Tuesday, July 27, 2010

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.

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