transit

Transit Death Spiral Continues

Transit ridership has been dropping for four years and increased subsidies won’t fix the problem. Data released by the Federal Transit Administration yesterday show that nationwide ridership was 3.1 percent less in June 2018 than it had been in June 2017. Ridership fell for all major modes of transit, including commuter rail (-2.6%), heavy rail (-2.5%), light rail (-3.3%), and buses (-3.8%). 

May Transit Ridership Down 3.3 Percent

Nationwide transit ridership in May 2018 was 3.3 percent less than in the same month of 2017. May transit ridership fell in 36 of the nation’s 50 largest urban areas. Ridership in the first five months of 2018 was lower than the same months of 2017 in 41 of the 50 largest urban areas. Buses, light rail, heavy rail, and streetcars all lost riders. 

Transit Death Watch: April Ridership Declines 2.3 Percent

Nationwide transit ridership continued its downward spiral with April 2018 falling 2.3 percent below the same month in 2017, according to data released yesterday by the Federal Transit Administration. Commuter-rail ridership grew by 3.5 percent, but light-rail, heavy-rail, hybrid rail, streetcar, and bus ridership all declined. The biggest decline was light rail at 5.5 percent.

The Case for Neglecting Transit

The American Public Transportation Association (APTA) has just published a paper on the economic cost of failing to modernize transit, referring to the roughly $100 billion maintenance backlog built up by U.S. transit agencies, mostly for rail transit. In fact, a strong case can be made that—with the possible exception of New York—American cities shouldn’t restore deteriorating rail transit systems and instead should shut them down as they wear out and replace them with buses where demand for transit still exists.

APTA claims that not restoring older rail systems will reduce “business sales” by $57 billion a year and reduce gross national product by $30 billion a year over the next six years. Reaching this conclusion requires APTA to make all sorts of wild assumptions about transit. For example, it states that a recent New Orleans streetcar line stimulated $2.7 billion in new infrastructure. In fact, that new infrastructure received hundreds of millions of dollars of subsidies and low-interest loans from Louisiana and New Orleans. In any case, APTA fails to make clear how rehabilitation of existing infrastructure could generate the same economic development benefits as building new infrastructure.

American taxpayers already pay more than $50 billion a year to subsidize transit. Essentially, APTA wants taxpayers to give transit agencies an additional $100 billion to keep transit systems running. I would argue that federal, state, and local governments should provide none of that money. Instead, the best policy towards them is benign neglect.

Trump Plan Probably Won’t Repair Crumbling Infrastructure

The White House released President Trump’s infrastructure plan today, which calls for spending $200 billion federal dollars as seed money to stimulate a total of $1.5 trillion on “gleaming new infrastructure.” Almost lost in the dozens of pages of documents issued by the administration is that the reason why the federal government supposedly needs a new infrastructure program is that our existing infrastructure is crumbling, and the reason it is crumbling is that politicians would rather spend money on gleaming new projects than on maintaining the old ones.

The White House proposes several new funding programs. The administration could have dedicated one or more of these programs to maintenance and repair of worn-out infrastructure. Instead, all $200 billion can be spent on new projects, and knowing politicians, most of it will be. To make matters worse, funds for most of the programs would be distributed in the form of competitive grants, but experience has proven that competitive grants are highly politicized. 

“In the past, the Federal Government politically allocated funds for projects, leading to waste, mismanagement, and misplaced priorities,” agrees White House economic advisor Gary Cohn. The administration’s solution, Cohn continues, is to “stimulate State, local, and private investment.” In other words, instead of most decisions being made by Washington politicians, they will be made by local politicians. But if local politicians were any better at maintaining infrastructure, then we wouldn’t have tens of thousands of local bridges classed as “structurally deficient” and the New York, Washington, Boston, and other subway systems wouldn’t be falling apart.

The White House says that the federal funds it proposes to allocate to infrastructure may be spent on either new construction or maintenance, which is an advantage over some existing federal programs that can only be spent on new construction. But just because they can be spent on maintenance, doesn’t mean they will be.

The New York subway system is falling apart because the city doesn’t have enough money to maintain it. Yet it has enough money to spend $10 billion on a tunnel between Penn Station and Grand Central Terminal for Long Island Railroad trains, which the New York Times has called “the most expensive subway in the world.” It also has enough money to build the eight-mile Second Avenue subway, which at $2.1 billion a mile must be the second-most expensive subway in the world.

The Good and the Bad of Public-Private Partnerships

President Trump has reportedly expressed reservations about public-private partnerships, but White House economic advisor Gary Cohn is still enthusiastic about building the administration’s fabled infrastructure plan around them. Not everyone realizes, however, that there are two very distinct kinds of public-private partnerships, which I call the good kind and the bad kind. I’d like to believe that it is the bad kind that worries Trump while it is the good kind that encourages Cohn.

The good kind of public-private partnership is more formally known as a demand risk partnership. In this case, the public partner essentially gives the private partner a franchise to build a road or some other infrastructure. The private partner is allowed to collect tolls or other revenues from the infrastructure for a fixed period of time, usually three or four decades, after which ownership and management of the infrastructure is turned over to the public partner (who may contract it out again). The key is that private partner accepts all of the risk that the revenues may not cover the costs. The I-495 Capital Beltway express lanes are a demand risk partnership.

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