Blog Entry #9 - October 3, 2013 - Fixing the Political Disconnect Between Infrastructure Needs and Funding

Today's article is interesting in that is discussing some of the reasons why there might be a disconnect between the country's need for infrastructure and the public's willingness to pay for it.  There reasons are as follows:

The Invisibility Factor:  this potential reason points out that we take for granted when infrastructure works well.  We turn on the faucet and water comes out, etc.

Follow the Money:  Unfortunately we are not able to follow where our money goes when we pay our taxes.  We have divorced payment for infrastructure from its consumption, unlike when we go to a store where we part with our money and come away with something that we want.

The Feeling of Paying Twice:  None of us feel good about paying twice for something, and in some ways, we pay twice for infrastructure.  First, theoretically, we pay with our tax money for infrastructure.  But when infrastructure is well-designed and well-implemented, "it often inflates the value of well-served land". If we want to get the most value out of new infrastructure, we want our home or business near a highway interchange or a transit station, for instance. But at this point, the value of land near this highway has likely increased due to the new infrastructure. So, after having paid for it with taxes, we must pay a landowner a premium rent or price to have access to the land that my taxes made more valuable in the first place.

A possible solution?

Lower the taxes on buildings and raise the taxes on land.  This because of "value capture".

Value capture - "can transform the property tax into a public-service access fee by reducing the tax rate on building values and increasing the tax rate on land values. The lower tax on buildings makes them cheaper to construct, improve and maintain. The higher tax on land (which returns publicly-created values to the public) helps keep land prices more affordable by reducing speculative profits and demand. This helps make infrastructure financially self-sustaining (at least to a greater degree than today) and thereby reduces the need for other taxes and subsidies"

My reaction to Value Capture
How do higher land prices make land more affordable by reducing speculative profits and demand?  Is it because it higher land prices would drive out anyone seeking to flip homes and thereby prevent artificially inflated prices that affect 

Questions
 What is exactly is "Congestion Pricing"?

More thoughts
From the comments to the article, I agree with the reader who says, "Unfortunately, many people have a very entrenched "don't tread on me" mindset. This results in an extreme dislike of anything that restricts their individual freedom even slightly and even if it is for the good of the public.

Today's referenced article is can be found here:
http://www.governing.com/blogs/view/col-fixing-political-disconnect-infrastructure-needs-funding.html

Blog Entry #8 - October 2, 2013 - RCTC gets green light for Perris Valley Line

Just one day after the federal government went into shutdown mode, the Riverside County Transportation Commission (RCTC) recieved some exciting news.  The much delayed 24-mile Perris Valley Line has been green-lit by the Federal Transit Administration. 

So what does this mean for RCTC?  This means that they now have the ability to start construction and it appears optimistic to assume that the final approval for $75 million federal grant will be approved in the near future.

According to local Rep. Mark Takano, D-Riverside,"I’m pleased that the Department of Transportation issued a Letter of No Prejudice to the Riverside County Transportation Commission, allowing the RCTC to incur costs for the Perris Valley Line,” Takano said in a statement. “This 24-mile rail will be a great benefit to the Inland Empire, not only because it will take 4,000 cars off the road each day, but because it will provide thousands of jobs to local businesses. … I look forward to construction beginning on the PVL as soon as possible.”

For more information, here is the link today's referenced article.
http://blog.pe.com/breaking-news/2013/10/01/transportation-rctc-gets-green-light-for-perris-valley-line/

Blog Entry #7 - October 1, 2013 - What FTA is Prevented from Doing if Government Shuts Down

Not only are approximately 18,000 USDOT employees subject to furlough, perhaps a much larger number of jobs may be at risk considering the list of FTA functions that can be suspended as a result of the government shutdown. 

For a list of FTA suspended activities and more, here is a site you may want to check out:
http://www.transportationissuesdaily.com/what-fta-is-prevented-from-doing-if-government-shuts-down/

Blog Entry #6 - September 30, 2013 - Government shutdown or not, more cuts are in store for transportation

Today's article is a great breakdown of the types of funds available for Transportation Projects.  As mentioned within the text: 

Transportation programs fall into two categories:

1.  Those funded from the Highway Trust Fund (where federal fuel taxes are deposited), and..

2.  Those discretionary programs funded from the general fund (where most other federal taxes go).

The interesting thing to learn here is that the Highway Trust Fund is not affected by sequestration, but with fuel taxes proving to be insufficient this year, the HTF has required funds from the general fund, thus making it indirectly affected by sequestration. 

This is a great article that can be used to understand how transportation projects are funded.

http://t4america.org/blog/2013/09/30/shutdown-or-no-fy2014-will-see-more-cuts-for-transportation/

Blog Entry #5 - September 27, 2013 - On the Performance of the U.S. Transportation System: Caution Ahead

In today's article, after breaking down the amount of money that is spent on transportation, the following statement is made:  "The fact that this sector is so large and simultaneously so intertwined with virtually all other sectors in the economy suggests it is vital to assess the performance of the transportation system and to consider how it could be improved".

The article also brings up a great point about "analyzing whether the United States has the optimal mix of public and private provision of transportation".   But I wonder, how really do we determine what this optimal mix would be?

The document referenced in the link below outlines the theory of efficient provision of transportation, describes how public–private provision in the United States has evolved historically, and summarizes the salient features of the current system.

The following paragraph is also intriguing, arguing that more money thrown at our transportation system should be a solution without first considering how efficiently the current system is financially structured: 

The hundreds of billions of dollars in welfare costs motivate either improving public provision or expanding the role of the private sector. I point out that political forces and limitations of transportation agencies strongly contribute to inefficient policies and, in my view, constrain efficient improvements in public provision. Thus, for example, policymakers have called for a significant increase in spending on the nation’s transportation infrastructure, but they have not considered how inefficient pricing policies have prevented travelers and shippers from making efficient use of existing infrastructure and how mispricing has distorted signals for investments in new capacity.

The last part of the introduction to the document attached briefly refers to the another point that is normally argued as part of the transportation discussion:  privatization and deregulation.  Rely on market competition to allocate transportation resources efficiently may seem like the best solution to some, but Clifford Winston argues that much of the support for this argument stems from theoretical arguments and empirical evidence based on international experiences and simulations of the effects of privatizing certain parts of the U.S. system.  Instead of purely advocating for privatization and deregulation, Winston calls for "modest, localized experiments that would give economists and other analysts the opportunity to develop crucial empirical evidence based on actual U.S. experiences to help guide policymakers’ decisions on what parts of the transportation system, if any, should be privatized and deregulated to improve its performance."

On the Performance of the U.S. Transportation System: Caution Ahead
http://www.brookings.edu/~/media/research/files/articles/2013/09/performance%20transportation%20system%20caution%20ahead/performance%20transportation%20system%20caution%20ahead%20winston.pdf

Blog Entry #4 - September 26, 2013 - Better balance needed in state transportation policy

Today's article talks about the need to strategize more effectively in order to address the deteriorating state of our transportation infrastructure.   The National Bridge Inventory found that 7,795 bridges across the country have been classified as both "fracture critical" and "structurally deficient".

Here is how those terms are defined:

Fracture Critical - the bridge or part of it could collapse if a single vital component, such as one load-bearing girder, fails.

Structurally deficient - at least one major component has deteriorated and the bridge needs repairs to remain in service and will eventually need major rehabilitation work to address the deficiency."

So if a bridge is "Fracture Critical", what can be done?  In the case of Structurally Deficiient, it seems that repairs are needed without a doubt.  

I agree that something has to be done, especially considering that revenue from gas taxes and vehicle registration fees, the system is becoming unsustainable.

Solution-based Approaches

• Do We Need Every New Road?  Perhaps not every new road project needs to be built.  State officials should be looking at a better balance among new roads, maintaining roads and bridges and other transportation options.
• Get Real:  Allow for a more realistic budget to address repairs.  In Wisconsin, Gov. Scott Walker cut $51 million from the state highway rehabilitation program, which funds highway and interstate repairs, including bridge work, over the next two fiscal years. It'll be interesting to see how this plays out, considering that about 45 bridges in Wisconsin  — including two in Milwaukee — are in "danger categories" that indicate the structures have designs that make them more vulnerable to failure and are deteriorating
• Sustainable Revenue:  Create a system with a sustainable flow of revenue should be getting a higher priority from legislators.  

Other than toll roads, what are some other ways to create sustainable revenue?

Blog Entry #3 - September 25, 2013 - Awarded funding for San Luis Obispo Council of Governments

The San Luis Obispo Council of Governments has been awarded several federal grants that will inject $1.1 million dollars into local transit projects. 

As the article below indicates, "the awards include two Federal Transit Administration planning grants, totaling $82,000 that will fund a Regional Transit Authority (RTA) transit intern position and an update to the Ride-On Transportation short-range transit plan, according to a news release. In addition, four existing Caltrans grants will continue to be awarded". 

http://www.sanluisobispo.com/2013/09/20/2693627/local-transit-projects-get-federal.html