Massive, Wasteful Spending on Rail Transit Degrades Overall Transportation

COST Commentary: Below is Randal O’Tooles announcement of CATO Institute’s recent release of his Policy Analysis No. 727. It is followed by the Executive Summary. The full Policy Analysis: Paint Is Cheaper Than Rails”: Why Congress Should Abolish New Starts can be found on the CATO web site.

This O’Toole paper argues that the highest priority when Congress reauthorizes transportation funding next year should be to abolish the Department of Transportation’s ‘New Starts’ program which gives transit agencies incentives to plan expensive, ineffective rail projects.

This Policy Analysis supports and enhances similar points as those contained in several recent postings to this site:

The Transit-Density Disconnect

Transit and Train Truths for Austin

24 Key “Guiding Principles” for Austin Area Transportation and Mobility

12 Reasons Austin’s Urban Rail is Off-Track

Austin’s Urban Rail has Many Unanswered Questions

There are many earlier postings which further address the subjects contained in this posting and the recent articles listed above.

As reported by the Texas Public Policy Foundation, the city of Austin already owes over $6,700 for every man, woman and child within the city limits. This presents the obvious question: Why would Austin even consider further massive debt and increased taxes to finance rail transit which is very ineffective as proven over and over in many cities, including Austin, during the past 3 decades as described throughout this site. Austin’s commuter rail requires taxpayers to pay $20,000 per year to subsidize every rider traveling round-trip each week day?

“Paint Is Cheaper Than Rails”: Why Congress Should Abolish New Starts

Randal O’Toole’s announcement of Release

Today, the Cato Institute releases my policy paper on the Federal Transit Administration’s “New Starts” program that gives about $2 billion a year in grants to cities to build new streetcar, low-capacity rail, and other rail transit lines. My basic argument is that nearly all of the billions spent on this program since 1992 have been wasted, mainly because rail transit is obsolete except in a few extraordinary places such as Hong Kong.

The paper starts by quoting FTA administrator Peter Rogoff, who in a 2010 speech chastised the transit bureaucracy for asking his agency for money to build rail lines when they couldn’t afford to maintain the lines they already have. “Paint is cheap, rails systems are extremely expensive,” he said. “You can entice even diehard rail riders onto a bus, if you call it a ‘special’ bus and just paint it a different color than the rest of the fleet.” “Bus Rapid Transit is a fine fit for a lot more communities than are seriously considering it.”

My paper points out that Rogoff’s own agency, with the complicity of Congress, is the main reason so many cities want to build rail lines they can’t afford to maintain. Although Congress set competitive grant criteria such as “cost effectiveness,” when the FTA tried to implement that criteria Congress simply exempted favorite projects from the rule. More recently, the FTA has rewritten the rule so it is now meaningless.

Another criterion the FTA supposedly requires is that agencies must be financially able to maintain rail service without cutting bus service. By an extraordinary coincidence, just last week the Cascade Policy Institute sent an open letter to the FTA pointing out that Portland’s transit agency, TriMet, does not come close to meeting this criterion. Not only is TriMet not offering the service it promised on the last two rail lines it built, TriMet’s own forecasts indicate that it will never be able to reach that service level. Instead, it has cut service and has warned that, given its current financial condition, it will have to cut it by another 70 percent by 2025.

The point is that the FTA ignores all of these problems and continues to give money to agencies such as TriMet. So it is no wonder that agencies continue to ask Rogoff for money for rail lines they can’t afford to maintain–those who ask, get it.

Sadly, Rogoff has never repeated his comments, and presumably was gagged by his boss, Ray LaHood. But this just shows why the only solution is for Congress to completely abolish New Starts. Instead, if the federal government funds transit at all, that money should be given to the agencies using formula grants, preferably with formulas that give them incentives to provide better transportation, not just more costly transportation.

“Paint Is Cheaper Than Rails”: Why Congress Should Abolish New Starts

By Randal O’Toole, June 19, 2013

Executive Summary

The New Starts program has proven a failure and gives transit agencies incentives to build overly costly systems. Congress created the program in 1991, directing the Federal Transit Administration to ensure each grant be “justified based on a comprehensive review of its mobility improvements, environmental benefits, cost effectiveness, and operating efficiencies.” In 2012, Congress added “congestion relief” and “economic development effects” to this list, but dropped “operating efficiencies.” By any of these criteria, the program should be abolished. Here’s why:

•Many New Starts projects reduce transit mobility because transit agencies sacrifice bus service to low-income neighborhoods, where such mobility is needed, in order to deliver rail transit to middle-income neighborhoods, where such mobility is merely an amenity.

•Planning documents for many New Starts projects predict that they will increase congestion by taking up more roadway space, disrupting traffic signal coordination, or increasing queues at park-andride stations.

•Planning documents often admit new rail lines will use more energy and generate more air pollution than the cars they take off the road. Other plans do not account for increasing automobile energy efficiencies or the effects of congestion on energy consumption and air pollution.

•The Bush administration attempted to use the cost-effectiveness requirement to place an upper limit on project costs, but the transit lobby has persuaded the Obama administration and Congress to effectively eliminate this criterion altogether.

•Numerous projects are far from operationally efficient because they increase operating costs without improving transit service. The transit lobby persuaded Congress to drop this criterion in 2012.

•Claims that rail transit promotes economic development are contradicted by the FTA’s own research.

Urban transit funds should come from local, not federal, taxpayers. Until Congress is ready to stop funding transit, it should abolish New Starts and distribute all transit funds using formulas, the way most funds for highways and buses are distributed today. This would reduce, if not eliminate, incentives for transit agencies to build high-cost systems when low-cost systems would work just as well.

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