Federal Funding Fun and Games Revisited

Back in July, I ranted about the current system of transit funding in the United States, wherein local projects generally depend on an injection of cash from Uncle Sam for viability--money that was, of course, originally sent to Washington by local taxpayers.  To summarize the prior article, the presence of the US government as middleman produces several distortions in the funding process.

• Federal money is viewed as "free".  While it isn't free in a strict sense, it is "free" in that it is completely disconnected from federal taxes collected.  Much like widening a freeway causes it to attract more cars (or improving a transit line attracts more riders), government agencies passing out "free" money causes it to be overconsumed....
• ...and often times, the point seems to be dining at the federal trough, rather than improving transit outcomes.
• And given that, there are incentives for costs to be escalated in order to increase the federal match--lest the money go to some other jurisdiction.
• The process of determining who gets what can be overly political.  Some projects get funded via earmark, and those that go through regular appropriations have to jump through oodles of (expensive) red tape to prove their worth.  And different types of projects are more likely to be funded depending on who occupies the White House

Given all the brouhaha over various expensive local projects such as the Columbia River Crossing (CRC) and Milwaukie MAX, both of which have price tags well north of a billion US dollars, and not to mention the brouhaha over completed local projects (such as WES) widely regarded as boondoggles, let me add a few more reasons to the list.

• The difficulty of achieving Federal funding makes delaying or descoping projects difficult.  Both CRC and MLR are attracting a lot of controversy due to their high price tags, given the recession.  A plausible argument is that We Should Be Saving Money In A Recession--an argument which is more plausible given the large public debt at all levels of government.  (We'll ignore for now the Keynesian ideal that spending on infrastructure is a good thing to do in a recession--which is one argument for federal funding, in that the Feds are the only layer of government capable of counter-cyclical investment, assuming there exists the political will to do so.)  However, there's a problem:  Major capital projects which require handouts from Washington (and Salem) can't easily be delayed--they can only be killed.  (They can be restarted, of course, but doing so often requires starting over from square one).  If things don't happen on schedule, the money disappears--and there is generally no promise that it will be restored in future appropriations.  (This argument is a favorite of the CRC committee--which loves to assert that if the project scope is changed, the project will never get built, because Uncle Sam will spend his money elsewhere.)
• On the opposite side of the coin--this makes it easy for hostile politicians to kill worthwhile big-ticket projects.  New Jersey governor Chris Christie cancelled the ARC project--decades in the making--with a stroke of his pen; consensus is that a new tunnel between Jersey and Manhattan will require additional decades to resurrect, should a political consensus to do so arise.  
• The current rules excluding operational costs from Federal funding have long been a source of contention.
• Finally, FTA rules require agencies to live with their mistakes.  Jarrett tweeted a reasonable question upon learning that Measure 26-119 failed, wondering if TriMet might plug the budget hole by killing WES--a service that has had extremely low ridership but at a high operational cost, and which has given the agency a bit of a black eye.  Ignoring the local politics, it would make sense--except that then the FTA would then likely demand a refund of the money paid to help fund the project.  Even if TriMet were to "suspend" the service--shutting it down until conditions improved, it wouldn't matter.  (And no, the FTA wouldn't then return the money back to TriMet were the service to re-open under better economic conditions).

Federal funding fun and games

In a comment on the prior post about Milwaukie BRT, RA Fontes noted in the comments that...

Don't know if things will change, but Mr. McFarlane has so far been awfully positive in his comments about Milwaukie LRT---all the jobs and economic development, etc.

An open BRT seems to be a no-brainer for this corridor. Single-seat service from OC and all over Clackamas County with door-to-door trip times that LRT can't hope to match except in a very few showcase examples.

But who cares?

 My response was this:

If I were cynical, I might suspect that getting $750 million of Federal money into the local economy is actually part of the goal.  :)

Actually, I am a bit cynical.  I'm not suggesting that TriMet (or any other particular agency) is engaging in any unique skullduggery... but I'm becoming more and more convinced that the current funding system in the US--where the bulk of tax dollars go to the Great Sausage Factory in the Sky, only to be doled back to the states and local governments by a bureaucracy with more layers than a bushel of onions--is broken.

Other bloggers I know disagree with me on this point, for various reasons.  Uniform standards are a good thing, and on many issues the US Government is more enlightened than quite a few states.  (Even the Bush Administration was more enlightened on transit issues than a few states I can think of...).

But the current method of funding disconnects the source of the funding from the target--encouraging waste and games.   Local governments generally view Federal grants as "free" money--even though it is funded by taxes, receipt of such funds has nothing to do with an area's federal tax liability.  Projects aren't always funded based on technical merit--much ink has been spilled about Peter DeFazio's ability to send transportation earmarks are way.  And yes--it is possible that in extreme cases, projects are pursued not because of the value of the system that gets built, but because of the opportunity to pump outside dollars into the local economy.  While the stimulus affect of locally-funded projects is overrated (such things merely move money around, not add to the wealth of a region); the stimulus affect of $750 million being sent into town courtesy of Uncle Sam is definite and real.  And if the money doesn't come to Portland, it will go to some other region.

Were I really cynical (I know, it's a cheap rhetorical device), I might even expect that project costs were frequently being inflated to boost the tab, and the overall Federal match.  If most of the expenditures are local (local contractors, design firms, property owners), much of the cost may be recovered as additional taxes--and the additional contributions to the overall economy might cancel out the additional cost to public coffers.  As noted previously, the costs for rail construction in the US have risen dramatically in the past decade--far outpacing inflation, wages, or other quantifiable cost factors. 

What would I prefer?  Lower federal taxes for this sort of thing, with local revenues raised to offset the Federal tax break; and local money used primarily to fund local projects.  The Feds could still get involved for projects of national significance (say, the CRC); when recession or other financial crises require use of US government credit, or in other unusual circumstances such as natural disasters--but as a general principle, regions would be expected to self-fund.  Likewise, state and local involvement ought to be segregated somewhat.  Of course, that might result in a few idiocratic states deciding to strike a blow for freedom by paving everywhere--but when gas costs $10, they'll have to live with that decision.

Of course, I don't expect this sort of fundamental restructuring of US governance to happen anytime soon.  Many on all sides of the political spectrum prefer a strong federal government with lots of cash, for numerous reasons.  A massive culture in DC has grown up around a large federal government, a culture that is neither liberal or conservative--and this sort of structural change would be resisted strenuously.  But that doesn't stop me from griping...

In the meantime, I should just remind myself:  When the folks in DC are picking up the tab, I shouldn't complain too much when surface rail projects cost $200 million a mile.

But I'm not that cynical.

Funding and the either/or fallacy

There's been a fascinating and extensive debate over at humantransit.org on competing proposals for how to improve transit along the Broadway corridor in Vancouver, BC.  Broadway street is a major east-west thoroughfare through the heart of the city (which is to say not through downtown, as downtown Vancouver is at the city's northern edge, across False Creek),  presently served by extremely-crowded bus lines.  This is one place where a legit claim can be made that rail is absolutely needed for capacity reasons.  The two competing visions for the corridor are a network of surface rail lines, on Broadway and the surrounding streets, presumably running in a dedicated right-of-way; or an westward extension of the Millennium Line of Skytrain.  While I lean towards the Skytrain solution, this is a Vancouver issue so my opinion on the matter is neither particularly strong nor particularly relevant.

What becomes apparent from listening to the debate, though, is that the two solutions are designed to serve different needs.  Skytrain supporters are interested in comprehensive regional transit; they want to get from UBC to the Canada Line or to Vancouver's eastern suburbs quickly.  Surface rail supporters are interested in community-building; they want to improve the quality of their neighborhood.  (Similar debates occur in Portland with regard to MAX and the Portland Streetcar--and ironically, the pro-surface-rail proposal sites Portland Streetcar as a model).  But not only are the two solutions designed to serve different needs, there's no inherent incompatibility between them.  There's no particular reason that Vancouver couldn't extent the Millennium Line all the way out to the University, and build streetcar lines to replace the busiest bus lines.

Except for money.




One big problem with these debates is many of them assume, a priori, a world of limited funding. Of course, that's a valid assumption in most cases (it is the world we live in, after all), but it often has the affect of chilling debate by forcing advocates to stake out either/or positions: In the present instance,  its either surface rail down Broadway or SkyTrain; but "both" appears to be out of the question. In Portland, we see calls to postpone or kill the Milwaukie MAX line not because the project lacks merit, but because many would rather use the money for something else they consider more important--such as preserving and extending bus operations.  Rather than viewing MAX as an important part of the transit system, it's viewed as a threat to other needs, and vice versa.

But obviously, we cannot pretend that we live in an unlimited-funding universe.  There will always be more worthwhile projects to pursue than money to pay for them--and that would remain true even if transit were funded as it ought to be.

Professional planning agencies have to deal with this as part of their jobs--and they have fairly effective methodologies for racking and stacking projects:  Rather than taking an either/or point of view, the potential projects that can be done are each considered and ranked.  Projects aren't ranked in isolation--in practice, there are far too many interdependencies to do that effectively--but they do specify different funding scenarios, and list which projects have to get done even in a limited funding environment, vs which ones only get done if money falls from trees, vs which ones aren't worthwhile in any case.

The advantages of doing business this way are obvious:  For one thing, you don't alienate potential allies quite as quickly.  For another, this allows all the needs of a region to be given fair consideration.  For a third, if the homework is done properly, and there are high-priority projects which nonetheless can't fit into a limited funding scenario, it gives leaders and activists a stronger case to seek out additional funding.  It's hard for an activist to make the case that we need more money to build whatever, when the same activist has been busy denouncing whatever as a ridiculous boondoggle--when he's not really opposed to the project on its own merits; but simply wants to preserve the funding for something else.

[Edited for links and minor additional commentary]

More on hierarchies

This post, on applying Maslow's hierarchy to transit, appears to have attracted a fair bit of attention.  Jarrett did two pieces based on it, Cap'n Transit did an extensive five part magnum opus on the subject, and many of the other usual suspects have chimed in as well. There are few points I think are worth emphasizing.

Trips, habits, and investments.

The good Cap'n, in particular, breaks up the mode choice factors into four clusters (Availability, Value, Amenities, and Glamour), and mode choices themselves into three types:  single Trips, Habits, and Investments.

The mode choice for single Trips may be made for any number of reasons--curiosity, for expedience to a particular destination, to impress someone (such as a date), etc.  However, a mode choice that proves itself to be useful for large numbers of trips becomes a Habit, and when one orientates ones lifestyle around a particular mode choice, including spending money on it, it becomes an Investment.  Buying a car or a long-term transit pass, or making a choice to live in a place because of it's proximity to a particular piece of transport infrastructure (or to a particular destination--I live in Beaverton because that's where my job is, for instance), is evidence of an Investment.

Cap'n Transit goes into detail how this affects funding decisions as well.  I encourage you to check out the whole series at his blog.

Time and the luxury of waiting

Jarrett, and several commenters on the the original post at humantransit.org, bring up another important point:  As you move up Maslow's pyramid (here talking about Maslow's original work, not organizations of transit-specific values), you are frequently dealing with longer time scales for realization of needs.  And that significantly affects people's perceptions.  One commenter, Adrian, writes:

The disagreements you're alluding to are more about the appropriate time-scale for change, than they are about a pyramid of needs. The person waiting in the rain for a bus wants a better bus service right about now, but the warm and dry urbanist wants to create an urban form over the next few decades in which waiting for a bus in the rain will be less common.
So it depends on who you're working for; today's population, or the much greater population of the future. I acknowledge that the people of tomorrow don't vote now, nor do they pay for anything now, but that's why they need strong advocacy now!

Jarrett himself, brings up the story of the LA Bus Rider's Union, an oft-criticized organization of mostly-poor (and mostly-Latino) bus patrons in LA who were able to significantly delay the roll-out of LACMTA's rail system, on the grounds that it was adversely affecting transit-dependent bus riders in Los Angeles:

But as Maslow shows, they shouldn't expect these considerations to be very convincing to a citizen who's stranded on a rainy streetcorner, or in a stopped transit vehicle, because the city designed its transit to catalyze great urban life at the expense of making it fast and reliable.  That person will see other people's high-level needs being placed above their low-level needs.  

And once they have that perception, they're ready to join, say, the Los Angeles Bus Riders Union (BRU).  In the early 1990s in Los Angeles, a critical mass of people saw their bus service being cut even as money went into long-term rail transit plans.  The rail projects were good ones, for the most part, but they were far in the future and therefore only relevant to people whose immediate needs were met.  As a result of the BRU's lawsuit, the Los Angeles County transit agency spent about a decade under a "consent decree" in which courts reviewed all their plans, to ensure that the city's massive and crowded bus system was not just protected but enhanced.  Today, Los Angeles is deservedly moving forward with rail again, but it's also a city where buses are taken seriously.

While there are ample grounds for criticism of BRU--it frequently wallows in racial demagoguery, and it subscribes to the reality-is-a-social-construct-so-lets-make-up-our-own strain of Marxism--BRU certainly had a point:  Los Angeles planners were trading off the needs of the present for the needs of the future, and those with present needs were none too happy about it.  Jarrett continues in a comment:

Yes, but you're talking about the future, and the future appears in Maslow's hierarchy (as fear and arguably also hope) on the Safety level. People who are working on the Physiology level are just not going to care, but they will care if you get in their way. 

The city we design has to not just be a great place in the future, but a continuously improving place at every step between here and there. And it needs to be improving not just in ways that we urbanist intellectuals approve of, but in ways that make it easier for ordinary people to meet ordinary needs. Good urban redevelopment does that, but putting things close together. 

But my point in using Maslow is this: Be careful when you hear an urbanist say that ordinary transport planning values like speed, frequency, reliability, or cost-effectiveness should be sacrificed for the sake of a redevelopment return. I've linked to two writers, (Patrick) Condon and (Darrin) Nordahl, who in different ways really do make that claim.

Why is this important?  Because with the current budget crisis affecting transit agencies around the country, the needs of the future are running headlong into the needs of the present--which was part of the point of FTA chair Peter Rogoff's controversial remarks a few weeks back.   And this conflict is at the heart of a burgeoning debate on TriMet's Milwaukie MAX project--wherein many local transit advocates are starting to suggest that the project be postponed (or canceled altogether) until TriMet's operational finances are in better shape.  The June open thread at portlandtransport.com has largely been taken over by this debate (though many of the participants there are libertarians who would scratch the project in any case).  Whether or not delaying the Milwaukie Line would help TriMet plug its operational hole is an interesting question--certainly, eliminating the debt service on the $39 million construction bond backed by TriMet's payroll tax would help; but it's unclear how fungible the rest of the project's funding sources are.  (It's also unclear if the project could be delayed and restarted in the future without either incurring a significant financial penalty, or losing out on outside funding and not getting it back).

Bus/rail and the funding crisis, part troix

Click the links for parts un and deux of this series.

I've been busy lately, and another full article will be coming soon.  But in the meantime, more material on the bus/rail debate (and in particular, on Peter Rogoff's controversial remarks last week).

• The Urbanophile's take.
• Jarrett quotes The Urbanophile
• Yonah does a followup. 
• TriMet announces its latest round of service cuts.  
• Bojack bashes Milwaukie MAX.  While ordinarily, this wouldn't be particularly noteworthy, as Bogdanski is generally suspicious of big-ticket infrastructure projects, his commenters make a salient point:  The State of Oregon is contributing $250 million to the project, funds which--unlike the Federal match--are completely fungible.  Could TriMet make better use of the money?

And a few other items:

• The Cascadia Corridor is getting nearly $600 million from the feds. 

An update on the rail/bus argument

A few days back, we dealt with a bit of a rail/bus argument brewing in Portland--wherein many transit advocates are assuming an anti-rail posture, on the belief that continued focus on rail expansion was jeopardizing bus service.  Some held this simply to be unwise choice; others saw more sinister motives. 

This debate is hardly unique to Portland of course; though this blog likes to focus on Stumptown.  Many transit agencies are having all sorts of trouble with operating deficits; one county in Georgia has dropped bus service altogether.

Yesterday, FTA chairman Peter Rogoff wandered into the briar patch--and gave a speech at the Boston Fed, that will make rail critics all over the country happy.  In said speech, Chairman Rogoff blamed many of the financial woes of many transit agencies on overzealous rail expansion.  He called for a focus on repairing dilapidated transit systems (by this, he means bringing them into functional working order, not sparkling-new status), and also endorsed Bus Rapid Transit as a substitute for rail in many circumstances--the BRT systems he described at least have a dedicated ROW and signal pre-emption; rather than just being a fancier bus).

Yonah Freemark at thetransportpolitic.com was not amused, however--noting that part of the problem is the fact that the Federal Government generally refuses to satisfy operations at all.  Transit administrators who want their share of federal dollars will only get it if they build something shiny and new.  Operations are often seen as a local problem--in large part out of concern that the money will go to pay raises for transit workers, not for improved or expanded service.   If DC's funding priorities change, excellent.  However, the government has been essentially encouraging the construction of capital projects, by not funding anythine else.  (And one way to improve operational efficiencies is to build rail, assuming an appropriate corridor).

One commentor at TTP pointed out another important factor:  Federally-funded projects generally have to be operated at a certain level of service, for a set number of years, as a condition of funding.  This is one reason, I suspect, that bus service in many places has borne the brunt of service cuts--were rails to be cut instead, the Feds would want their money back. 

While I'm not quite as annoyed by Rogoff's advice as Yonah--he certainly points out a disturbing trend that is obvious to many--the current policy of the Feds exacerbates the problems tremendously.  Much of these policies were inherited by the Obama Administration--and the prior administration seemed determined to make construction of quality transit as difficult as possible--but changes are needed.  Blaming transit admins for not doing their jobs--while in some cases true--is far from the whole story.