Out of Control Policy Blog

Transportation Funds Should not be Used for Economic Development Purposes

Many questionable development projects are sold to taxpayers as transportation related. However, often these projects are economic development projects masquerading as something else. Taxpayers deserve the truth. Transportation referendums should support projects that move people from point A to point B. If city boosters want to increase Economic Development they should be honest about it. While cities have always built unnecessary expensive rail transit systems and rebranded rural roads as technology highways to draw high-paying jobs, some opportunistic governments have advanced the process to a new level. These governments have not been shy about using taxpayer funds to do it. The USDOT discretionary grants, recent federal transportation bills, and local transportation taxes are diverting funds from useful transportation projects to useless economic development purposes. 

President Obama’s stimulus and discretionary grant program was a failed project that delivered too few funds to transportation. Perhaps this was by design. The TIGER Grants program focused on Economic Competitiveness, Job Creation and Economic Stimulus. While part of the goal was to improve the economy, in the TIGER Grants program, the DOT weighted Economic factors at 54% of the total factors. This was not a Department of Commerce Department program but a Department of Transportation program. This weighting caused many projects with no transportation benefit to win transportation funding. The Atlanta Streetcar, the most expensive TIGER II project, travels the same street as a bus route which was discontinued for low ridership. Clearly this project is about economic development. Other TIGER grant winners include the St. Albans Main Street Reconstruction in Vermont and the Anke Bay Loading Facility in Alaska. By one count almost a third of the total TIGER projects are Economic Development not Transportation related. A list of all funded projects by round is available at here

The latest transportation authorization bill, SAFETEA-LU, expired more than two years ago. The U.S. is currently waiting on a bill from the 112th Congress (hint-hint). While I have previously highlighted the pork-barrel funding in this bill, now I want to detail the Economic Development projects. While a bill that funded the Bridge to Nowhere was not known for its good choices, the large number of purely Economic Development projects was upsetting. SAFETEA-LU funded (under The Denali Access System Program) construction of a hospital in Barrow and renovation of the Division of Juvenile Justice building in Nome. The state of Ohio received 2,750,000 to renovate and expand the National Packard Museum and adjacent historic Packard facilities as a transportation museum. This transportation museum needed national funding because all seven U.S residents who were interested in the museum could not possibly cover the cost of expanding the facility. And Glennville, GA population 3,500 received funds to improve the sidewalks, lighting, and landscaping in downtown. The complete list of SAFETEA-LU projects is available here

Residents are increasingly funding local city and county transportation projects out of their own pockets. Taxes should only be increased as an absolute last resort. Many new local transportation taxes fund economic development improvements. If a transportation sales tax referendum passes later this year in Metro Atlanta, taxpayers will spend more than $500 million on the BeltLine streetcar project. Even its boosters admit it is an economic development projects. Mass INC, an organization advocating for the middle-class, is calling for a regional transportation tax to fund economic development projects in rural areas of Massachusetts. And most local planning agencies have Economic Development "experts" in the Transportation department attempting to divert funds for their causes. 

Economic Development is crucial for every city and state. Sometimes Economic Development and Transportation go hand in hand. For example, a new commercial area needs roads so customers can reach the area. But Economic Developers are tapping the transportation kitty for funding for non-transportation reasons. Transportation spending’s purpose is to move people from point A to point B. Projects which do not meet this objective should not receive transportation funds.

Baruch Feigenbaum is Transportation Policy Analyst


« California, Illinois Continue to Make… | Main | PA Lawmakers Should Encourage Prison… »




Out of Control Policy Archives