Bacon's Rebellion

There’s been a lot of loose talk recently about raising the statewide gasoline tax to pay for transportation improvements. The gasoline tax has three main virtues: First, it is easy to administer. Second, it is a rough form of a “user pays” tax. Third, it can raise a lot of money.

Here’s the problem. When you raise the tax, it’s a statewide tax. The political pressure for raising taxes to build more roads is limited largely to Northern Virginia, Hampton Roads and perhaps far SW Virginia where there’s a lot of agitation for a Coalfield Expressway. But people in the rest of the state, which includes roughly half the population, have little interest in paying higher taxes for something they don’t regard as a problem. Politically, it will be very, very difficult to enact a hike in the statewide gas tax if the purpose is to fund road construction that half the state doesn’t want or need.

That’s the reason why legislators last year tried creating regional transportation authorities: so the regions that were willing to tax themselves more could do so. Unfortunately, the cure — giving taxing powers to unelected, unaccountable bodies — was worse than the original problem.

Lawmakers need to take another crack at devising regional solutions — solutions that avoid the pitfalls of the ill-fated regional transportation authorities. After exhausting all other options, lawmakers should consider regional congestion authorities operated by special “congestion corridor authorities” under very tight guidelines. Authorities would be given power to administer congestion-pricing tolls that (a) maximize throughput on existing highways, (b) allocate scarce highway capacity during periods of peak demand, and (c) provide a stable flow of revenue to invest in congestion mitigation within the corridor.

As far as municipal bus systems go, the Greater Richmond Transit Company (GRTC) is better run than most. A survey of 12 similarly sized bus companies showed that GRTC ranked second-lowest in costs per passenger and in the amount of government subsidy received per trip. But, according to David Ress at the Times-Dispatch, rising gas prices are compelling the GRTC to go back to the public well for another dip.

While sky-high gas prices ought to be nudging people out of their cars and into buses, they also jack up the bus company’s operating expenses. CEO John C. Lewis Jr. says GRTC needs another $2 million a year from the City of Richmond, its most generous benefactor, to maintain current levels of service at current fares. The alternative is to raise fares $.25 to $1.50 per ride and probably to cut back on routes. The bus company has daily ridership of 28,000.

Since 2005, when Lewis joined GRTC, gasoline has increased costs from $1 million a year to $4 million a year. The GRTC needs help. But help may be hard to find.

Councilman Bruce Tyler wonders if GRTC could be managed more efficiently. He cites excessive overtime payments and relatively empty buses on certain routes, especially Sunday.

I have little doubt that GRTC could be run more efficiently — I’ve seen plenty of near-empty buses too… Big, gas-guzzling buses carrying only two or three passengers. I can only wonder what kind of bureaucratic entanglement requires the company to run big buses instead of smaller, more fuel-efficient vehicles on low-volume routes. The small-bus solution is so obvious that some inane and arbitrary rule must be preventing GRTC from trying it.

But the problem is far bigger than GRTC management — which, as I noted, is actually pretty good — or even obtuse government regulations. GRTC is providing shared-vehicle transportation services in one of the most auto-centric regions of Virginia, if not the United States. Development in the Richmond region is scattering across more land, smeared at lower densities, than even Northern Virginia or Hampton Roads.

As a consequence, huge swaths of the region are entirely unsuitable to bus transport. The distances from potential riders’ houses to the logical locations of bus stops are too far to conveniently walk — and, in any case, the streetscapes are inhospitable to pedestrians. Even if passengers persevered, the distances between destinations in the scattered, fragmented counties outside Richmond would mean longer ride times. And then there’s the question of whether there’s anything within walking distance at the destination.

The core market for GRTC is the City of Richmond and adjacent sections of Henrico County, the only places where settlement patterns are suitable for bus transit. But that market is shrinking. As household sizes get smaller, the same amount of housing stock holds fewer people. The city steadily lost population over the past few decades in a trend that appears to have bottomed out only recently. At the same time, spreading affluence has enabled poor people to purchase automobiles and drive themselves. (I know two immigrant women, a mother and daughter, who lived in the city and rode the bus to their jobs as domestics in Richmond’s West End for several years, then purchased a car as soon as they could save the money.)

GRTC’s Lewis is acutely aware that human settlement patterns are antithetical to traditional bus services, and he’s proposed some imaginative ideas to convert Henrico’s Broad Street into a Bus Rapid Transit corridor. But that requires an up-front capital investment that the cash-strapped GRTC doesn’t have.

Bacon’s bottom line: Here’s the irony: Higher gas prices should be a boon to buses. As the cost-benefit equation of driving cars vs. mass transit changes, more people should be opting for buses. Because buses have so much unused capacity, revenue from that ridership should drop straight to the bottom line. While ridership may be up somewhat (the article provides no numbers), it’s clearly not up enough to make up for the spike in gasoline prices. For all practical purposes, most citizens of the Richmond region have no mass transit option. Unless they move to the city (or Henrico), they are stuck in their cars.

I don’t want to read too much significance into this event, but it does make me wonder: Has the transportation issue peaked in Northern Virginia?

Gov. Timothy M. Kaine held a town hall meeting in Ashburn — ground zero for traffic congestion in Northern Virginia. People asked him about the environment, about energy, even about the proposed Dominion coal-burning power plant in Wise County. But nothing about transportation.

Writes reporter Erika Jacobson:

The absence was so noticeable, in fact, that Kaine himself asked the audience where the transportation questions were.

“Does nobody want to ask about transportation?” he said with a laugh.

It’s hard to imagine that Northern Virginians don’t have transportation on their minds. But, at the very least, the Ashburn audience made it clear they don’t find the issue as all-consuming as the developers, construction companies, engineering firms, home builders and other rent seekers might have us believe.

“A Conservative Transportation Alternative” rejects Business As Usual transportation policy on the grounds that the existing transportation system is broken, and no amount of money raised through taxes and allocated by politicians, is likely to fix the problem. The authors marshal a powerful body of evidence to make their case.

First, they make the point that, contrary to assertions by the Axis of Taxes, Virginia has dramatically increased transportation spending since 1986, when the modern era of transportation funding began. The chart below shows that spending outstripped growth in the number of licensed drivers and even growth in Vehicle Miles Traveled.

(Click on image to enlarge.)

(I would add one important caveat to this data: It appears not to adjust transportation spending for the inflation in construction costs. There has been little if any increase in real spending, as opposed to nominal spending. Still, the data demonstrates that Virginia’s transportation system has hardly been starved for funds.)

Over the years, the General Assembly has supplemented the 1986 Baliles-era funding sources with several additional revenue streams: the state recordation tax, a state tax on insurance premiums and General Fund appropriations in 2000 ($307 million), 2002 ($147 million), 2005 ($348 million) and 2007 ($661 million).

No amount of spending under the current system, the authors argue, will ever be enough to solve traffic congestion. I will quote the document at some length because I couldn’t say it better myself:

The model of urban development that the Virginia legislature has been funding for decades simply doesn’t work anymore — if it ever did. … Virtually all of the assumptions underlying the model are flawed. It is foolish to assume, for example, that every resident in a region should be able to move by automobile from one point in the region to any other without substantial delay.

Another assumption is that interstate motorists can be whisked around or through urban centers on new highways. Whenever a highway is built for that purpose, it serves as a magnet for development, resulting in yet another clogged corridor.

The model also assumes that the public should be required to pay to extend roads and utilities to new residential and commercial developments located far beyond urbanized areas where the price of land is relatively low. Perhaps more than any single factor, this proposition has produced the sprawl that characterizes Virginia’s metropolitan areas.

The prevailing attitude is that traffic congestion is a problem that can be relieved by constantly constructing new roads and adding lanes to existing ones. … Government tends to respond with a single formula: raise taxes and build more of the same. … Elected officials have been too quick to pass over the most equitable, efficient and disciplined option for paying the staggering cost of transportation projects. That option is tolls or other user charges, land or cash contributions by adjacent property owners who will benefit or other methods of having special beneficiaries rather than taxpayers pay for new projects.

Well said, gentlemen! Well said!

A coalition of activist Virginia conservatives has distributed an analysis of Virginia transportation policy, “A Conservative Transportation Alternative,” in the hope of informing the General Assembly during its upcoming special session on transportation. No single author is listed, but I suspect that the guiding light behind the document is Patrick McSweeney, the Richmond-area attorney whose legal work persuaded the state Supreme Court to strike down the Northern Virginia Transportation Authority.

The ideas in the “Conservative Alternative” will sound very familiar to readers of Bacon’s Rebellion. They are based on the propositions that (a) the existing transportation is broken and cannot be fixed with more tax money and (b) Virginia needs to devolve responsibility for transportation policy to municipal governments, where transportation and land use planning can be aligned. The document also supports the idea of a “user pays” financing system.

The “Conservative Transportation Alternative” is significant because it represents an important advance in the conservative movement beyond the “Just Say No” rhetoric of the past. Instead of fighting an obstructionist battle against bone-headed ideas — raising taxes, creating unconstitutional regional authorities and perpetuating Business As Usual — these conservative activists have shifted to the ideological offensive, so to speak, articulating a positive set of principles to guide transportation policy going forward.

The manifesto is significant in another way. In the past, free-market and fiscal conservatives opposed Business As Usual policies mainly on the grounds of opposition to new taxes. That left them little in common with the Smart Growth movement, comprised mainly of liberal-leaning environmentalists who emphasized land use reform and environmental issues. By embracing land use reform, at least in principle, the “Conservative Alternative” builds a conceptual bridge between the two groups, opening up the possibility that Virginia’s free marketeers and Smart Growthers may find sufficient common ground to collaborate in the future. Mark my words, “A Conservative Transportation Alternative” is a very important document.

I will delve into the document’s detailed arguments in subsequent posts, but for now, let me leave you with the principles it espouses to guide Virginia transportation policy:

1. Fund transportation:

(a) without tax increases,

(b) without more tax-supported debt,

(c) without allowing diversions of funds earmarked for transportation to non- transportation programs, and

(d) by imposing the costs of new projects, to the extent possible, on those who will directly benefit from new transportation spending.

2. Refocus state transportation policy to encourage greater investment, innovation and risk-taking by the private sector.

3. Transfer responsibility for secondary roads to cities and counties that are not already exercising that authority, and accompany such transfer of responsibility with the authority over the revenues currently used at the state level to build and maintain secondary roads.

4. Adopt true performance-based criteria for spending government funds on transportation, with relief of traffic congestion having the highest priority.

5. Develop a methodology for allocating the cost of new, upgraded and expanded transportation facilities and other infrastructure that appropriately accounts for distance-related factors and any hidden cost of sprawl so that subsidies borne by taxpayers at large can be reduced or eliminated.

These are all sound principles, and they represent a huge conceptual leap forward for Virginia conservatives. The document does leave some work undone: It does not offer specific policy prescriptions for raising the funds that the transportation system clearly does need. (For my thinking on how these principles might translate into a “user pays” system for paying for transportation improvements, I refer readers again to my essay, “User Pays.”) But that is a minor quibble. This is a very important document indeed.

What’s the real cost of running the Washington Metro? Does anyone really know? Metro authorities cite problems such as worn track fasteners, crumbling concrete platforms and corroded traction power cables, reports Lena Sun with the Washington Post. The agency needs $489 million for “urgent” maintenance work, $244 million of it in the next two years. Metro doesn’t have the money, and municipal governments in the Washington region are reluctant to cough up any more.

Please note, that half billion dollars just covers Metro’s “urgent” needs. How much would it cost to bring the Metro up to the standards of a first-class commuter rail? How would that liability translate into fiscal obligations for Virginia localities under the current cost-sharing formulas?

As gasoline prices soar, Metro should be riding high as motorists seek alternative modes of transportation. But the railway system is crumbling. Is there any hope that Metro can function effectively under its current governance structure, which must balance the interests of multiple municipalities in three different states?

One more question: Is this a system that Fairfax County really wants to buy into with the Rail-to-Dulles project? Does the county have any idea of what kind of liabilities are lurking off the books?