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Reason Foundation

Surface Transportation Innovations #96

Value-added tolling and Interstates, saving the Highway Trust Fund, HOV lane paradox, urban congestion in the US vs. overseas

Robert Poole
October 25, 2011

In this issue:

In last month’s issue I wrote about the growing interest among state DOTs in tolling the Interstate highways in their states. Earlier this month I addressed a group of state DOT CEOs at the annual meeting of American Association of State Highway & Transportation Officials (AASHTO) in Detroit. I argued that a toll is inherently a better user fee than a fuel tax—all the more so given federal policy that is increasingly focused on both fuel economy mandates (which mean less fuel tax revenue per mile driven) and alternative ways of powering vehicles. In addition, tolls can be set to recover the costs of building, operating, and maintaining specific highways, whereas a fuel tax produces the same revenue per mile traveled regardless of how costly or inexpensive the particular highway is (so that drivers on rural two-lane highways cross-subsidize drivers on Interstates).

But my key topic was political feasibility. Survey results, such as those compiled and analyzed in National Cooperative Highway Research Program’s “Compilation of Public Opinion Data on Tolls and Road Pricing”, increasingly show that if voters are given a list of alternative ways to pay for highway improvements, they usually prefer tolls to tax increases (including fuel tax increases). (http://onlinepubs.trb.org/onlinepubs/nchrp/nchrp_syn_377.pdf)

The key problem facing this country with respect to the Interstates is that they are starting to wear out, as individual corridors exceed their original 50-year design lives. They were also built to 1960s design and safety standards, and many lack adequate capacity for current and projected traffic levels, especially for goods movement. But any serious assessment of what it will cost to reconstruct and modernize aging Interstates shows that it is impossible to do so with current and projected fuel tax revenues. Financing this reconstruction—which amounts to replacing obsolete 20th-century Interstates with advanced-design 21st-century Interstates—is most likely to be feasible with tolls as the principal revenue source.

Last winter the Wisconsin Policy Research Institute commissioned the Reason Foundation to study the feasibility of reconstructing and modernizing that state’s Interstate highways using toll finance. As the principal analyst for this project, I saw the challenge as twofold. First, what would it cost to do this and would realistic toll rates support those costs? Second, could this be done in a way that might be politically acceptable? The key principle embodied in the study is what I dubbed “value-added tolling.” In other words, tolls would be implemented on an Interstate corridor only after it had been reconstructed and modernized, offering greater value to those asked to pay the tolls.

Following this principle, the study analyzed the age and performance of every Interstate corridor in the state (using detailed data made available by WisDOT). Based on that information, we developed a 30-year, corridor-by-corridor implementation plan, giving priority to early reconstruction of the oldest corridors and those most urgently needing additional lane capacity. We costed out each “project” using unit-cost data from FHWA. After surveying current toll rates across the country, we decided on baseline (2010) toll rates of 5¢/mile for cars and 20¢/mile for trucks. Those rates would be inflation-adjusted over the entire 30-year period.

In build-year dollars, the cost of the entire program was $26 billion. Our analysis compared the net present value of toll revenues with the net present value of costs, as a basic test of financial feasibility. For the rural Interstate system, the NPV of revenues exceeded the NPV of costs by 9.5%. For the urban Interstates (greater Milwaukee), the NPV of revenues was 71% of the NPV of costs. The study is available on both the WPRI and Reason Foundation websites. (http://reason.org/news/show/rebuilding-wisconsin-interstates-to)

I’ve been pleasantly surprised by the response to the study: widespread coverage in print and electronic media, including a positive editorial in the Milwaukee Journal Sentinel and an hour-long call-in show on Wisconsin Public Radio. Value-added tolling is consistent with the Interstate reconstruction tolling pilot program dating from TEA-21, which requires that all toll revenues be used for the reconstruction, operation, and maintenance of the tolled corridor—a principle that highway user groups agreed to when the pilot program language was drafted. Mainstreaming that pilot program would open this approach to all states faced with the monumental task of replacing their worn-out Interstates over the next several decades.

How to Save the Highway Trust Fund

In both houses of Congress, the scramble is on to find some additional source of revenue to add to the $234 billion that is likely to be generated over the next six years from highway user tax revenues. Under the July outline of a six-year House bill, that would be the total amount available for the federal highway and transit program. State DOTs and highway and transit interest groups are lobbying hard for something—anything—to be added to that sum. What they seek is a total more like the $323.4 billion that results from the Congressional Budget Office’s projection of recent highway and spending. Even though the spending for the last three years included three one-time stimulus bailouts of the Highway Trust Fund totaling $34.5 billion, that beefed-up spending level is taken to be the new normal, rather than a short-term emergency boost ostensibly aimed at providing recession-relief jobs.

The biggest problem with this quest is that none of the sources of added funds is remotely related to being a highway user fee. The House is looking at additional revenues from accelerated oil and gas production (not a “tax increase,” you understand—just more revenue due to more taxable activity). Transportation Weekly reports that the Senate is looking at (a) tax-code changes related to Social Security and Medicaid and/or (b) a grab-bag of measures relating to ethanol, chicken manure, and a crackdown on diesel fuel theft.

Besides not being likely to produce a six-year total of anything close to the $89 billion over six years needed to close the gap, pumping non-user-tax revenue into the Highway Trust Fund is likely to destroy it. The 1974 Budget Act includes an amendment by Sen. Sam Nunn requiring that 90% of the revenue in federal trust funds be derived from user taxes and fees, in order for those trust funds to be exempt from various general spending limitation rules. It was adopted by a vote of 80-0. Protecting the HTF and other trust funds has a long history of bipartisan support, as insulating them from “artificial and unnecessary constraints of the budget process” (Rep. James Oberstar) and ensuring that such trust funds remain “deficit-proof” (Rep. Bud Shuster).

In my view, giving up this special status would be penny-wise and pound-foolish. Many of those arguing for finding more money, regardless of its source, may not realize the serious longer-term consequences of essentially destroying the HTF mechanism.

So here is my suggestion of a better way forward. The original purpose of the Highway Trust Fund, when it was created in 1956, was to build key highway corridors linking the country together. It was only opened up to transit in the early 1980s, when President Reagan’s DOT Secretary Drew Lewis made a deal to gain urban interests’ support for a 5 cents/gallon increase in the fuel tax by dedicating one of those five cents to a new Mass Transit Account within the HTF. There is no transit user tax supporting what is now 20% of the HTF that goes to transit. But transit is politically popular, and there is no chance that Congress would stop funding it.

Therefore, consider the following. If Congress is determined to continue highway and transit spending at something like the level of the last three (bailout) years, use all the highway user tax money for the highway program (via the HTF) and use the bailout money to support the transit program (outside of the HTF). Thus, over the six-year reauthorization period, instead of the $234 billion of highway user-tax revenue supporting $178.4 billion of highway spending and $56 billion of transit spending, it would support $234 billion for highways only. That’s an average highway amount of $39.1 billion per year, all of it funded by highway user taxes, protecting and preserving the Trust Fund. That compares with an average of less than $31 billion a year under the July House proposal (and an average of $33 billion a year under SAFETEA-LU). And transit supporters would need to find not the $89 billion noted above but only $56 billion over six years. Oil and gas tax revenue? Medicaid savings? It’s not for me to say, but whatever they come up with would not harm the Trust Fund as long as it’s never deposited there.

This reauthorization is a turning point for the Highway Trust Fund. Either we return it to being a real trust fund, on behalf of those who pay the user taxes, or we scrap it and convert fuel taxes into general federal revenues, to be parceled out who knows how and subject to all the budgetary pressures that will arise in coming decades. That’s not the road I want to travel.

The HOV Lanes Paradox

There’s been considerable buzz in urban transportation circles the last few weeks over a study by Michael Cassidy and Kitae Jang of UC Berkeley, “Dual Influences on Vehicle Speed in Special-Use Lanes and Critique of U.S. Regulation.” They analyzed what happened on a four-mile length of I-880 in Hayward when a new rule went into effect that ended access to the HOV lanes for hybrid vehicles. Caltrans put this change into effect because numerous HOV lanes in California were failing to meet the federal performance standard of maintaining at least 45 mph speed 90% of the time. (www.its.berkeley.edu/publications/UCB/2011/VWP/UCB-ITS-VWP-2011-4.pdf)

Cassiday and Jang predicted that shifting hybrid users into the general-purpose (GP) lanes would worsen congestion in those lanes, and they were right. But they also predicted that speeds in the HOV lanes would decrease, rather than increase, despite fewer vehicles in the HOV lanes. And their data, derived from loop detectors in the pavement, confirmed their hypothesis. Their explanation is a psychological one—that people driving in the HOV lane don’t feel comfortable going 65 mph right next to lanes that are engulfed in stop-and-go conditions. So when speeds in the GP lanes drop, so do speeds in the adjacent HOV lane. They criticize the FHWA performance standard as ill-conceived and actually call for allowing more classes of vehicles into the HOV lanes.

I see several problems with this assessment. First, to the extent that psychological factors may lead to speed reductions in the HOV lane, a measurement of what happened in only the first month after the policy change ignores learning and adjustments that take place over time. Second, the HOV lanes in the San Francisco Bay Area are not separated in any way from the GP lanes; people are free to dart back and forth between GP and HOV lanes. That may be a key factor leading to lower HOV-lane speeds when the GP lanes are congested. Third, this phenomenon is not seen in HOT lanes, to the best of my knowledge. For the two I’m most familiar with--91 Express Lanes in Orange County, CA and the I-95 Express Lanes in Miami—vehicles in the HOT lanes during peak periods cruise along at 60-70 mph while adjacent GP lanes can be in stop-and-go conditions, but are always significantly slower during peak periods. In both of those cases, plastic pylons provide a kind of psychological barrier between the GP lanes and HOT lanes; perhaps that makes a meaningful difference.

To their credit, Cassidy and Jang do consider conversion from HOV to HOT as one possible solution to the dilemma they see on the Bay Area HOV lanes, since this would be one way of getting more vehicles out of the GP lanes and into the special-use lanes. As the Bay Area moves forward with its current plan to convert its HOV lanes into HOT lanes as part of creating a regional HOT lanes network, they should consider using plastic pylons to separate the HOT lanes. When what you are selling to paying customers is faster and more reliable travel, it would not do to have HOT lane speeds decrease significantly whenever GP lanes experience stop-and-go conditions.

New Reports Put Urban Congestion in Perspective


The 2011 Urban Mobility Report was released last month by the Texas Transportation Institute (http://mobility.tamu.edu). Superficial mainstream media coverage, as always, focused on the big numbers: a total urban congestion cost last year of $101 billion and total delay hours last year of 4.8 billion hours. And congestion is massively greater than in 1982, when TTI first began compiling annual figures. But within the data are bits and pieces of more positive news. In addition, several other reports released during the same time period put those commuting horrors into perspective. So let’s try to get a more balanced picture of U.S. commuting.

First, if we review the annual data since 1982, it’s clear that congestion seems to have peaked, at least temporarily, in 2005-06. The table below compares the latest (2010) national numbers with the peak year for the same variable.

chart peak value

The decreases from these peaks are most likely due to the combined effects of higher fuel prices and the Great Recession. But most of the 2010 values are modest increases over 2009 and 2008, as economic growth has begun to resume. So it’s certainly true, as the TTI report summarizes, that:

One factor not getting much attention is the impact of congestion on goods-movement. Shortly after the TTI report appeared, the American Transportation Research Institute (ATRI) released its report, “FPM Congestion Monitoring at 250 Freight-Significant Highway Locations.” The Freight Performance Monitoring (FPM) initiative is a joint effort of ATRI (the trucking industry research arm) and FHWA. Based on previous freight bottleneck studies, the program collects data on 250 major interchanges with heavy truck traffic. Data from GPS-equipped trucks are used to calculate a freight congestion index for each one (factoring in both the extent of speed reduction and the volume of trucks affected). The report lists these interchanges in rank order of their computed congestion index. The most congested is I-290 at I-90/I-94 in Chicago. Of the top 10, three are in Houston, two in Chicago, and one each in Fort Lee (NJ), Gary (IN), Austin, Atlanta, and Los Angeles. Incidentally, TTI’s recent reports have included measures of truck congestion; the latest one finds that although trucks are only 6% of urban vehicles, they experience 26% of total congestion costs. That factors into higher costs for just about every product we buy. The ATRI report is at:
www.atri-online.org/index.php?option=com_content&view=article&id=303&ItemID=70.

Despite congestion being so costly and time-consuming in the aggregate, most Americans’ commutes don’t appear to be as bad as you might think. The Census Bureau’s American Community Survey data on commuting in 2010 recently appeared. They put the average U.S. commute time at 25.3 minutes. Worst in the nation is the New York urbanized area at 34.6 minutes, with the Washington, DC region second at 33.9 and Chicago fourth at 30.7. The notorious Los Angeles/Orange County urbanized area—with the largest aggregate amount of congestion—didn’t even make the top 10 in commute time, coming in at #17 with 28.1 minutes. It’s worth noting that the longest trip times are in places with traditional central business districts and relatively high transit mode shares.

Two recent global studies also put U.S. commutes in perspective. One from IBM calculated a “commuter pain index” for the world’s 20 largest urban areas. Mexico City ranked first (worst) with an index of 108. Only three US regions made the list, with Los Angeles scoring a modest 34, New York 28, and Chicago 25. (For comparison, Beijing scored 95, Johannesburg 83, Singapore 44, and Paris 31.)

And most recently, the New York Times (Oct. 14th) reported on a study of commute times for OECD member countries. In this study, the U.S. average is 28 minutes, compared with the average among all 23 OECD countries of 38 minutes. Commutes were especially long in Japan, Italy, and Spain—all with far more compact and centralized urban areas. And only three small countries—Ireland, Denmark, and Sweden--had commute times lower than the U.S. average.

Selling “Second-Hand Roads”


The debut issue of the OECD International Transport Forum’s magazine, Motion, includes an interview with U.K. legal expert Andrew Briggs (of Hogan Lovells) on trends in transport project finance due to the global credit markets crunch. In discussing the easier time financiers have with availability-payment concessions compared with toll concessions (in which investors bear traffic and revenue risk), Briggs remarks that European governments have been providing “a greater degree of protection for financial investors,” because after all, “there is no market to sell a second-hand road!”

From an investor’s viewpoint, if what Briggs means is no market for a struggling toll road at 100 cents on the dollar, he’s right. But from a public policy point of view, he’s quite wrong. I have yet to see a case of an insolvent PPP toll road lacking a willing buyer at some price point. I know of three such cases in the United States and three in Australia. In this country, the start-up Camino Colombia toll road near Laredo, TX went bankrupt in 2003 and was purchased by an insurance company at 13¢ on the dollar, which later sold it to Texas DOT at 22¢ per dollar. Charging more realistic tolls, it is still in service today. In Virginia, a flawed non-profit PPP model left the Pocahontas Parkway toll road near bankruptcy, but VDOT arranged for a long-term lease by Transurban in 2006 that kept the toll road in operation and made possible a useful extension to the Richmond airport. Finally, in San Diego County, the South Bay Expressway (SR 125), a victim of the bursting of the area’s housing bubble, filed Chapter 11 in 2010, and is in the process of being purchased by SANDAG, the local MPO. At no time has it ceased serving its toll-paying customers.

In all three cases, investors did lose money, but the taxpayers did not. The same is true of three Australian toll tunnels that experienced traffic and revenue far below projected levels. Because start-up (“greenfield”) toll roads are inherently risky, one of the major advantages of long-term toll concessions is transferring not only construction risk and completion risk to knowledgeable investors, but also transferring traffic and revenue risk. Briggs is quite right that availability-payment concessions are much less risky for investors; that’s true by definition.

But availability payment concessions don’t provide net new revenues to invest in transportation infrastructure. They are a financing and procurement tool, which offer the benefit of producing a needed infrastructure project much sooner (like financing a house purchase instead of paying cash), while also transferring construction risk and ensuring proper maintenance over the life of the facility. Those benefits are not trivial.  But to the extent that the major problem facing U.S. surface transportation is a huge investment shortfall, the best candidate for making a serious dent in that is to toll major new and reconstructed projects. Especially where there is no experienced toll agency in being, the situation calls for a procurement model that can shift key risks from taxpayers to investors. That model is the toll concession.

We know such risk transfer works. We can also observe that some investors would rather not take those risks, which is why there’s a global trend toward availability-pay concessions. But as long as other capital providers and toll companies are willing to take those risks, good public policy should welcome them to the table.

Bizarre Turn in Harbor Maintenance Tax Saga

If you think the Highway Trust Fund is not the ideal way to fund highways, take a look at the Harbor Maintenance Trust Fund. Congress created it in the 1980s to fund maintenance dredging at U.S. ports. The revenue comes from a 0.125% tax on the value of containerized cargo. The proceeds are credited to the HMTF and can be used only for dredging projects done by the Army Corps of Engineers, after passing the Corps’ version of a cost-benefit analysis.

Before explaining the new problem, let me count up the long-standing flaws in this arrangement. First (a major complaint of the ports), Congress regularly appropriates far less for dredging projects than the amount produced each year by the Harbor Maintenance Tax, using the surplus to make the federal deficit a bit smaller (as they used to do with the Aviation and Highway trust funds). So many ports must wait years for their turn to come around. Second, the cost-benefit analysis is flawed, being based on alleged national benefits of a project when those benefits are local and regional—and ports on the same coast compete with one another. Third, in recent years Congress has earmarked essentially all the dredging projects, anyway. Fourth, not all ports need regular dredging; some of the largest (Seattle, Tacoma, Los Angeles, Long Beach, for example) have naturally deep harbors—but containers arriving there must pay the tax anyway. This amounts to a large-scale redistribution of resources from ports that are well-suited to major cargo to those that aren’t (unless their owners choose to invest to make them so).

The new wrinkle in all this is that the West Coast ports have gotten steamed up about the success of the (so far tiny) Canadian port of Prince Rupert. With its direct rail access to Chicago and its great-circle distance from Asia being significantly shorter, Prince Rupert is turning into a potentially serious competitor. But since containers landing there don’t have to pay the U.S. tax (duh!), the West Coast ports (including several like Portland that do require dredging) are calling for federal action. Friendly Senators have called on the Federal Maritime Commission to investigate, and the six-port “West Coast Collaboration” is now calling for some kind of tax on containers entering the U.S. from Canada via Prince Rupert.

This is ludicrous. The problem is the Harbor Maintenance Tax itself. As Journal of Commerce columnist Peter Tirschwell wrote recently, “Might not a better solution be to scrap the HMT and make funding for maintenance dredging a local responsibility among ports that require it?” Indeed it would be.

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 am participating in.

High Speed Rail: Perspectives and Prospects, 2011 Lipinski Symposium, Nov. 14, 201, Evanston, IL, Northwestern University. Details at www.iti.northwestern.edu/lipinski.
(Robert Poole speaking)

23rd Annual ARTBA Public-Private Partnerships (P3) Conference, Nov. 15-16, 2011, Washington, DC, Mayflower Hotel. Details at http://artbap3.org. (Robert Poole speaking)
 
Infrastructure Investor America’s Forum, Dec. 7-8, New York, NY, McGraw-Hill Conference Center. Details at www.peimedia.com/iiamericas11. (Shirley Ybarra speaking)

News Notes


Amtrak to Open Some Routes to Bidders
Under legislation enacted in 2008, Amtrak will open one or two of its inter-city routes to competition from private passenger rail operators. The most likely bidders are companies that have won commuter-rail contracts away from Amtrak: Herzog (which now operates the Caltrain service to and from San Francisco), Keolis (which now operates Virginia Railway Express), and Veolia (which operates Florida’s Tri-Rail). Bloomberg reports that the companies will likely target state-subsidized routes, on the premise that states are more likely to be cost-conscious. Excluded from bidding will be the four corridors that Amtrak owns: Boston-Washington, Philadelphia-Harrisburg, New Haven-Springfield, and a 95-mile portion of Chicago-Detroit.

PPPs and Megaprojects
A good overview of the advantages of long-term concession PPPs for megaprojects was published recently by Richard G. Little, director of the Keston Institute for Public Finance and Infrastructure Policy at USC in Los Angeles. “The Emerging Role of Public-Private Partnerships in Megaproject Delivery” explains how both business incentives and contractual provisions can shift important risks from government/taxpayers to investors in the P3 entity. It appeared in Vol. 16, No. 3 of Public Works Management & Policy, 2011.

Federal Court Upholds Trucking Deregulation

In a closely watched case, the Ninth Circuit Court of Appeals upheld the challenge filed by the American Trucking Associations to the Port of Los Angeles’ attempt to ban owner-operator drayage operators from serving the port. The court found that the port lacked legal authority to regulate trucking in this way, given that Congress had long since deregulated trucking. The decision was published on Sept. 26, 2011. Several other major ports had contemplated enacting similar provisions; by banning owner-operators, they would make it feasible for unions to organize fleet employee drivers.

Public Support for Truck-only Lanes

In its August survey of public opinion on infrastructure (America THINKS), HNTB queried people on long-distance Interstate Corridors of the Future (specifically Interstates 5, 10, 15, 69, 70, and 95). In addition to high levels of concern over congestion (50%) and poor pavement conditions (54%), some 38% expressed distress at sharing lanes with heavy trucks, and 25% thought that creating separate truck-only lanes would make the biggest difference in reducing congestion on such routes. In a separate question, 69% said they would be likely to support funding long-term improvements to these particular routes. Also, 72% did not want the federal government making the key decisions about these Interstates.

Reforming Transportation Enhancements

A bill introduced last month by Rep. Mike Kelley (R, PA) would remove the mandate that states devote 10% of their federal Surface Transportation Program funding to “Transportation Enhancements.” His Transportation Funding Flexibility Act would not prohibit states from spending up to this amount on bicycle and pedestrian facilities, landscaping, and historic preservation but would no longer mandate spending Highway Trust Fund money on such programs.

Critique of Green Jobs Programs
My Reason magazine colleague Jacob Sullum devoted his weekly syndicated column several weeks ago to the inherent flaws in the rationale underlying government support for “green jobs,” such as subsidizing battery and solar panel companies. “The Broken Planet Fallacy: the Solyndra Boondoggle Illustrates the Folly of Treating Global Warming as an Economic Boon” is available on the Reason magazine site: http://reason.com/archives/2011/09/21/the-broken-planet-fallacy.

Feedback on Seattle Tunnel
In response to my article last month on congestion-relief tunnel projects, Mike Ennis of the Washington Policy Center points out that the Alaskan Way tunnel will actually reduce north-south highway capacity in Seattle. The elevated Alaskan Way viaduct, to be torn down due to earthquake vulnerability, carries six lanes of traffic, whereas the tunnel will have only four.

Ditch HSR, Increase Your Bond Rating?
Two states whose governors rejected federal high-speed rail funding have recently garnered bond rating increases from Standard & Poor’s. Ohio went from AA+negative to AA+stable, which S&P attributed to the state’s budget reforms. And Florida won a coveted AAA rating after closing a major budget gap with “significant cost-cutting measures.”
 
Virginia Finds Partial Way Around Rest-Area Commercialization Ban
Although VDOT and a number of other state DOTs have been unable to generate much support in Congress for overturning the federal ban on having gas stations and/or restaurants at Interstate highway rest areas (unlike on turnpikes, where such amenities are greatly appreciated), VDOT has come up with a way to offer at least some new services at the state’s rest areas. The rest areas are being equipped with new food, drinks, and cosmetics vending machines, and the state’s 11 welcome centers will be equipped with ATMs and touch-screen information kiosks. There will also be advertising and sponsorship opportunities. It’s all being done under a three-year contract with CRH Catering.

Prof. Joseph Schofer Garners TRB Award
The Transportation Research Board has announced that Northwestern University Prof. Joseph L. Schofer is the winner of its 2011 Roy W. Crum Distinguished Service Award. The award recognizes Schofer for more than 40 years of teaching and research in civil and environmental engineering as well as extensive activity on TRB committees and task forces over the years. The award presentation will take place during the Chairman’s Luncheon at the TRB 91st Annual Meeting, in January.

Quotable Quotes

“The [proposed jobs] bill will add billions of dollars to state and local government expenditures by reducing the tax benefit of state and municipal bond issues for taxpayers earning more than $250,000 per year. . . . The President obviously believes that tax-free bonds are a benefit to the buyers when, in reality, the benefit accrues entirely to the municipalities that issue the bonds. Because the bonds are tax-free, the issuers pay a lower interest rate—by an amount almost exactly equal to the tax benefit. By reducing the benefit, municipalities will be forced to pay significantly higher interest rates, increasing their annual debt-service cost. . . . Those investors that have portfolios of municipal bonds will switch to high-grade corporate or pay the tax from the higher interest payments they’ll receive. All the supposed increase in tax payments from the plan will simply be a transfer from municipal and state governments to the federal government through the hands of investors. . . . From my perspective, interest on municipal debt should have no tax-free benefits at all. Municipalities should pay market rates based on their credit-worthiness, and individuals should pay taxes on interest just as they do when they buy corporate bonds. The current system, in effect, subsidizes heavy issuers of bonds at the expense of states that issue bonds at more modest levels.”
--Harvey Golub, “A Jobs Bill that Boggles the Mind,” Wall Street Journal, Sept. 21, 2011

“Among the nations in the [OECD] survey, the United States has the lowest urban population densities. This reality is at odds with the contentions of some analysts who have associated longer travel times and greater traffic congestion with lower urban population densities. But shorter commutes are about more than density. This is illustrated by comparing the Los Angeles and Toronto urban areas. The two . . . have almost identical population densities, at 7068 and 7040 persons per square mile respectively. The density of the core areas is similar, with proportions of land areas at above 10,000 persons per square mile. The most important differences are that in Los Angeles the transit commuting share is one-third that of Toronto, and automobile commuting is more prevalent. Employment in Los Angeles is much more dispersed, with less than 5% of jobs being in the downtown area, compared to approximately 15% in Toronto. . . . One-way commute times in Los Angeles are nearly one-third less than in Toronto—28 minutes in Los Angeles and 40 minutes in Toronto. . . . The keys to shorter commutes in the U.S. are adequate roads, personal mobility, and decentralization (lower density) of both jobs and housing.”
--Wendell Cox, “OECD Cites Shorter U.S. Work Trip Travel Times,” NewGeography, Oct. 18, 2011(www.newgeography.com/content/002488-oecd-cites-shorter-us-work-trip-travel-times)
 
“[I]n most developed economies, high-speed railways fail to bridge regional divides and sometimes exacerbate them. Better connections strengthen the advantages of a rich city at the network’s hub; firms in wealthy regions can reach a bigger area, harming the prospects of poorer places. Even in Japan, home to the most commercially successful line, Tokyo continues to grow faster than Osaka. New Spanish rail lines swelled Madrid’s business population to Seville’s loss. The trend in France has been for headquarters to move up the line to Paris and for fewer overnight stays elsewhere. . . .The advantages, meanwhile, accrue mostly to business travelers. . . . Yet because high-speed lines require huge investments, usually by governments, ordinary taxpayers end up paying. So instead of redistributing wealth and opportunities, rich regions and individuals benefit at the expense of poor ones.”
--“The Great Train Robbery,” The Economist, Sept. 3, 2011.

“Ample supplies of oil and gas, combined with taxpayer fatigue over green subsidies, means that a range of costly and uncompetitive technologies such as biofuels and electric cars now face the prospect of financial failure. To be sure, investments in the oil and gas industry are not immune from surprises and technology advances. LNG receiving facilities in the U.S. are suffering large financial losses. The good news is that unlike the bankrupt Solyndra solar plant that received over $500 million in federal loans, losses at the LNG receiving facilities will not be picked up by the taxpayers.”
--Lucian Pugliaresi, “The Lessons of the Shale Gas Revolution,” Wall Street Journal, Sept. 30, 2011

“Dallas, Houston, San Antonio, and Austin are all among the 20 fastest-growing major cities in the nation. However, the three cities with various levels of rail transit—Dallas, Houston, and Austin—all have declining transit ridership trends and have fewer absolute transit riders today than they had a dozen years ago. They have spend billions to implement and promote transit with a heavy focus on rail transit. . . . Increasing the proportion of a region’s transit funds being spent on rail transit leads to less cost-effective overall transit and degraded transit for the majority of transit riders who still ride buses.”
--Tory Gattis, “Major Texas Metro Areas Are Confirming Failures in Rail Transit,” NewGeography, Sept. 14, 2011 (www.newgeography.com/content/002442-major-texas-metro-areas-are-confirming-failures-rail-transit)


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


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