 months as requested by the Obama administration. Senate Environment and Public Works Committee Chairwoman Barbara Boxer, D-CA, has vowed to address the rescission matter when her chamber takes action. The Senate continues debating appropriations measures this week. It is unclear when the transportation extension will come up for floor debate.

I have written many times before (here, here and here) about this issue and doubt this is my last comment on the twists and turns we will be following over the coming months.

Time and again I will remind you that we at Reason favor the 18-month extension in order that we have a full discussion of the transportation policy issues facing this nation. It was first stated here and here by Reason’s founder Bob Poole.

Surface and Aviation Funding on a Three Month Fix?

shirley.ybarra@reason.org (Shirley Ybarra) — Mon, 21 Sep 2009 12:49:00 EDT

It seems both surface transportation and aviation funding may be on the path for three month “fixes” if Chairman of the House Transportation and Infrastructure Committee, James Oberstar has his way.

SURFACE TRANSPORTATION FUNDING
With only two weeks left until the authority for federal surface transportation programs expires, Chairman James Oberstar is reported that he will move a three-month temporary extension of federal surface transportation programs this week. The bill will extend the current programs and funding levels which are set to expire on September 30 until the end of the calendar year.
Until last week, Oberstar repeatedly said there would not be a temporary extension for any length of time, insisting Congress must move a six-year bill. The Obama administration has requested an 18-month extension, however, and key Senate committees have endorsed that idea. We have written before supporting the 18-month extension.

In the meantime, the Senate is expected to consider a bill that would extend federal surface transportation programs through March 2011 at current funding levels. The Senate bill would transfer $19.8 billion from the government's General Fund into the Highway Trust Fund to cover the short fall in the highway trust fund. The money represents reimbursements to the trust fund of $12.5 billion in interest payments not made since 1999 and $7.3 billion for emergency spending taken out of the trust fund in recent years and not replenished. No specific timetable is available yet on the Senate bill.

At the same time rescissions of highway funds are looming on September 30 also and the Governors have asked for relief of the $8.7 billion. I have written here about the rescissions before.

AVIATON FUNDING

Today, CQ Politics reports that Chairman Oberstar is also preparing a “clean” three-month extension of the Federal Aviation Administration programs. The FAA has been operating on numerous short-term authorizations, the most recent of which will expire at the end of September. The Senate Finance Committee is also working on a three-month extension, which would give the Senate until the end of the year to finish its full reauthorization bill.

The House passed Chairman Oberstar’s multi-year reauthorization measure May 21, 2009 and the Senate Commerce, Science and Transportation panel has approved its portion of the Senate bill. However, the Finance panel has yet to report out the revenue titles.

It will be interesting to see if what the three month extension buys us.

World Car Free Day Tomorrow---Buy Your Bread and Milk Now

shirley.ybarra@reason.org (Shirley Ybarra) — Mon, 21 Sep 2009 10:54:00 EDT

An article in the Washington Post on Sunday notified me that Tuesday, September 22, 2009 is World Car Free Day.

“World Car Free Day is the annual apex of a global movement that promotes alternatives to a car-dependent society, including improvement of mass transit, cycling and walking, and the development of communities where jobs are closer to home and where shopping is within walking distance.” The global movement is based in the Czech Republic and coordinates the European activities. Projects in the USA are run through a variety of member organizations because there were technical issues regarding the tax free status Details are here.

A charter for the organization is here and obviously their agenda does not include mobility.

While the loss of life attributed to automobile crashes is tragic--3,000 per day world wide according to this group—there are many who would disagree with their premise that “automobiles shape and distort our urban environment. They replace lively, pleasant, walkable, human-scaled communities with low-density, sprawled-out environments designed for getting elsewhere as fast as possible.”

The charter goes on to say, “Our society's dependence on an expensive, inequitable technology - the most resource-intensive means of locomotion ever devised - has expanded to achieve a radical monopoly in much of the industrialised world. This automobile-motorway-petroleum system denies free mobility to children, the elderly, the poor and the physically handicapped. Public transport, bicycle and pedestrian infrastructure is tacked on as an afterthought, if at all.”

This all seems a bid much doesn’t it?

The Washington DC area ranks in the top five in every survey of urban congestion, commuter stress and time wasted going bumper to bumper in traffic, the notion of a day without cars sounds as delightful as it does preposterous.
Last year, the DC region had 5,445 people participate and this year the organizers are hoping for 10,000 participants. However, the counter shows they are quite a ways from reaching their target tomorrow.

A 24-hour break from burning carbon fuel might mean a peaceful hiatus from noise and a reduction in air pollution, but there's no guarantee that it will be a better air-quality day. When the Washington DC region has a bad-air day, it's caused by an atmospheric inversion that stalls soot blown our way from the Midwest. This is well known.

Lon Anderson of AAA MidAtlantic has stated “There is a major misconception about how much vehicles contribute to pollution." Anderson said about 25 percent of the DC region's pollution comes from cars. He goes on to say, "What comes out of the tailpipe is about 95 percent cleaner than it was 25 years ago. A lawn mower that runs for a couple of hours puts more pollution in the air than a car driving from here to New York and back."

So as we do in “snow days” we in the DC area had best buy our bread and milk today before the Car Free Day starts tomorrow since the delivery systems for anything on the grocery shelves will be completely disrupted tomorrow. Not likely this year anyway.

My colleagues at Reason have written extensively about mobility and its contribution to the economy. See any of the writings of Adrian Moore, Bob Poole, Sam Staley and David Hartgen.

Illegal Taxicabs Provide Valuable Service in Baltimore

sam.staley@reason.org (Samuel Staley) — Thu, 17 Sep 2009 12:55:00 EDT

The Baltimore Sun has an outstanding and unusually detailed story about the role illegal taxicabs play in providing core transportation services in the city. Taxicabs are tightly regulated in most cities, and a too often neglected side effect is the growth of an informal taxicab, or "hack," service to meet unmet demand. This is what's happening in Baltimore (as well as most major cities) where hacks provide essential services to customers for grocery stores and health food markets:

At some stores, supermarket hacking is a highly organized enterprise, governed by the protocol of a private club whose "captain" runs the operation like a taxi stand. The hackers are not store employees, but some markets run background checks before allowing them to pick up customers out front. That puts riders at ease even as it creates a startling disconnect: Businesses are making sure people aren't criminals before letting them break the law on their property.

"We don't call them hacks, we call them courtesy drivers," said Bill Stanfield, assistant manager at Food Depot in Northeast Baltimore, which runs checks on drivers and provides them with store IDs. "All stores have what you call courtesy drivers."

Supermarket hacks have been around for decades, and riders describe them as a community service as much as cut-rate cab. For many supermarkets, hacks have become an essential link to their customer base, which explains why they turn a blind eye or explicitly endorse them by running background checks and issuing IDs.

Life isn't all rosy for those that use hacks; there are glitches in the system largely due to its illegal nature. Some hack drivers have ripped off customers. In an informal market, there is little legal recourse. A few cases of physical assualt on riders have also been reported, including rapes of female riders. A formal way to track and qualify drivers would make it easier to identify (and weed out) those that commit assaults. In fact, this is what many stores in Baltimore do.

Still, the vast majority of hacks, however, are legitimate drivers providing legitimate services.

Hack drivers and riders alike say supermarket hacking is safe because the same customers and drivers see each other week after week. They make a distinction between "courtesy drivers," mostly older men who've submitted to background checks and have a store's permission to hack, and the younger "jacklegs" who just show up.

The courtesy drivers belong to drivers' clubs, each with its own "captain." The store won't do a background check or issue an ID unless the captain vouches for him. The captain also mediates any disputes among hackers over customers. Customers set the price for each ride, something drivers contend makes the service not only cheaper than licensed cabs but also legal. ([Police Spokesman] Guglielmi said it's illegal no matter who determines the fare.)

Moreover, that's why the more savvy businesses are running background checks and issuing IDs; they want to provide a level of quality control for their customers. It's a win-win--customers win because they get service, the business wins because services are available for their customers, and hacks win because they can ply their trade to a needed market.

Needless to say, local regulators aren't happy.

But background checks do nothing to make hacking legal or safe, said city police spokesman Anthony Guglielmi. "I don't care if the grocery store gives you a red badge, you're operating an illegal cab."

Operating a hack cab is a misdemeanor, and the rider can face a charge of hitchhiking.

"When we spot them, we cite them," Guglielmi said. But that can be difficult. "It's not like they have a sign on their car, 'I'm a hack.' "

Of course, there is a solution to this problem: Open up the taxi market by making permitting easy and an administrative process for anyone who wants to provide a legitimate transportation service.

The only weakness in what I think is a great article is the reporters didn't evaluate the barriers to getting a legal license in Baltimore. In other cities, caps on the number of cabs, driver permits, dispatch companies and other rules make it difficult, if not impossible, for hacks to go legal. I wouldn't be surprised if similar barriers exist in Baltimore.

For more on Reason Foundation's work on taxicab regulation, see additional blog posts here, here, and here.

Links to Trasportation, Land Use, Smart Growth in the News

sam.staley@reason.org (Samuel Staley) — Thu, 17 Sep 2009 07:40:00 EDT

The American Dream Coalition, an organization focused on educating and informing citizens on land use, transportation, and growth management issues from a private property rights and free market perspective, has a weekly newsletter of news links well worth the free subscription.

As the coalition describes "The American Dream Communicator's" purpose:

The American Dream Communicator is a weekly round-up of news and opinion about public policy in America’s cities and metropolitan areas. Issues affecting mobility and transportation, land use and housing affordability and related matters of economic development, property rights and grassroots activism in the cause of freedom often get overlooked in the national news. Yet by pulling together news reports and commentary from different parts of the country, common themes and patterns begin to emerge.

Here's a sampling from the September 11th edition on Moblity and Transportation:

Mobility & Transportation
The Costs of Climate Change Strategies, Who Will Tell People? – Wendel Cox, New Geography
Senator muscles U.S. for Vancouver light rail money – The Oregonian
NYSDOT: $19.9 Million in Stimulus Money to Fund Transit – Read Media, New York
Phoenix to sell 7 properties it bought for light-rail facilities – AZCentral
Light-rail settlement to cost $36.7 million – Ottawa Citizen
Honolulu residents paying $4,000 per person for light rail – Honolulu Advertiser
Missouri S.C. won’t hear appeal regarding light-rail plan – Kansas City Business Journal
D.C. Metro Predicts Shortfall, Talks Fare Hike – Washington Post
VTA proposes bus, light rail cuts – San Jose Business Journal
Tenants Evicted by Metro Transit Authority to make way for subway – New York Times
Sacramento light-rail factory is hiring – Sacramento Bee
Cyclist dies after collision with Toronto streetcar – National Post, Canada
Metro employee struck by train, seriously injured – Washington Examiner
Light rail train derailed in Phoenix crash, 7 hurt – ABC-15, Arizona
Pedestrian Hit By Light-Rail Train in Minneapolis – KSTP-TV, Minneapolis
Traffic circles stir more controversy in Ahwatukee – AZCentral
Big traffic calming schemes increase emissions - Environmental Data Interactive
PODCARS - A Personal Rapid Transit primer – Miami Examiner
America's Ten Best Transportation Projects Unveiled – Thomas.net

This is a great new resource for those following these issues on the state and local level and who want to be kept up to date with events around the nation.

Highway Funding Still in Limbo

shirley.ybarra@reason.org (Shirley Ybarra) — Fri, 11 Sep 2009 12:13:00 EDT

Today, the Wall Street Journal reports that the six-year $450 billion highway authorization bill is unlikely to clear Congress this fall and that an extension of current transportation funding formulas is likely.

While Chairman Jim Oberstar still hoped to have a vote on his bill later this month, a spokesman said the passage by the full congress is unrealistic given Washington’s focus on health care reform and other issues.

The current law expires September 30 and the highway trust fund needs an infusion of money plus the states are facing a rescission, or a turn back of $7.8 Billion of funds by the same date.

An August 8, 2009 article in Congressional Quarterly summed up the uncertainty well.

“State transportation officials say uncertainty about future funding is forcing them to foreswear ambitious new projects in favor of simple maintenance and repairs.”
“While states did receive a one-time infusion of cash from the economic recovery package, almost all of the money for transportation has been obligated. Most went to “shovel-ready” projects like filling potholes or repairing guardrails.”

Nothing has changed.

The debate will now turn to how long the extension will be. President Obama and the Senate have suggested an 18- month extension, pushing the debate off until after the 2010 elections.

I have written here about the rescissions and here on the previous dire warnings about the highway trust fund. We at Reason have suggested that an 18-month extension makes sense.

My colleague Bob Poole wrote here and recognized the Senates suggested 18-month delay here.

The rescission needs to be addressed and the funding for the trust fund needs to be back filled again to provide enough security for planning projects that make sense. This is no way to run the transportation business in the U.S.

Another Blow to the Highway Planning and Funding

shirley.ybarra@reason.org (Shirley Ybarra) — Mon, 31 Aug 2009 07:59:00 EDT

Last week the Federal Highway Administration (FHWA) issued a notice asking each state to identify proposed program reductions by September 4, 2009. This is the result of a provision in the highway authorization bill due to expire September 30, 2009 mandating the states return $8.708 billion (yes with a B) of contract authority to the Highway Trust Fund. (HTF) The state by state table is here.

Remember we have watched the HTF almost go broke in September 2008 when Congress added $8 billion to the fund. Then in the spring 2009, I wrote about the fund going broke again and that it could have been fixed in the stimulus package. Then in June, the states were warned again by FHWA of pending doom with funds running out in August. Congress added $7.0 billion to get the HTF through September 30, 2009.

Now comes another warning to the states to begin to look at program reductions at the end of September. Key senators have vowed to fix this issue but with all that is going on will it be another band-aid? Will this be at the last moment in September?

This roller coaster ride for federal highway funding significantly hampers the states planning of highway projects. The states can not count on traditional federal funding being available. Add to this precarious nature of state funding and the planning process goes into a seizure except for the small projects and perhaps those already committed via the stimulus funds.

We at Reason have written before about the need for an 18 month extension with adequate funding and a realistic debate. Once again, Congress may take the band aids out of medicine cabinet rather than searching for a real solution.

My colleague Bob Poole said it best:

“Putting the highway bill on a fast track means this country will forego what should be an extended debate on whether this measure is the right path to pursue. And with other key Obama administration priorities—health care policy and global warming/cap & trade, in particular—already in play and requiring extensive debate, a rush to enactment of the surface transportation bill would almost certainly lead to changes we’d come to regret.”

The Quirky, Nonsensical World of Stimulus-Era Transportation Policy

sam.staley@reason.org (Samuel Staley) — Wed, 26 Aug 2009 14:19:00 EDT

For those readers (like me) who think this is really a weird time for transportation policy, I highly recommend Steve Polzin's recent post at Planetizen.com's blog Interchange on the strange journies transportation policy has taken over the last year. Steven directs mobility policy research at the Center for Urban Transportation Research as the University of Florida.

As Steven writes:

"On the surface there is a perception that transportation policy is moving in the direction of favoring more urban and multimodal priorities for transportation, favoring providing travel options, favoring urban development and redevelopment, favoring climate friendly investments, and relying more on performance measures. In reality we seem to be witnessing a series of disjointed, inconsistent and, dare I say, hypocritical and perhaps demagogic decisions and positions...."

The transportation "Christmas tree" includes transit, highways, climate change, stimulus, economic development...the list goes on. And most of it is contradictory.

"Rather than elaborate and unproven strategies to induce altered travel behavior and location decisions why don’t we get the pricing signals right first? Is it logical to abhor fuel tax increases as publically intolerable while assuming a far higher travel cost consequence from Cap and Trade is OK? Should we subsidize the ownership of autos through clunker rebates while investing in expensive capital investments to coax folks out of their cars? The direct costs of the roadway system have been able to be comfortably supported by users’ fees for decades so now when deficits are at record levels we should use general funds to bail out the highway trust fund?"

It's worth reading the entire post, even if it leaves us scratching our heads (or saying "Of course! what do you expect?").

Another Potential Delay for Northern Virginia High Occupancy Toll (HOT) Lanes Project

shirley.ybarra@reason.org (Shirley Ybarra) — Sun, 23 Aug 2009 09:15:00 EDT

We have been following the development of high occupancy toll (HOT) lanes in Virginia. With the Beltway HOT lanes now under construction we were disappointed last week when Secretary of Transportation Pierce Homer delayed the I-95/395 project from the Pentagon south to Massaponex in Spotsylvania County Virginia. The Secretary attributed the delay to concerns about the financing and also to take time to address the concerns of Arlington County.

Not being satisfied, Arlington County filed a law suit on Wednesday to delay the project asking for a more thorough environmental review of high-speed toll lanes intended to relieve traffic congestion in and out of Washington as reported in the Washington Post.

“The suit, filed in U.S. District Court in Washington, specifically challenges a Federal Highway Administration decision to exempt the HOT lanes project from normal environmental scrutiny, an exemption based on the premise that it would have no significant impact on air quality.
Naming federal and state officials, the suit also says that improper designs in two locations -- the Shirlington off-ramp and the Eads Street terminus -- would cause traffic congestion on local streets.”

I have written here about the need to relieve congestion in Northern Virginia (NoVa) and how the HOT lanes are an important tool. Virginia is fortunate to have the public-private partnership tools available, especially in the difficult budget times every state is facing.

This is the same County I wrote about here where it takes 25 years to widen a 1.5 mile section of I-66, road in the same County. (It is still not done!)

While Northern Virginia moans and groans about traffic congestion, NoVa is lucky to have some remarkable solutions on hand such as public-private partnerships for the HOT lanes. The I-95/395 HOT lane project is now being further frustrated by not working together to make the project happen. The public-private partnership solution for bringing HOT lanes to NoVa is a good answer especially for the Commonwealth which has little or no money to do the project itself.

Citizen's Guide to Transportation Released

sam.staley@reason.org (Samuel Staley) — Fri, 21 Aug 2009 08:58:00 EDT

The American Dream Coalition, an organization of grass roots activists supporting market-based approaches to land-use, development, and transportation, has released an 8-page Citizen's Guide to Transportation Reauthorization. This is an excellent summary of the major issues, and a great resource for citizens, journalists, and elected officials.

Among the topics covered are:

The role of the gas tax;
Travel trends by transportation mode and income;
Costs per mile of using rail, cars, and buses;
Subsidies and construction costs for transportation modes; and
Energy efficiency.

Of course, I would be remiss if I didn't also plug my own book as important background for understanding the importance of this round of reauthorization: Mobility First: A New Vision for Transportation in a Globally Competitive 21st Century.

Reason Foundation has published extensive work on reauthorization as well.