Urban Returns

. . . or maybe not

Some legislators must think the "local options" bill too radical an experiment in participatory democracy:

Rep. Joe Pickett, chairman of the House transportation committee, said a transportation funding bill reported out of his committee earlier this week is unlikely to reach a vote on the House floor. The bill is the House companion to a senate bill authored by Sen., John Carona, R-Dallas. Though they have serious differences in their approaches, the two bills would each give counties in Texas' largest urban areas the right to call tax elections in which voters would be asked to pay more to fund highway and rail projects.

"To get to the floor in this session, I would say the chances are very tough," Pickett said, noting that while he supports the bill it needs to be scheduled for a vote by the full House if it is going to pass. He says that's an unlikely prospect.

"Local option" grinds along

Senator John Carona's (R-Dallas) "local option" transportation tax passed the Senate in mid-April but is being "simplified" (i.e., weakened) in the House:

A simplified version of SB 855 emerged Tuesday that would let counties in 85 percent of the state call elections asking voters for a one-time, 10-cent-a-gallon tax increase.  The ballot would have to specify what projects the money would go to, along with their cost and completion dates.

The money could be used on roads or passenger rail, assuming that an accompanying constitutional amendment to allow such elections passes the Legislature and is approved by voters in November.  The Texas Constitution currently allows gas tax money to be spent only on road projects.

Even after a project is paid for, the bill would allow the extra gas tax money to be used for maintenance and operations.  It would also devote all locally raised gas taxes to transportation; 25 percent of the current gas tax goes to education.

Austin transportation officials couldn't say what a 10-cent increase might bring to Central Texas. However, the North Central Texas Council of Governments has estimated that, with about 6 million people, the increase would raise about $370 million a year. Assuming a similar ratio, the three-county Austin area could bring in about $90 million a year.

Carona's bill likewise limits the gas tax to 10 cents per gallon, but offers a menu of other options, including parking taxes, driver's license renewal fees, and new vehicle registration fees.  It would allow counties raise more money, in other words.

Cities and counties need autonomy over their own infrastructure.  They shouldn't have to beg TxDOT for their fair share.  They will invest their money more wisely and efficiently than TxDOT (usually) because they know their needs better than bureaucrats working off a different agenda.  And cities and counties, like people, have different preferences.  Some prefer more or better roads, while others prefer rail.  Some prefer all the infrastructure they can get, while others would gladly let their infrastructure decay a bit if they could get cheaper gas.  

There is always the risk that cities or counties will invest their money foolishly.  But when a county makes a boneheaded decision, its residents are the ones who suffer.  When TxDOT adopts an idiotic policy, everyone in the state suffers.  Unfettering counties and cities is a good thing, and this bill would be a good first step.

I do have a couple of criticisms.  First, neither bill would allow counties to use the money to maintain local streets.  Counties instead would have to dedicate the money to specific capital improvements identified on the ballot.  A gas tax is a much better way to fund the maintenance and repair of local streets than property and sales taxes, though.  It's more equitable -- those who don't use local streets much don't have to subsidize those who do -- and provides a stable funding source, freeing up general revenue money for other things.     

Second, the 10-cent-per-gallon limit is a silly bit of nannyism.  Any tax must be approved by a majority of the county's voters.  If a county's voters want more, what business is that of the Legislature's?  It's not like central-city residents can stick  suburbanites with punitive tax increases; suburbanites (or others who drive a lot) predominate almost everywhere.  In any event, it's a small increase given current gas prices, and less than the weekly variation in gas prices of a year or so ago.  Ditch the cap.

Local option

The Chronicle reports that state senators (mostly Republicans) are throwing obstacles in front of Senator John Carona's "local option" bill.  This bill would allow counties to choose from a menu of fees and taxes to fund transportation projects as they see fit.  Options would include imposing a local gas tax or raising vehicle registration or driver's license renewal fees.  "No taxes or fees" would be on the menu, too -- and any increase would require voter approval.

This is a measure long overdue.  Cities and counties need to regain control of their local infrastructure.  Cities and counties know their needs better than TxDOT.  Cities and counties certainly know their preferences better than TxDOT.  We need to devolve more control to the locals, and "control" requires money.  This bill doesn't go far enough, in fact; counties and cities not only need the right to raise new money, they need to get back some of the money they now send TxDOT. 

State Republicans are raising a ruckus, though:

Sen. Dan Patrick, R-Houston, called it a "disaster" that, with so many exemptions added, puts the whole new tax burden on "my two favorite people, the police officer married to the school teacher."

There are a couple of points worth making here.  The first is that Patrick's "police officer married to the school teacher" probably lives in the 'burbs, and suburbanites suffer especially hard from dilapidated infrastructure.  Perhaps the police officer and school teacher prefer better roads (or a rail option) to slightly higher fees and taxes.  There are always trade offs.  Under the local option, they'd at least get to vote in a local election.  Patrick and company apparently think the policeman and school teacher are better off when the decision is made for them by suddenly paternalistic Republican senators sitting a couple hundred miles away. 

That leads to the second point.  The "local option" bill is not a tax hike.  It gives county voters discretion to tax themselves if they'd like better infrastructure.  Voters in some counties might prefer creaky infrastructure to higher gas taxes or vehicle registration fees.  Others might prefer more roads, or better roads, or more money for transit.  The point is that counties could sort themselves according to their own preferences.  And gain more say over their urban form rather than having it dictated to them by the bureaucratic TxDOT.

Perhaps that's the senators' real objection.  They fear that if urban areas get even a limited choice over their own infrastructure, they might make choices that the Legislature doesn't like.  The Lege doesn't like the "local" in "local option."

Federalizing local street networks

Streetsblog has an interesting interview with John Norquist, the president of the Congress for the New Urbanism.  He discusses boulevard design, highways' impact on cities, and the benefits of dense, local street networks.

He also discusses a CNU proposal to use federal funds to encourage the latter:

The first step is to allow federal funds to be used to bring street networks up to a standard of 150 intersections per square mile. So if you have a suburban sprawl kind of situation where the intersection density is like at 40 per square mile, if you have a project that’s going to bring that intersection density up to 150, then the state would be eligible for getting federal funding to go in and do that.

As much as I prefer grids to cul-de-sacs, I think this is a bad idea.

First, it’s important to distinguish between local street networks and major arterials like boulevards and highways.  States and the federal government (indirectly) pay for most highways, while cities pay for most boulevards and other arterials.  Norquist rightly complains that the feds have shaped highway design and location for decades.  Not to mention the mix of highway and transit spending.

Local streets are different.  Local street networks look like they do because cities don’t build them anymore.  They instead are platted, built and paid for by subdivision developers. They don’t become public streets until dedication, when cities take title and the responsibility for maintaining them.  Cities thus have privatized their grid design.  We should not be surprised, then, that developers ignore spillover benefits -- especially connectivity -- when laying out their streets.

Cities do plat and build the arterial roads that link subdivisions to the rest of the city. But we can’t get intersection density by redesigning arterials.  Arterials are one-dimensional; grids are two-dimensional.  CNU understands that, which is why it wants federal funding for local street networks with a minimum intersection density.

I’m sure developers would be perfectly happy with CNU's proposal. It would eliminate one of their two major infrastructure costs. (The other is running connections from the subdivision to the local water, sewer and electric lines.)  Developers would lose some developable lots because a dense street network needs more pavement than the minimal street networks developers build.  But I’m sure developers would gladly give up 10% of their buildable lots if cities would agree to build their streets.

Do we want to abandon developer-financed local streets?  Even if cities and the feds paid just part of the cost, this would be an immense expense.  Most cities don't have the money.  It would take billions per year -- every year -- to make a noticeable difference in city structure.

It is also a bad idea to subsidize developers and property owners.  Reducing the cost of building subdivisions would get us . . . more subdivisions.  If you dislike the relentless spread of single-family subdivisions, then you want developers to bear all the cost.  (Actually, you should want developers to bear all their costs regardless.)  

Such a subsidy could be efficient in theory if it were limited to the extra expense incurred by the developer to densify their street networks.  But developers would have no incentive to disclose their true costs, and local officials could not figure that out on their own.

Finally, it is a bad idea to get the feds involved in local street design.  If “incentives” meant “funding,” the feds would dictate street layout, just like they dictate highway width, turning radii, and drinking ages. Cities wouldn't  use their scarce dollars to build more than the feds require.  Developers certainly wouldn't. And the federal government might not do it the way you or I want it done.  Suppose the feds, thanks to lobbying by property owners and developers, decided to fund only 100 intersections per square mile? Or 75? Then 100 or 75 intersections per square mile is what would get built.

There would be enormous pressure to go with less dense networks since they are  cheaper.  Developers would continually push for less dense networks even if the cities were footing the bill -- sacrificing 20 houses for road funding might be a good deal, but sacrificing just 10 houses would be a better deal.

So whenever someone wanted to change the rules for local street design, they'd have to run to D.C.  That's worked real well in the past, right?

Baffled

By this:

Suppose the federal government gave you and your neighbor $500 each to buy a new bike, but what you really wanted was a $250 shopping spree for running gear instead. So you offered to sell your $500 federal check to your neighbor for $250 in cash so everyone’s dreams could be realized.

That is essentially what several cities in Los Angeles County planned to do with federal stimulus money, until the local transportation authority, its face slightly reddened, pulled the plug on the plans. A spokeswoman in Washington for the House Committee on Transportation and Infrastructure said Wednesday that the swaps would be illegal.

“We have already put governors, transit agencies and large metropolitan planning associations on notice that we intend to aggressively oversee that the funding is utilized as Congress intended,” the spokeswoman, Mary A. Kerr, said by e-mail.

Under the federal stimulus package intended to improve the nation’s infrastructure, the Los Angeles County Metropolitan Transit Authority was set to dole out roughly $215 million in sums of at least $500,000 each to the county’s 88 cities to get their projects moving.

Many cities on the list, however, did not have qualifying projects because they are too small or cannot move as quickly as the stimulus law stipulated. So the transit agency encouraged the cities to do with the stimulus money what they often do with other money — swap it with other cities at a discounted rate.

These swaps sounded innocuous enough:

Irwindale, which has roughly 1,500 residents, agreed to sell its $500,000 allocation to the city of Westlake Village — 9,000 residents — for $310,000 in cash, which would go into Irwindale’s general fund.

“We have a general fund deficit this year,” said Robert Griego, the city manager of Irwindale, which got offers from a half-dozen cities for its money. “So we probably would have used it to avoid people getting laid off.”
Torrance, a city in southern Los Angeles County, moved to snap up transportation dollars to spruce up major arteries, and planned to buy a $500,000 share from Bradbury, another small city, for about $315,000.

“We thought it was kosher,” said Eric Tsao, the finance director of Torrance. “We could have leveraged more for our projects, and the other cities would have had some money to do what they would like. You can’t do much with $500,000 in infrastructure anyway.”

But when the exchanges were brought to light on Monday by The Pasadena Star-News, the transit agency quickly intervened. It sent letters to cities clarifying that the only swapping allowed would be federal money for equal amounts of state transportation money.

I understand why the federal government wants its transportation dollars spent on transportation projects.  But unless the Times left out part of the story, the cities purchasing the "transportation dollars" intended to use the dollars for transportation projects.  If they hadn't, they presumably wouldn't have been able to buy the transportation dollars at such steep discounts.

The feds' intervention was not necessary to protect the stimulus.  Stimulus dollars do not have to be spent as efficiently as private investments, but that does not mean they have to be spent as inefficiently as possible.  For example, paying 100 guys $10 an hour to dig holes in a desert might be stimulative but it wouldn't provide as much stimulus as paying 50 bus drivers $20 per hours to keep the buses running.  The  bus drivers provide a social benefit, which leverages the stimulus dollars; the hole diggers do not.

The cities' swaps obviously made everyone better off.  The cities that sold the dollars got cash to offset budget deficits and cuts in city services and employment.  The cities that bought the dollars got more transportation than the sellers would have gotten for much more money.  The feds, almost by definition, got more stimulus and more transportation.  Thus, I'm baffled.

Stop privatizing toll roads

Ben Wear discusses (but unfortunately does not link to) a report from a task force created by the Texas legislature to examine TxDot's public-private toll road partnerships.  These partnerships have stoked a lot of opposition.  The task force offered a mixed evaluation; it is unlikely to settle the debate.

I think privatizing toll roads is a bad idea, at least for now and maybe forever.

Privatizing roads is unpopular.  Some people simply can't abide turning public roads over to private companies.  Some think the deals amount to corporate charity.  And public-private agreements include contract provisions that infuriate some people. These include clauses limiting speed limits or capacity increases on parallel roads.  These are necessary to assure the private operator that revenue will be stable, which in turn is necessary to sell bonds.   But most people don't see them that way.

There is already plenty of resistance to tolling roads.  It will take the public time to get accustomed to them.  There is no need to link tolls and privatization, which simply stokes more opposition to tolls.

There is another reason to oppose privatization.  Privatization requires that each new road pay for itself.  For reasons I've explained before, the roads that ought to be tolled are the congested, older roads.   Properly pricing these older roads with congestion tolls would generate revenue to fund new capacity -- whether new roads or commuter or light rail.  Pricing new roads does little to relieve the congestion on existing roads.  Instead, it discourages trips that ought to be taken while doing nothing to discourage trips that shouldn't be taken.  (This is exacerbated by TxDot's insistence on charging flat tolls rather than variable congestion tolls.)  It should be no surprise, then, that new toll roads rarely pay for themselves.

We ought to treat our roads and transit systems as a network.  We should care about network capacity and network congestion and not so much about the revenue generated by a given road.  Privatization encourages us to chop up the network into little pieces.  That's counter-productive at best.  

  

Fairness

In Armchair Economist: Economics & Everyday Life economist Steven E. Landsburg posed the following:

"Suppose that Jack and Jill draw equal amounts of water from a community well. Jack's income is $10,000, of which he is taxed 10%, or $1,000, to support the well. Jill's income is $100,000, of which she is taxed 5%, or $5,000, to support the well. In which direction is the policy unfair?"

Jack and Jill are getting exactly the same amount of water but the government has decreed that Jill pay five times as much for it.  Doesn't seem fair.  But Jack must pay a larger percentage of a much more modest budget to get the water; the tax is more of a hardship for Jack than Jill.  Maybe Jill should be paying more.

Carpe Diem says an honest person will admit that this question has no indisputably right answer. Prof. Landsburg himself asked "If I can't tell what's fair in a world of two people and one well, how can I tell what's fair in a country with 250 million people and tens of thousands of government services?"

Let's assume we agree that this taxing scheme is fair.  Consider a simple twist:

The well produces 2,000 gallons.  The government taxes Jack $100 for each 100 gallons he draws from the well.  Jack would be willing to pay $200 for the first 100 gallons, $190 for the next 100, and so forth, so that he would be willing to pay $100 for the tenth barrel of 100 gallons.  Because Jack will keep buying water until the marginal price equals the marginal value to him,  he will spend a total of $1,000 for 1,000 gallons.

The government taxes rich Jill $500 for each 100 gallons she draws from the well.  Jill values the first 100 gallons at $590, the second 100 gallons at $580, the third 100 gallons at $570 and so forth; she is willing to pay $500 for the 9th barrel of 100 gallons and only $490 for the 10th barrel.  Jill keeps buying water until marginal price equals the marginal value to her so she spends $4,500 for 900 gallons; she's not willing to buy the last 100 gallons.  

100 gallons remain in the well.  Jack could buy that last 100 gallons for $100, but he doesn't value them that much.  Jill is willing to spend $490 for that 100 gallons, but that is not the tax we agreed was "fair" for Jill.  

Is this tax scheme still fair if it wastes 100 gallons of water?

Economics can't answer this.  All it can do is identify the dead-weight loss from the tax policy (here the 100 gallons of water left in the well).

I imagine 80% of political arguments are isomorphic to one of these two examples.  Which is why I try to stay out of political arguments.

Cows

Why do Texas politicians load their campaign ads with so much rural imagery?  The ads are full of pastures, cows, ranchers, mountains, sometimes the Palo Duro canyon.  Cornyn is particularly fond of cows.

It isn't just Cornyn, though. Virtually every Texas ad uses rural imagery.

Why? Texas is an urban state. 71% of the population lives in an urbanized area. The average Texan lives at a density of over 3,000 ppsm. Nearly 15 million people live in the Houston, Dallas, San Antonio or Austin metropolitan areas alone. Most of us rarely encounter (live) cows; even fewer of us work on ranches or at farm equipment stores.

But these ads must be targeting urban/suburban residents -- it is a waste of money for either liberals or conservatives to target rural votes because they are much more likely to be conservative than the average city-dwelling Texan.

I don't think politicians are stupid; they must have good evidence that rural imagery works.  What I don't understand is why so many urban-dwelling Texans identify themselves with a lifestyle their families abandoned generations ago.