Surface Transportation Innovations #72

A federal toll czar, funding transit as social infrastructure and reducing vehicle miles traveled

In this issue:

  • Fund Transit as Social Infrastructure?
  • The Case Against a Federal Toll Czar
  • Residential Density and VMT Reduction
  • Jobs-Housing Balance vs. Retail/Housing Mix
  • Truck-Only Lanes Moving Forward
  • Upcoming Conferences
  • News Notes
  • Quotable Quotes

Fund Transit as Social Infrastructure?

Last month at the ARTBA Public-Private Ventures conference, a long-time transportation colleague whose work has shifted from public-private partnership (P3) toll roads to transit P3s had an interesting idea. Instead of thinking of highways and transit as the same kind of thing, he said, we really should think of transit (and he seemed to be thinking mostly of rail transit) as social infrastructure. The fact that it generates some revenues isn't that relevant; it's something people want, and it needs to be paid for (mostly) by general taxes, not user fees.

He made a good point, and this links directly to an idea that commuting expert Alan Pisarski put forth several months ago. Recalling that Congress has several times recently used general fund money to bail out the federal Highway Trust Fund (and that this is likely to continue, if Congress does not significantly increase federal fuel taxes), why not have Congress fix the Trust Fund by shifting federal transit funding to the general fund? That would free up considerable Highway Trust Fund monies for highways, which was that fund's original purpose, after all.

I expect the immediate reaction of transit advocates, state DOTs, and Metropolitan Planning Organizations will be opposition to such a major change from the status quo. But every national commission and think tank has called for this reauthorization of the federal program to be a time of thinking outside the box, so I hope you will think through with me the potential advantages of this change.

First, transit is more popular today with elected officials than at any time I can remember. So the natural fear of transit people that losing access to dwindling federal fuel tax revenues would mean a reduction in transit funding seems fanciful to me. The Administration and Congress are, after all, putting $14 billion of new general fund money into inter-city passenger rail. It's inconceivable to me that they would reduce, rather than increase, the amount of federal support for transit, whatever its source. And transit advocates might figure out that instead of always having to fight for a larger share of Highway Trust Fund money, they might do better making the case for larger general fund support.

Second, every credible study of highway funding-the FHWA's Conditions & Performance reports, the AASHTO Bottom Line reports, the Infrastructure Finance Commission's report-finds that this country has a large backlog of deferred highway maintenance, a still-large (though slowly declining) number of deficient bridges, and a huge unmet backlog of capacity additions and bottleneck removals that would pass a benefit-cost test. Yet it seems highly likely that Congress will not increase federal gas and diesel taxes this go-round, so those problems are likely to get even worse during the six-year reauthorization period. Thus, refocusing the Trust Fund on its original highways-only purpose would facilitate much-needed highway investment despite the lack of a gas-tax increase.

Third, making this change would reverse the two-decade trend of gradually converting the fuel tax from a user fee into a general public-works tax. Ample survey research shows that as of now, large fractions of the public won't support increased fuel taxes because they (correctly) expect they will get little or no direct benefit from paying more at the pump. They know all about bridges to nowhere, and the more knowledgeable ones have begun to realize that the Highway Trust Fund has increasingly become a politicians' plaything rather than a means of giving them better highways in exchange for their "user tax" payments. But shifting those revenues back to being 100% for highways could go a long way towards putting trust back in the Trust Fund.

How much could federal highway investment be increased if this change were made? The recent GAO study requested by Sens. McCain and Coburn (GAO-09-729R) found that during fiscal years 2004-2008, $78 billion in Highway Trust Fund monies (out of a total of $244 billion) were spent on transit and other non-highway purposes. In round numbers, that is 32%. When you actually get into the details, it's a bit more complicated, since the question posed to GAO was very narrow (spending on anything other than the construction and maintenance of highways-so the 32% includes highway-related research and planning, operating funds for FHWA, NHTSA, and FMCSA, etc.). Adjusting for some of those things would reduce that 32%. But the GAO calculation appears not to have taken into account the extent to which state DOTs "flexed" some of their highway funds to non-highway projects, as allowed under SAFETEA-LU. Correcting for that would increase the percentage. However the final number works out, it's a pretty sizeable amount of dollars.

I hope this idea gets serious consideration as we rethink the federal role in surface transportation.

We Don't Need a Federal Toll Czar

Assuming the House reauthorization bill moves forward as drafted by Chairman Oberstar and his staff, one of the battles will be over its proposal to centralize decisions over nearly all U.S. toll roads and tolled P3 projects in a new "Office of Public Benefit" in the Federal Highway Administration. You have to sort through several different sections of the bill to understand the full impact: Sec. 1204 on the OPB itself, Sec. 1301 on federal veto power over toll agreements, and Sec. 1504 on P3 agreements.

The first thing to understand is that while proponents claim that the bill "consolidates" a number of current pilot programs on tolling and P3s, what it actually does is to significantly expand federal control. First, it turns back the clock to the days before the 1991 ISTEA legislation (which began to relax what had been a nearly complete ban on tolling on federal-aid highways). Since ISTEA, the only restrictions have been limited to the Interstate system, but the House bill reverts to the bad old days, and would apply to anything on the entire federal-aid highway system.

Second, the tolling section requires that all tolling agreements (which allow some use of tolling on a federal-aid highway) must be approved-or not-by the Office of Public Benefit. This includes the "tolling schedule," which seems to ignore the increasingly common dynamic pricing as used on Managed Lanes and on some recent and planned toll roads. And any "substantial changes" in the toll schedule are also subject to the OPB czar's veto. Public comment would be required before any such tolling went into effect. And-get this-anyone who objected would have 90 days to bring a lawsuit. States would also be required to use any excess toll revenues for transit (including operating costs). And states would be required to mitigate the impact of toll facilities on low-income travelers and others diverted from the roadway due to tolling.

Third, the measure would create new obstacles for P3 projects. Besides spelling out certain provisions that must be included in such agreements, the measure requires negotiated agreements between a state DOT and the competitively selected private partner to be submitted to the federal OPB czar for approval-or not. As former DOT chief counsel D. J. Gribbin wrote in Public Works Financing , "[R]equiring all tolling and P3 agreements to be approved by the Office would severely limit the attractiveness of P3s to both states and the private sector." By creating considerable uncertainty over whether such approval would be granted, "P3 proponents would be at risk of the OPB denying a P3 project after millions of dollars and years of effort were spend to develop it. This puts P3 proponents in a catch-22. OPB will only approve projects [that are] well developed but no one will spend funds to advance a project to that stage unless the project has OPB approval."

Pennsylvania Gov. Ed Rendell cheered P3 proponents at last month's ARTBA Public- Private Ventures conference and again at the Infrastructure Investor: New York conference by asking his audiences to "Help me kill the Office of Public Benefit." In July, the National Governors Association called on Congress to remove federal restrictions on states' authority to toll federally-aided highways and to make decisions about "the appropriate level of private sector participation in their surface transportation programs." I hope AASHTO, the state DOTs'organization, does likewise at their upcoming annual meeting later this month.

Increasing Density and Reduced Driving

Last month I reviewed the important Transportation Research Board report "Driving and the Built Environment" which summarized serious research on key issues in this area. One of its findings is as follows: "The literature suggests that doubling residential density across a metropolitan area might lower household VMT [vehicle miles of travel] by about 5 to 12 percent." It noted that many studies that claim higher impacts "are subject to a number of shortcomings," including the possibility of self-selection-the tendency of people who like urban lifestyles to locate in high-density areas; hence, the findings from those areas are probably not generalizable to the larger metro area population.

This month I'd like to call your attention to an interesting quantitative exercise on this subject carried out by Randal O'Toole of the Cato Institute. He reproduces a Sierra Club graph and data on daily trips per person as a function of density (people per square mile), based on the VMT reduction being 10% for doubled density--consistent with the TRB study. Then he looks at the impact on an area that is shifted to higher density. Using the Sierra Club's figures for auto trips/capita at each density, he calculates and then adds to the graph the total daily auto trips that result from the higher density (lots more people/square mile times a slightly lower trips/person means a lot more trips/square mile). Assuming that congestion increases proportionally to trips/square mile, O'Toole's calculations show that congestion increases by a factor of 10 as per-capita trips are being cut in half, as densities are being increased to a level beyond that of New York City.

This is a nuance that the TRB researchers appear to have missed, and unless there is some basic flaw in what O'Toole has done, this congestion impact is very important. Not only would it impose costly time-wasting on those in the densified areas. It would also increase greenhouse gas emissions from that area. (Go to www.debunkingportland.com/smart/densitycongestion.htm)

Jobs-Housing Balance versus Retail-Housing Mix

Two different urban planning objectives have been promoted as ways of reducing auto travel. One calls for serious efforts to have jobs spread more evenly throughout an urban region, rather than the once-traditional pattern of the jobs being located mostly in a central business district while the suburbs consist largely of bedroom communities. This is called increasing the jobs-housing balance. The other idea, which is more closely linked with smart-growth and new-urbanist planners, calls for mixed-use zoning in residential areas: providing a significant mix of retail and residential uses. The first idea is intended to reduce the length of average commute trips; the second to reduce the use of cars for shopping trips.

Thanks to recent research by Robert Cervero and Michael Duncan of the University of California Transportation Center in Berkeley, we have some solid data on these two approaches' impact on VMT (vehicle miles of travel). (www.uctc.net/papers/825.pdf)

Cervero and Duncan relied on household travel diary data from the year 2000 in the San Francisco Bay Area. Overall, they found that a 10% increase in the number of jobs in the relevant occupational category within four miles of one's residence is associated with a 3.3% lower daily work VMT, and a somewhat larger impact on vehicle hours of travel (VHT) for work trips. For shopping and services trips, the impact of having retail and services close to home was much smaller (which makes sense, because most people need to drive to reach their preferred stores and service providers). Overall, the researchers concluded that jobs-housing balance reduces VMT 72.5% more than mixed-use (housing and retail) development, and reduces VHT by 88% more. They note that these results are consistent with a recent national study that analyzed the influence of seven land-use variables in 1990 on changes in commute time in 2000, for 50 large urban areas. The only one related significantly to lower commute time was jobs-housing proximity.

There is also some evidence that jobs, over time, follow residents to the suburbs, as office and industrial parks get built closer to where many employees (and executives) prefer to live. Cervero and Duncan cite previous research on this from both the Los Angeles and Washington, DC metro areas. The latter is where the term "edge city" was coined, to describe one aspect of this phenomenon, which is now seen nationwide.

Truck-Only Lanes Gain Some Traction

Last month the Federal Highway Administration approved Missouri DOT's request to rebuild its portion of I-70, between Kansas City and St. Louis, with truck-only lanes. The idea was studied as part of a four-state "Corridors of the Future" project, for which study funding was awarded under that FHWA program about two years ago. Four states-Missouri, Illinois, Indiana, and Ohio-took part in that study, one of whose aims was to assess the feasibility of rebuilding and modernizing I-70 in that 800-mile corridor with the added lanes being designed as truck-only lanes. Missouri has gone further towards implementation thus far, perhaps because its need for widening and rebuilding is more urgent than that of the other three states. It plans to seek $200 million in federal stimulus money to build an initial 30 miles of I-70 truck lanes in two counties.

As conceptually designed, the project would add two truck-only lanes in each direction across Missouri. The lanes would be in the center of the right of way, with eastbound and westbound truck lanes separated by a concrete Jersey barrier. The truck lanes would be separated from the general purpose lanes in most places by a grass median. Direct-access ramps would be used to access the truck lanes in high-traffic areas, with slip ramps between the truck lanes and the GP lanes elsewhere. The price tag is estimated at $4 billion, which Missouri DOT does not have. But if the truck lanes offer significant time-saving, safety, and productivity gains (e.g., by permitting turnpike-double rigs), truck tolls could provide at least part of the funding.

Truck-only lanes are being studied as part of a tolling study on rebuilding I-80 in Wyoming, and Florida is moving forward with a project called the I-4/Crosstown Connector that will provide truck-only lanes from the Port of Tampa to I-4, alleviating extensive truck traffic through a local neighborhood called Ybor City. And the greater Los Angeles area continues to pursue a set of truck toll lanes to link the ports of Los Angeles and Long Beach with the distribution centers in the Inland Empire of Riverside County. This project is in the region's long-range transportation plan.

Upcoming Conferences

Note: I don't have space to list all the transportation conferences going on; below are only those that I or a Reason colleague are speaking at.

AASHTO Annual Meeting, Palm Desert, CA, Oct. 22-27, 2009. Details at: www.transportation.org/meetings/181.aspx.

2009 AMPO Annual Conference, Savannah, GA, Oct. 27-30, 2009. Details at: www.ampo.org/content/index.php?pid=200.

Council of State Governments Annual Meeting, Palm Springs, CA, Nov. 12-15, 2009. Details at: www.csg.org/meetings/conferencecalendar.aspx.

The Future for Interurban Passenger Transport, Madrid, Nov. 16-18, 2009, Joint OECD/International Transport Forum conference, Palacio de Congressos. Details at http://istep2009.cedex.es.

IBTTA Transportation Policy & Finance Summit, Washington, DC, Dec. 13-15, 2009, Grand Hyatt Hotel. Details at: www.ibtta.org/Events/eventdetail.cfm?ItemNumber=3855.

News Notes

New Interstate Route: Phoenix to Las Vegas
In discussing highway policy, it's long been taken for granted that "the Interstate system was completed years ago." To be sure, the original map adopted by Congress in 1956 when the program began has been built out. However, that map reflected U.S. population and land use as of the 1940s, when the system was being planned. The country is vastly different today, with Phoenix and Las Vegas having grown from small cow towns in the 1940s to major metropolitan areas today. Yet there is no Interstate route connecting them. Consequently, I was pleased to see an AP story (Sept. 15, 2009) reporting that the Arizona DOT will soon begin an environmental study of the proposed 225-mile I-11 from Phoenix to Las Vegas. Another proposed missing link is the completion of I-69 from its current southern terminus at Indianapolis to southeastern Texas. The idea that a 1940s-era map is sufficient for 21st century highways has long been overdue for rethinking, and it appears that such rethinking has begun.

Status Report on Electric Vehicles
For an excellent three-page overview of where industry has gotten with battery-powered vehicles, read "The Electric-Fuel-Trade Acid Test," pp 75-77, in the Sept. 5, 2009 issue of The Economist. (www.economist.com/displaystory.cfm?story_id=14362092)

 "Hobbit Homes" for America?
The idea that government should force high-density residential patterns, beyond what people would freely choose, has been standard practice in the U.K. since the Town and Country Planning Act of 1947. Comparable policies have been followed in a number of other European countries. It occurred to economist Ron Utt to see if that constraint on housing supply could be quantified. (Restricting land available for housing would be expected to lead to smaller units on more-expensive land.) Using data from the BBC on new housing produced from 2004 through 2008 in eight countries, Utt found that the average size of a new U.K. housing unit is now only 818 square feet-compared with 1,022 in Japan, 1,474 in Denmark, 2,116 in Australia, and 2,303 in the United States. U.K. housing is also the most expensive in the English-speaking world. London Mayor Boris Johnson has referred to the tiny British houses as "hobbit homes," and has promised moves to change this trend. (www.heritage.org/research/smartgrowth/wm2601.cfm)

Can Government Effectively Address Global Warming?
In a disturbing Sept. 14, 2009 op-ed piece in the Wall Street Journal, science writer Ronald Bailey (Reason magazine) asks the question: "Is Government Action Worse than Global Warming?" Check it out at: http://online.wsj.com/article/SB10001424052970203917304574413231076020844.html

New CAFÉ Standards' Impact on Highway Trust Fund
In September the EPA and NHTSA (National Highway Traffic Safety Administration) announced the Administration's new CAFÉ (Corporate Average Fuel Economy) standards, aimed at increasing energy efficiency and reducing greenhouse gas emissions from motor vehicles. Under the standards, the combined passenger car/light truck fuel economy of new vehicles will increase from 27.3 mpg for model year 2011 to 34.1 mpg for model year 2016. Transportation Weekly (Sept. 23, 2009) estimates that over the lifetime of vehicles sold from model years 2012 through 2016, the reduced fuel use will cost the federal Highway Trust Fund $11.3 billion-and there would be comparable impacts on state fuel tax revenues, as well.

More Congestion Pricing Primers from Federal Highway Administration
FHWA's excellent series of primers on aspects of congestion pricing continues, with the most recent one being "Transit and Congestion Pricing" (FHWA-HOP-09-015). Other recent additions include "Technologies that Enable Congestion Pricing" and "Economics: Pricing, Demand, and Economic Efficiency." You can peruse an entire library of related documents by going to http://ops.fhwa.dot.gov/publications and paging down to the section called Tolling and Pricing Program.

Quotable Quotes

"[W]e seem to be witnessing a series of disjointed, inconsistent, and dare I say, hypocritical and perhaps demagogic decisions and positions:

  • Increasing the federal fuel tax is taboo but cap and trade is critical.
  • Transportation resource allocation should be performance-based across modes, but billions are earmarked for high-speed (and probably not-so-high-speed) rail.
  • Investments should be very efficient-but create lots of jobs.
  • We want to reduce vehicle miles of travel, but not lose any jobs in the auto and related industries; we take credit for jobs created by investments in one mode without debating the losses in competing modes.
  • We are eager to claim credit for economic development near transportation investments but not to debit the foregone development at locations where we didn't choose to invest."

--Steven Polzin, Center for Urban Transportation Research, "Speaking of Clunkers," Planetizen, Aug. 12, 2009 (www.planetizen.com/node/40125)

"Power is at the root of this issue. Congress generally disfavors the use of public-private partnerships because they reduce the 'federal' share of the pie and diminish earmarking capability, thereby reducing the power and influence of the federal legislative branch. In other words, P3s substitute for large public funding by injecting private-sector investment into the system which sometimes supplants the 'power of the purse' from Congress. Many in Congress don't want to see any reduction in their power to control the purse strings because they want to determine which projects are advanced, rather than having the private sector, in consultation with local and state governments, make those decisions."
--Marcus J. Lemon (former chief counsel, Federal Highway Administration), "Reauthorization: A Missed Opportunity for Transportation Funding Reform," Tollroadsnews.com, June 6, 2009. (www.tollroadsnews.com/node/4223)

"One of the biggest killers of all is that states insist on allocating federal transportation funds through a politically devised formula. The result? Smooth, well-paved rural highways and worn-out urban roadways that are paved with a layer of asphalt too thin to withstand heavy use and are therefore in need of excessive, costly maintenance. . . . All of this wouldn't be so bad if even inflated costs brought back large returns. In co-authored, peer-reviewed research . . . I found that over the past decade we have reaped a mere 1% return on our highway investment. And what's more, for every $1 the government has spent trying to reduce roadway congestion, motorists have saved a mere three cents in travel time and other costs."
--Clifford Winston, Brookings Institution, "Stimulus Doesn't Have to Mean Pork," Wall Street Journal, Dec. 29, 2008.

"For the last 50 years, we have relied almost entirely on government to build and operate our highway system. This, in a capitalist country whose citizens are often highly critical of government-run programs. . . . The funny thing is, government-run roads are a relatively new phenomenon in the United States. Prior to the 20th century, almost all roads, bridges, canals, and railroads were build [and operated] by private companies. . . . Today, in the face of stiff opposition to higher taxes, we are faced with a dilemma. We need a modern transportation system to compete in the global marketplace, but we've been unable to reach political agreement on how to fund the improvements. . . . In most industrialized countries, private sector investment has been the preferred option. Here, that idea has been met with significant opposition. . . . As the head of a government transportation agency, it would be easy for me to oppose private investment. But I care too much about Central Texas to put my own [political] interest first. . . . As citizens, we need to face up to the fact that roads are not free, and that unless we want our infrastructure to devolve into resembling a third-world country, we are going to have to increase our investment in transportation infrastructure. Where that investment comes from is ultimately up to how well our political and policy leaders inform the public."
--Mike Heiligenstein, Central Texas Regional Mobility Authority, Sept. 1, 2009 (www.mobilityauthority.com/index.php?option=com_content&view=article&id=165&Itemid=257.)

 "Greenhouse gas reduction is the hardest possible case: an effective program would require very large changes in private behavior; it appears that only an ineffective program is politically feasible for the time being; and the prospect that technological change will ameliorate the problem independently (e.g., through development of low-cost, non-carbon energy generation) remains highly uncertain."
--Christopher DeMuth, "Unintended Consequences and Intended Non-Consequences," Bradley Lecture delivered at American Enterprise Institute, June 8, 2009.

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





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