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Are We There Yet? Voters Champion Transit

Editor's Note: Many voters across the country have willingly taxed themselves in order to fund major expansions of transit systems in recent years. This week's excerpt from Are We There Yet? explores this trend and the examples of Denver and Los Angeles. Unfortunately, as the report explains, in many places the dollars for construction have not been matched by funding for operations, a problem proving particularly hard on systems serving low-income, transit-dependent populations.

Voters have proved to be enthusiastic supporters of transit ... and have stepped up to tax themselves in order to make up for the shortfall in state and federal funding. Twenty-three sales tax measures for transit were passed in 16 states in the 2008 election. These sales tax measures are sometimes criticized as regressive because they impose a greater burden on lower-income families. Many states mitigate this by excluding necessities — such as food, medicine, clothing and rent — from the sales tax. But because of these concerns it is critical to ensure that the people hardest hit by sales tax increases benefit from the transit investment.

Denver took a bold step in 2004, voting to fund the full build-out of a light-rail system in a dozen years, the largest system expansion since the 1970s when Washington, D.C.’s Metro system was built. And Los Angeles County voters upped the ante in 2008 by passing Measure R, a 30-year transportation sales tax that raises a stunning $40 billion for transportation, including $30 billion for transit — providing enough money to double the size of the fixed-guideway transit system. A 30-year extension of the sales tax goes before voters in November 2012; if passed the L.A. County Metropolitan Transportation Authority could use the longer revenue stream to secure loans enabling the agency to accelerate the construction of seven rail lines over the next decade.

Los Angeles County has two other sales taxes for transit as well. In fact, in many parts of the country a large portion of transportation funding for highways and roads now comes from local sales tax measures. In Southern California local funding for transportation — as opposed to state or federal funding — has climbed to more than two-thirds the total amount, according to the Southern California Association of Governments.

The 2012 federal transportation bill called MAP-21 significantly expanded the Transportation Infrastructure Finance and Innovation Act (TIFIA) low-interest loan program, which will provide opportunities for Los Angeles as well as other regions to use revenue streams such as sales taxes to secure very low-interest loans to build transit projects as well as highways — and TIFIA enables borrowing for not just one line but several. U.S. Department of Transportation Secretary Ray LaHood has called this loan program “the largest transportation infrastructure financing fund” in the history of the U.S. DOT.

However, some transportation experts have expressed concern that federal loans — and not grants — could be the future of federal transportation funding. That is because gas tax revenues, the major federal source of revenue for transportation projects, have been declining for some time and are expected to continue to decline due to decreases in driving and increases in fuel efficiency, and because Congress shows no interest in increasing gas taxes. See chart: Successful transit sales tax ballot measures 2010-2011.

FUNDING TO BUILD BUT NOT OPERATE

Because the availability of transit funding hasn’t kept up with demand, the federal government — in order to sort out the best and most competitive projects — has made it harder to win funding. While this makes sense, it has ironic consequences: The federal funding process has become so time-consuming and costly that it is estimated to drive up the cost of transit projects significantly. This has resulted in fewer projects entering the federal funding pipeline, in spite of the heightened interest. Recent changes in the law and in the way that the Federal Transit Administration evaluates proposed projects are intended to make the federal process somewhat less burdensome.

Highways, in contrast, are not required to go through such a difficult and time-consuming process. The result is an enormous disincentive for building transit. Meanwhile, the rules for highway building make it much easier to build roads — even though driving has a much more deleterious effect on health, and has been attributed to much higher rates of asthma in children, and of poor lung function in people of all ages.

Buying buses and laying track for new rail systems — the capital expenses — are just part of the problem. While the federal government allocates funding each year for capital expenses, federal law forbids subsidizing operating expenses, which leaves local and state governments on their own when it comes to paying to operate the systems the federal government has helped build.

Yonah Freemark writes about this on his blog, The Transport Politic, noting that the result of this policy is that “metropolitan areas with higher poverty rates and lower median incomes [which need transit more] are likely to have less money to spend than peer cities with lower poverty rates and higher median incomes.”

The recession, meantime, has forced cutbacks in service and fare increases at the very same time that transit use is at an all-time high. Conventional wisdom is that ridership is significantly lower if trains and buses don’t come at least every 15 minutes, so service cutbacks won’t help transit make these new users into regular riders, or help people who rely on transit get to their jobs on time. That’s why both Los Angeles and St. Louis included funding for transit operations as well as for transit construction in their sales tax packages. Salt Lake City adds a surcharge to diesel fuel when prices spike above $3 a gallon, so that the transit agency has revenue to pay these higher prices.

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