u.s. transit capital funding: a big picture?

An email asks a seemingly eternal question, from reader Aaron Brown:

I … wanted to reach out to see if you’d be willing to provide any thoughts on the massive capital funding backlogs that major transit systems face here in the US. The latest reports I’ve seen throw around numbers above $50bn just to bring systems into a state of good repair, excluding any expansion. Given the current condition of local, state, and federal budgets, this number seems extremely daunting to me.Here in Chicago, for instance, we have a pretty solid transit system (relative to most US cities), but one that is old and badly in need of repairs. Again, however, the amount need just to bring the system to a state of good repair ($7bn for the CTA alone) seems overwhelming. We have aging buses and railcars, tracks and ties in need of replacement, and an L system with structures over 100 years old that are all competing for limited funds. And this is in a city and transit system that is seeing record ridership and will need to expand over the next few decades to serve one of the largest (and growing) metro areas in the country.

I know you typically focus on the technical and design aspects of transit systems, but have you given any thought to the funding issues they face? Are we US city-dwellers doomed to face continuing deterioration of our mass transit systems because of a lack of government funding? Or are we doomed to fight the losing battle to raise taxes to pay for these capital needs? And – finally – are there non-traditional ways to raise revenues that might be worth exploring in your mind?

The question makes me want to distinguish not just between strategy and tactics, but also between strategy and a thing that hangs above the level of strategy, which we might call principle.

  • Tactics are means of getting things done, in the short term, in the existing situation.  If the existing situation is messy, the tactics will be pretty messy.  A typical tactic, in the legislative context, is something like: “Hide the transit funding inside a highway bill and add a million for the Pork Rind Museum in the Speaker’s district.”
  • Strategy is a longer-term or bigger-picture sense of direction or objective, the larger thing you’re trying to accomplish.  Strategies look a little purer than tactics, but they also aim for the longer term.  A strategy is something like “build consensus on the link between transit and urban economic development, by engaging key development lobbies to construct a larger transit advocacy coalition.”
  • Principles, in my mind, are descriptions of what state of affairs would be just or appropriate or civilized or sustainable.  Principles can also be boundaries on what will be considered ethical or reasonable.  Strategies that are worth anything have principles behind them.

So a principle might be:  “Aim to break down the boundaries between Federal Transit, Highway, and Railroad administrations for the purposes of funding streams.  Aim for a simplified transport funding structure in which all areas receive comparable per-capita spending over long cycles — say an entire decade.  Make this funding entirely fungible between transit and highways so that each jurisdiction can focus on whatever balance of modes reflects its local consensus.”   (When you see your way to dropping the “Aim to” from those principles, you’re ready to turn the principles into strategies.)

But another might be:  “Several urgent matters of national security directly benefit from more sustainable and compact urbanism — notably climate change, petroleum dependence, and food security.  For these reasons, national policy should tilt funding priorities in that direction, beyond what would be dictated by strictly per capita funding shares.”

Principles may be completely vague about how to move forward; that’s the work of strategy in the medium term and tactics in the short term.  On the other hand, principles can be quite prescriptive about placing boundaries on short term behavior.  One such principle might be: “Do not under any circumstances permit a net shift in funding from transit to highways.”  You could argue that this is too rigid.  In soccer,  for example, it sometimes makes sense to kick the ball back to your own goalkeeper.  But your principle can embrace that possibility by saying that a net shift toward highways shouldn’t remain a net shift for more than x number of years.  After all, when you kick the ball back to your own goalkeeper, it’s specifically for the purpose of getting it moved in the opposite direction, and soon.

Aaron’s question helps me better articulate an important feature of this blog’s brand or niche.  I’m really not very interested in political tactics, and am happy to defer to people who are, such as Yonah Freemark for example.  Many great political bloggers cover nothing but tactics; when did you last read about a principle on Talking Points Memo, for example?

I’m interested in strategy to the extent that it can manifest principle and turn principles into tactics.  I’m very interested in principles, because they highlight the real disagreements, and therefore define the real game.  My experience is that some purely tactical-minded transit managers often sacrifice important principles for the tactical needs of the moment — in other words, they are prone to make Faustian bargains.

So I mostly do principles here, and principle-based critiques.  Sometimes I lay out, on the level of principle, how we go about getting something very immediate and tactical done — here, for example.  (All good tactical manuals are based on principles.)  But when it comes to how to get a particular short term proposal through a particular messy situation, I generally defer to the tacticians, while reminding them to keep one eye on the principles.

How’s that for evading a question?  Is this why people sometimes tell me I should run for office?  In fact, it’s exactly why I won’t!

8 Responses to u.s. transit capital funding: a big picture?

  1. sabre23t July 8, 2010 at 3:29 am #

    Hi Jarrett,
    Nice principle …
    Aim to break down the boundaries between Federal Transit, Highway, and Railroad administrations for the purposes of funding streams
    In our corner of the world, after long years, we are just starting to see a little consolidation of these various agencies, when they recently created SPAD (aka Land Public Transport Commission) for Klang Valley and Malaysia. Only Rail, Bus and Taxi authorities in one though. Highways still have separate agencies.
    Ref: http://ms.wikipedia.org/wiki/Suruhanjaya_Pengangkutan_Awam_Darat

  2. Rob Fellows July 8, 2010 at 12:38 pm #

    Jarrett, you did an excellent job of avoiding the question — but I think it’s right to start with principles.
    The question here is not unique to transit; pretty much all public infrastructure faces a public disinterest in paying to preserve existing things, given the alternative of building new ones that provide more capacity or access. (The same is true on the transit operating side – it’s always more appealing to policymakers to add new service rather than to fix reliability problems on existing ones).
    You can make the case that this is just one more argument to shift funds from highways. But I’m not sure that’s a principle that leads to strategies that could provide a way out of the crisis. For one, you have to make the case that it’s not worthwhile to maintain the roads we’ve already built, many of which provide a transit right of way.
    I think a better principle is to firmly commit to maintain and preserve capital assets once they’re built, and to condition new and expanded capital program on having achieved that end. It shouldn’t be necessary to go to voters to ask whether they are willing to pay for maintenance and preservation – that needs to be assumed or mandated as a condition of building in the first place.
    There are all sorts of ways to operationalize that, each frought with complications and obstacles, but that seems like a better principle to start with than to just fall back to the easy comfort of war between the modes.

  3. Alon Levy July 8, 2010 at 6:05 pm #

    The answer I’d give to Aaron is that at current US infrastructure costs, American cities are doomed to disrepair. However, if US infrastructure costs went down and became comparable to European and Japanese costs, it would be much easier to produce transit funding. Not only would current funding levels go much further, but also it would be easier to persuade politicians to allocate more money toward goals that are impossibly expensive today.

  4. Aaron Brown July 8, 2010 at 8:26 pm #

    Thanks Jarrett…you would make a good politician.
    Alon – your response begs a few obvious follow-up questions, including whether it’s possible to achieve cost-parity in the US (and if so, how?).
    But most importantly, why are US infrastructure costs so vastly higher? I’ve followed the recent debate on subway construction costs at the Transport Politic but came away with little in the way of conclusions, mostly just speculation. Have there been any legitimate studies into this discrepancy?
    That would be the first place to start if (as you suggest) we need to bring US costs in line with the rest of the world.

  5. EngineerScotty July 8, 2010 at 11:05 pm #

    Many factors come to mind:
    * Political corruption in some areas
    * Higher labor costs
    * Currency/macro-economic issues
    * A rather onerous public review process
    * Greater difficulty with eminent domain (and a corresponding reluctance to use it).
    * Less economies of scale due to fewer build-outs in the first place.
    * Distributed power structure in many areas (along with a lack of political consensus among the electorate), permitting many thumbs to get into the pie.
    Many of these apply elsewhere, obviously; we just have a particularly nasty combination.
    Were I a cynic, I’d suggest that the best way to improve transit costs in the US would be to a) first return the GOP to power, so they can deflate the currency, bust the unions, and squander the supply of dead dinosaurs, followed by b) a return of Democrats to power (more liberal than Obama) who will then spend lots of now-with-more-purchasing-power money on such things, and soak the rich to pay for it. :)
    However, I’m not a cynic, so I won’t advance that particular strategy. :)

  6. Rob Fellows July 8, 2010 at 11:09 pm #

    I have some theories, but I’d love to see a definitive study of the causes for supercharged inflation in infrastructure construction over the past ten years. I actually don’t understand why so little attention has been paid to this.
    I think one clear reason is the influence of improved environmental standards, so just about every project has had to include environmental retrofits and improvements (for drainage, ESA, etc.) that were not required over a decade ago.
    But I also think the bubble economies we’ve lived through have also had an impact, along with the increased need for voter approval of every new infrastructure tax. Where I live, there’s been a bonanza in debt-funded rail and highway improvements, I assume as a result of feeling wealthy and assuming we would keep getting wealthier still. (Even potholes have been funded with debt financing in one large local city). Bonding is particularly attractive when you need voter approval on a tax, because you can promise to deliver a program in ten years that would normally take much longer (even though you end up having only half the money for improvements than you would have if you didn’t have to spend the rest on finance charges).
    So the result here has been a huge frontloading of projects to make ballot measures pass, and that means that there is a huge spike in labor needed for a few years followed by dramatic layoffs. During the spike, there has to result an increase in labor costs, as engineers and construction workers need to be imported to the region to deliver a massive program. (We are now reaching the end of that era on the highway side, so there will be massive layoffs a couple of years hence.) It would be interesting to know whether other states and regions had a similar experience due to borrowing during the fat years. I know the portion of transportation revenues in my state spent on finance charges has soared dramatically for both local and state levels, and both transit and highway modes.

  7. Eric Doherty July 8, 2010 at 11:27 pm #

    Rob Fellows wrote “you have to make the case that it’s not worthwhile to maintain the roads we’ve already built”
    ‘Fix it First’ policies go hand in glove with shifting funds from roadway expansion to transit. Add in policies to get heavy trucks off the road in favor of more efficient modes, such as short sea shipping and rail, and roadway maintenance and repair costs go way down. (Or you get a new source of revenue from weight based damage cost charges).
    Transport Revolutions: Moving People and Freight Without Oil by Richard Gilbert and Anthony Perl (now in paperback) has some good content on the potential of shifting spending from roadway expansion to transit and other efficient modes.

  8. Alan Kandel July 9, 2010 at 7:32 am #

    I have a suggestion. I’ve read about development that comes into existence along light rail transit lines. I’ve read about how ridership in many cases surpasses ridership projections for new start-ups. I’ve read about where patrons using various systems patronize businesses along said lines and the way I see it, various businesses situated along such rail transit lines and near the stations in particular are likely benefiting from the presence of said light rail service, perhaps above and beyond what may have occurred had the rail transit system not been there.
    Consider that Baltimore light rail, for instance, serves Camden Yards Stadium where the Orioles play their home games. Keep in mind also that baseball players get paid huge salaries, so it would seem logical that baseball organizations (maybe more so than other business enterprises) could lend a helping hand by injecting capital (strictly from profits) into a rail transit system that theoretically could help bring such a transit network back into state of good repair, which would benefit the riders, which, in turn, could possibly be of added benefit to baseball.
    My point here is that businesses that benefit directly or indirectly due to the presence of a transit system being there that drives business to their doors, I could see these business owners potentially benefiting even more, by them having a percentage of their profits go right back into a system that brings them patronage. In other words, said businesses would actually become stakeholders in the transit systems themselves. I think this arrangement would be something on the order of a “pay it forward” concept?
    Any thoughts?