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Reason Foundation

Surface Transportation Innovations #82

Rethinking the Highway Trust Fund, High Speed Rail and Development, Density and GHG Reduction

Robert Poole
August 4, 2010

In this issue:

New Reason Study Says Refocus, Revitalize Highway Trust Fund

This week the Reason Foundation released the first major policy study from our surface transportation reauthorization project. Its focus is a reconsideration of the federal role in funding and guiding surface transportation infrastructure in this country. Like the Government Accountability Office, we argue that the federal government is overextended and living way beyond its (our) means. Hence, when it comes to transportation, it should focus on first things first. After careful analysis, we conclude that the truly vital federal role is to facilitate interstate commerce and international trade. And that the principal surface transportation means to that end is a refocused Highway Trust Fund used to expand, modernize, and rebuild the Interstate highway system. You can read the executive summary at http://reason.org/news/show/highway-trust-fund-summary and download the full study report at: http://reason.org//files/restoring_highway_trust_fund.pdf.

In this short article, I don’t have the space to lay out the entire argument. One key point is that American taxpayers have lost trust in the Trust Fund, as it has evolved from having a focus and purpose (“You pay this federal fuel tax and we will build you a nationwide super-highway system”) into a kind of all-purpose public works program that now funds sidewalks, bike paths, recreational trails, museums, and streetcars—with ever-larger chunks of the money earmarked for pet projects unlikely to pass any sensible benefit/cost test. So greatly narrowing the focus to something Americans could see as directly benefiting them (relief from urban freeway congestion; lower prices for goods shipped to them) could rebuild support for federal transportation investment.

Why not follow the advice of the Policy & Revenue Commission (and quite a few interest groups) and instead expand the focus of the federal program to all modes (high-speed passenger rail, short-sea shipping, freight railroads, etc.)? For at least two reasons. First, with essentially zero likelihood of a federal fuel tax increase, there is not enough money in the currently defined Trust Fund even to meet basic highway investment needs. Secondly, all the money in the Trust Fund comes from highway users, from what are still naively (or misleadingly) called “highway user fees.” Our proposal is to restore the users-pay/users-benefit principle by safeguarding the monies generated by highway users for investment in the highway system.

What, then, about urban transit and bikeways and sidewalks? And high speed rail? There is both a principled and a pragmatic reason to fund these out of general revenues, if the feds are going to fund these programs at all. The principled one is that these kinds of infrastructure are not and cannot be self-supporting from fees charged to their users. This kind of social infrastructure in most of America is supported by general taxation, not by singling out one subset of the population (most of whom don’t even use them). So it makes no sense to further starve highway investment (which can inherently be self-supporting) to support social infrastructure. And the pragmatic reason is that over the past two years, Congress has shown ample willingness to put general fund money into highways, transit, and high speed rail. What we are proposing is to let them keep doing that, only just for non-highway purposes. Leave highway user taxes to their original highway purpose.

Our case also rests on the recent plethora of studies that find large and growing shortfalls in what is needed to maintain, expand, rebuild, and modernize the Interstate system. That is why our proposal calls for limiting the revamped Highway Trust Fund to the truly federal purpose of what we dub Interstate 2.0. We will have more to say about this in coming months, but it envisions adding selected routes to the Interstate map, to reflect 21st-century America (vs. 1940s America, on which the system’s map was based), adding capacity to key long-haul routes (some of it in the form of dedicated truck lanes), redesigning and rebuilding the 200-odd interchange bottlenecks across the country, and adding networks of priced express lanes on major urban freeway systems. Our calculations suggest that by refocusing the Trust Fund in this manner, an additional $10 billion per year could be invested in Interstate 2.0, to be supplemented by toll financing where appropriate.

That’s all I have space for here. If your initial questions aren’t answered by what I’ve written, you might check out the Frequently Asked Questions on the website: http://reason.org/news/show/highway-trust-fund-faq.

Economic Development and High Speed Rail


You may have forgotten it already, but in June the U.S. Conference of Mayors released a report called “The Economic Impacts of High-Speed Rail on Cities and their Metropolitan Areas.” (www.usmayors.org/highspeedrail) Its “sponsorship” (noted on the cover) by HSR builder Siemens was a clue that this was less of a study than an advocacy piece. And its claims were simply beyond belief. Among its shortcomings were failure to acknowledge that while the addition of a HSR station in a big city may shift some development to there, that development likely would have occurred somewhere else in the metro area, or elsewhere in the state. This is the same kind of argument typically made for tax-supported convention centers and sports stadiums, many of which turn out to be white elephants. And it also ignored the obvious issue of opportunity costs: what else could have been done with the resources put into this particular project. I discussed this report on the National Journal transportation blog last month: http://transportation.nationaljournal.com/2010/07/will-high-speed-rail-drive-busi.php#1601355.

Only after I’d written that piece did I discover an excellent analysis of the same subject, by David Levinson of the University of Minnesota. “Economic Development Impacts of High-Speed Rail” is an empirical assessment of what we do and don’t know about this subject, written very accessibly. (http://nexus.umn.edu/Papers/EconomicDevelopmentImpactsofHSR.pdf)

After providing some background on overseas HSR systems and on proposals for such systems in this country, Levinson begins by summarizing research on the extent to which urban rail transit systems foster economic development, as measured by land value changes. The underlying theory is that better transportation access increases the benefits of urban agglomeration. Of the 21 studies summarized, most find some increased land values near stations, but four find negative land-value impacts alongside the tracks.

There is nowhere near as much research on HSR impacts, but Levinson notes contrasting impacts of different lines: no impact near the Eurostar stations in Paris and London but significant positive impacts on some of the main Japanese lines. A study in the Netherlands found no significant impacts on firm location choices there, and another on Japan finds mixed results, with the researcher concluding that “the Shinkansen has shifted growth but not induced it.” Another researcher finds that while a HSR line improves accessibility between the cities connected, it creates a “tunnel effect” for the places in between, resulting in “territorial polarization.”

In a short section on nuisance effects of HSR (ignored entirely by the Conference of Mayors report), Levinson cites his own prior research showing that each additional decibel of noise reduces home values by 0.62 percent. He estimates that a HSR line with 20 trains/hour at 241 km./hr. through an area with 1,000 housing units per sq. km. valued at an average of $250,000 would produce total noise damage per kilometer of track of $1.975 million—which equates to nearly $1 billion in noise impact from a 500 km. line.

Overall, Levinson concludes that the [net] local land-use effects of HSR are likely to be small to non-existent. Agglomeration benefits may exist, but there is little basis for estimating their size.

Density and Trip Reduction

I have written previously about the probably small impact of high-density, compact residential development on the amount of driving people do—and hence this policy’s likely ineffectiveness as a greenhouse gas (GHG) reduction measure. Now, a detailed review of the literature validates those concerns. “Research on Factors Relating to Density and Climate Change” was released late in June by the National Association of Home Builders, which commissioned the study from Abt Associates. You can find it at www.nahb.org/fileUpload_details.aspx?contentID=139993.

Abt’s researchers reviewed nearly 200 studies on residential density and its relationship to travel behavior and climate change. The bottom-line finding is that while there is some relationship, the effect of density on travel behavior is modest: only about 5% reduction in vehicle miles of travel (VMT) with a doubling of residential density. One reason for such a modest impact is that many other factors influence travel behavior. Among them are:

Another key factor is one I’ve also written about: self-selection. As the Abt researchers write, transportation “researchers have re-considered the direction of causality and acknowledge that land use patterns may facilitate travel behavior but not cause it, because household decisions about location—and all the characteristics of this location—are simultaneous with decisions about travel behavior. That is, people who dislike driving may self-select to live in walkable neighborhoods with convenient access to transit, while people who like [or don’t mind] driving may be more likely to select neighborhoods with good auto accessibility.” And, “studies that ignore the impact of self-selection are likely to over-estimate the impact of the built environment on travel behavior.”

They also point out that doubling residential density would likely take a long time—as measured in decades—so that any VMT reductions resulting from this policy will be slow to develop. And they suggest that transportation pricing is likely to be a far more effective tool than “smart growth” land-use policies for influencing VMT.

Proposed National Freight Program Needs Work

On July 22nd, three Democratic senators—Lautenberg, Murray, and Cantwell-- introduced the 2010 FREIGHT Act. It was immediately endorsed by an unusual assortment of groups: the Coalition for America’s Gateways & Trade Corridors, Transportation for America, Environmental Defense Fund, and the National Railroad Construction & Maintenance Association. Conspicuously absent was the American Trucking Associations, and thereby hangs a tale.

The bill would do several things. It would create an Office of Freight Planning & Development within the U.S. DOT, so this would be a multimodal entity, including ports and waterways, railroads, and highways. It would require DOT to create a national freight strategy, whose goals include increasing the reliability of travel time in major freight corridors, reducing GHG emissions from goods-movement, reducing other noise and emissions from goods-movement, and increasing safety. So far, so innocuous.

But then come the stranger things. It would create a competitive grant program, but only for politically correct projects: port improvements, freight rail improvements, and intermodal facilities. But not for adding lanes to freight-clogged highways or facilitating dedicated truck lanes. And there is no funding source or suggested amounts of funding. So this potentially could be a major program or it could be mostly symbolic, or a hoped-for foot in the door.

Since facilitating interstate commerce is spelled out in the Constitution, I don’t have a problem with the idea of the DOT attempting to look for strategic investments in goods-movement infrastructure. And I also recognize that different modes have different roles to play in moving the goods that America’s companies and citizens need. What I do find troubling is something mentioned by John Cutler, general counsel of the National Shippers Strategic Transportation Council. “Our real concern is that government might put a finger on the scales in order to force freight off of trucks and onto trains.” (I wonder where he got that idea!) He continued: “I am a big fan of the trucking industry. . . . I also represent rail shippers, and I often see 98 percent on-time delivery provisions in truck contracts, but I’ve never seen one in a rail contract.” The past decade has seen a major shift in logistics. “We’ve gone from just-in-case supply chains, with extra inventory and extra carrying costs and storage costs, to minimal inventory and minimal carrying costs and storage costs. All of this has been made possible by the high service quality of the trucking industry.” (www.truckinginfo.com, July 22, 2010)

The ATA, to nobody’s surprise, has decided to oppose the FREIGHT bill. I will withhold judgment until I see more details, but this looks disturbingly like a companion measure to Secretary Ray LaHood’s expressed desire to get “gas-guzzling trucks off the road.”

Upcoming Conferences

Note: I don’t have space to list all the transportation conferences going on; below are those that I or a Reason colleague are participating in.

International Bridge, Tunnel, and Turnpike Association 78th Annual Meeting, Sept. 12-15, San Diego, CA, Hilton San Diego Bayfront. Details at: www.ibtta.org/Events/EventDetail3.cfm?ItemNumber=4428&token=22270&userID=.

8th Annual Preserving the American Dream Conference, Sept. 23-25, Orlando, FL, Doubletree Resort. Details at http://americandreamcoalition.org. (Sam Staley and Shirley Ybarra speaking)

Wisconsin Transportation Builders Association Annual Fall Meeting, Sept. 29, Madison, WI, Marriot Hotel. Details at www.wtba.org. (Robert Poole speaking)
 
News Notes

Congress Still Earmarking Transportation
According to a table in the July 28th issue of Transportation Weekly, the FY 2011 Senate transportation appropriations bill includes 371 earmarks totaling $488 million, while the House bill has 299 earmarks totaling $240 million. Both totals are smaller than the 1,041 earmarks in the FY 2010 bill as enacted, totaling slightly over $1 billion. I guess that’s some people’s definition of progress.

Americans Prefer Tolls Over Taxes
In response to the question of whether Americans would rather pay for new roads by means of a gas tax increase or tolls, they prefer tolls by more than two to one (41% to 18%). That’s one of several key findings from a nationwide survey commissioned by HNTB Corporation, conducted in late June by Kelton Research. And when given a list of funding options, tolls again ranked highest (39%), compared with increased public transportation taxes (29%), vehicle registration fees (23%), sales taxes (20%), gas taxes (18%), income taxes (11%), or property taxes (9%). These results are consistent with the 2008 NCHRP Synthesis 377 report, “Compilation of Public Opinion Data on Tolls and Road Pricing,” which you can download from the Transportation Research Board website.

Western Governors Back LCVs
At its annual meeting in June, the Western Governors Association called on Congress to allow the US DOT to consider pilot tests of longer combination vehicles (LCVs) on additional routes where these double- and triple-trailer rigs are banned due to the federal freeze on truck size and weight. A 2004 FHWA study found that increased LCV use in 13 western states would reduce heavy truck vehicle miles traveled by 25%, reduce fuel use and emissions by 12%, and save shippers $2 billion per year.
 
Does Warming Climate Mean Worse Smog?

Researchers at UC Berkeley and UC Davis, in a report for the California Air Resources Board, say that “climate change and regional air pollution are intertwined problems,” because rising temperatures increase ground-level ozone and particulate matter. I have not read their study, but my skeptical antennae were alerted by the following sentence in the ARB news release: “California could experience as many as six to 30 more days when ozone concentrations exceed federal clean-air standards, depending on the extent of increased temperatures and assuming that pollutant emissions in California remain at 1990-2004 levels.” (emphasis added) There is no reason to make the italicized assumption, given that EPA continues to ratchet down emission standards and that vehicle technology continues to improve.

New TRB Guidebook on Risk Analysis

NCHRP Report 658 is a new “Guidebook on Risk Analysis Tools and Management Practices to Control Transportation Project Costs,” a topic of particular relevance during times of tight budgets.

Quotable Quotes

“Given the lack of funding in just about every state, if not all 50 states, for a basic highway maintenance and improvement program, shifting money from ‘must-have’ projects to ‘nice-to-have’ projects is simply irresponsible and is not a good use of taxpayers’ money.”
--Tim Lynch, Senior Vice President, American Trucking Associations, testimony before House Transportation Appropriations Subcommittee (www.truckinginfo.com/news/news-detail.asp?news_id=71081), July 22, 2010.

“Does the public perceive a crisis? ‘What do your constituents tell you?’ asked one participant. Members of the Senate panel did not answer the question directly, but their comments left no doubts as to how they assess the political environment. The public, they suggested, is skeptical that any additional money would result in tangible improvements in mobility. The level of trust in the federal government’s ability to solve the nation’s problems is low. Local transportation tax initiatives get to be approved because local officials can point to specific improvements that new taxes will buy. People know what they are voting for and see tangible results for their tax dollars. They do not have the same level of trust and confidences in the promises of the federal government.”
--Ken Orski, “Some Frank and Unscripted Comments from Capitol Hill,” Innovation NewsBriefs, Vol. 21, No. 11, June 3, 2010


Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy


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