Saving Cities from Bad Federal Policies

Since 1992, federal taxpayers have helped fund construction of urban rail transit lines through a program called New Starts. This program is due to expire in 2020, and today the Highways and Transit Subcommittee of the House Transportation and Infrastructure Committee will hold a hearing on whether or not to renew it.

No doubt most of the witnesses at the hearing will be transit agency officials bragging about how their expensive projects have created jobs and generated economic development. But a close look at the projects built with this fund reveals that New Starts has done more damage to American cities than any other federal program since the urban renewal projects of the 1950s. Here are eight reasons why Congress should not renew the program.

1. New Starts encourages cities to waste money. The more expensive the project, the more money New Starts provides, so transit agencies plan increasingly expensive projects to get “their share” of the money. As a result, average light-rail construction costs have exploded from under $17 million per mile (in today’s dollars) in 1981 to more than $220 million a mile today.

2. New Starts encourages cities to build obsolete technologies. There are good reasons why more than a thousand American cities replaced their rail transit lines with buses between 1920 and 1970: buses cost less and can do more than trains. A train can hold more people than a bus, but for safety reasons a rail line can only move a few trains per hour. A busway can move hundreds of buses and twice as many people per hour as any light-rail line. As one recent report concluded, “there are currently no cases in the US where LRT [light-rail transit] should be favored over BRT [bus-rapid transit].”

3. Rail transit often increases congestion. Light rail, streetcars, and even new commuter-rail lines often add more to congestion by running in streets or at grade crossings than the few cars they take off the road. The traffic analysis for Maryland’s Purple Line, for example, found that it would significantly increase delays experienced by DC-area travelers.

4. New Starts forces transit agencies to go heavily in debt. New Starts pays only half of construction costs, and transit agencies often borrow heavily to pay the other half. This leaves them economically fragile so that, to avoid going into default in an economic downturn, they are forced to make heavy cuts in transit service.

5. New Starts forces cities to double-down on subsidies to generate rail ridership. To promote ridership and attract so-called transit-oriented developments near rail lines, many cities subsidize such developments through tax breaks, infrastructure subsidies, and direct financing. This has added billions to the cost of rail transit projects.

6. Far from promoting economic development, New Starts may actually slow economic growth. A Federal Transit Administration-funded study concluded that, “Urban rail transit investments rarely ‘create’ new growth, but more typically redistribute growth that would have taken place without the investment.” Yet transit agencies claim that every gas station, auto dealership, and parking lot built near a rail line was somehow stimulated by that line. The reality is that the high taxes imposed to pay for rail construction and subsidize transit-oriented developments are likely to discourage employers from moving to urban areas with new rail transit lines.

7. New Starts harms low-income commuters. Most new rail lines aim to get middle-class people out of their cars, but when the inevitable cost-overruns take place, transit agencies often cut bus service to low-income neighborhoods. Due to service cuts and fare increases, for example, Los Angeles has lost more than four bus riders for every rail rider it gained from opening new rail lines.

8. Rail transit harms the environment. Some rail transit is electrified, but except in the Pacific Coast states most of that electricity still comes from burning fossil fuels. The Washington Metrorail system uses more energy and emits more greenhouse gases per passenger mile than the average car, while DC’s H Street streetcar is more environmentally harmful than a coal-rolling truck.

Transit is a local matter and should be funded at the state or local level, not by federal taxpayers. If Congress is going to fund transit at all, it should give transit agencies incentives to focus on riders, not contractors. Instead of renewing New Starts, Congress should fund transit agencies according to the amount of fares they collect, allowing the agencies to spend the money on buses or trains and on capital improvements or rehabilitation of worn-out systems. In addition to encouraging agencies to increase revenues, not costs, this would more fairly distribute federal dollars to the regions that need them the most.