Congrats to Michigan DOT on new performance site

Michigan DOT has done a fine job in putting together a new, user-friendly “MDOT performance” section on its website.  MDOT has always been in the first tier of agencies in generating and slicing and dicing data, but it’s nice to see them working on the presentation and communications side.  They are lucky to have the continued leadership of Kirk Steudle, who has survived election turnovers and who has been a national leader of performance management.

Congrats MDOT!

Next step?  I’d like to see them do more on sustainability performance measures and land use linkages.

Revenge of the Electric Car – Get the DVD!

I’m usually the last person I know to see a great movie, but “Revenge of the Electric Car” has seen such limited and erratic distribution that there may still be many people behind me.  I had a chance to see “Revenge” this weekend at the kind of venue in which it’s been playing – an environmental film festival at the Princeton Public Library.

I think it’s a fantastic movie – a really well-told documentary with great stories, fascinating characters (Bob Lutz of GM, Carlos Ghosn of Nissan, Elon Musk of Tesla), and just the right touch of humor.  There’s plenty of “message” here but no preachiness.

Many groups have been using the film as a recruiting and messaging tool (the screening we saw was part of a session organized by the New Jersey Clean Cities Coalition), and I think it’s great for that purpose.  At our screening, about 200 people packed into a stuffy room with plastic chairs and poor visibility and loved it.  They were full of questions and comments on the future of electric transportation.

The good news is that “Revenge” is now available on DVD.  If you haven’t seen it, you should!

Gas Taxes and Hammers

What do gas taxes and hammers have to do with each other?  A metaphor of sorts.

You have probably heard – and maybe used – Maslow’s famous line: "If the only tool you have is a hammer, you tend to see every problem as a nail."

I have a variant: “If you are forbidden to use a hammer, driving in a nail with a monkey wrench or a tire iron can be considered creative carpentry.”

My analogy, as you probably guessed, is to avoiding the obvious choice for raising transportation revenues – the gas tax – in favor of  “innovative” and “outside-the-box” solutions. 

As the reauthorization debate proceeds, we will observe the entire Congress rummaging through the garage for monkey wrenches, tire irons, old shovels, and pieces of scrap metal rather than picking up a hammer.

Rochester Stories

The Atlantic Cities has some fun with the past, present, and future of urban planning in Rochester, New York.  Rochester has certainly had some tough times.  The demolition of the Midtown Plaza, discussed and shown in the posting, is no doubt a sad reminder of the drastic shrinkage of downtown retail.  However, I think it looks so bad in Rochester only because it went downhill from what I’m told was a pretty successful and high-quality urban development.  And that was only after the two anchor department store were shuttered, a story played out in most downtowns.

And now, of course, Kodak is on the bubble, although that was not a surprise, and the company’s local workforce has been shrinking for a long time.

The good news is that Rochester is still one of the most successful cities in New York state, with a low unemployment rate and an economy rebuilding around “eds and meds.”

My friends in the city tell me that the next big step under consideration is decommissioning the grade-separated Inner Loop expressway and replacing it with an at-grade urban boulevard.  Looks like a perfect place for that application!

Why not plan some streetcars?!

SOTU – Transportation Gets a Mention!

Transportation at least got a mention in last night’s State of the Union address.  Although we might have hoped for more, I think we are all pleased that the President talked about the importance of transportation.  Maybe this will help provide a little momentum to reauthorization.

Some additional details are available in the “Blueprint” outline document posted by the White House.

A few comments:

·      No mention of transit.  Maybe this was because transportation is included in the manufacturing section.  Nevertheless, fares are increasing and service is deteriorating in many transit systems, causing a drag on the economy and hardships on transit users.  Transit desperately needs help if the economy is to rebound.

·      Funding for the transportation program (at what level?) is to come from savings.  No one knows what this actually means, but the proposal has the effect of once again dodging the obvious (to some of us) need for a bump in the motor fuels tax.

·      Good to see a mention of high-speed rail, but we all know this will takes lots of money over time, and we have convinced ourselves that we are a poor nation and can’t afford to do anything big anymore.  We’ll see what happens.

·      The placement of transportation in the manufacturing section of the Blueprint probably led to stating the reasoning for investment in transportation as: “so that companies can ship their goods more efficiently throughout the country and the world.”  The relationship of the transportation sector to an “insourcing” program – which I strongly support – needs a lot more discussion.  At the moment, our investments in freight in this country are largely focused on supporting the supply chain from Chinese manufacturing.   What would an American manufacturing investment program look like?

·      No mention of the importance of transportation investments as an economic stimulus.  It may be that the President’s opponents have been so successful in stigmatizing the original stimulus bill that the administration won’t talk about it.  This is unfortunate, as I think most of us familiar with it would call ARRA a huge success, at least on the transportation side.  Nothing would do more for the economy right now than an ARRA II!

It was great to see the President being more assertive and positive and inspirational on a lot of issues, including (although minimally) transportation.  Hopefully his message will energize discussions about getting transportation funding back on track.  Then we need to take these discussions to the next step: planning and building the transportation system of the 21^st century.

Minnesota Explores Mileage Tax

Minnesota DOT convened a 25-member blue ribbon task force last year to look at the possibilities of developing a mileage-based tax for transportation revenue in the state.  Their report, issued last month, fell far short of a ringing endorsement, calling the prospect of such a tax “both promising and problematic” and calling for “exploration” of the idea to “continue to advance in a measured, informed and thoughtful manner.”  This lukewarm endorsement was not troubling to advocates of the new tax, who understand that putting a new system in place will take lots of prep work.  The benefits and concerns laid out by the task force are similar to those identified in other studies, but it was interesting to see how these played out at the state level.

Some points of interest:

·      Falling revenues and lack of fairness were both tagged as problems associated with the gas tax, but fairness seemed to have more play in the presentation, with special mention of electric vehicles (including photos of EVs recharging).

·      The trucking interests on the task force worked to keep the report as neutral as possible, then filed a written minority report arguing that the report’s criticism of the existing system was overstated and its description of the problems associated with a mileage-based tax were understated.

·      Minnesota is one of those unfortunate states with a constitutional prohibition against using gas taxes for transit.  A mileage-based tax would not be subject to this provision, and a debate was begun (to be continued!) as to whether a prohibition should or should not be imposed.

·      A somewhat more muted debate (you can’t see it in the report) was begun on the issue of whether or not existing transportation revenues are or are not adequate for the future.  We have seen this argument in other states and will see more of it in the future. 

MnDOT, meanwhile, is conducting a demo project for a mileage-based system using GPS technology.

Infrastructure Banks Also Don’t Generate Revenue

In a recent post I made the point that public-private partnerships don’t normally generate revenue.  They normally result in debt instruments that require revenue to pay them off.

Something similar needs to be said about infrastructure banks.  An infrastructure bank is……..a bank!  It is a type of bank that lends money to build projects and expects to get paid back in revenues generated by those projects – meaningtolls.

Now, infrastructure bank debt can be a useful way to finance projects, as can general obligation bonds, TIFIA loans, GARVEE loans, and all the other debt instruments available for projects.  But they shouldn’t be confused with the need to raise revenue.  Unfortunately, discussions of infrastructure banks often have the effect, intentionally or unintentionally, of obscuring that need.  This is something we should keep in mind in future discussions (possibly SOTU?) of I banks.

Public-Private Partnerships Don’t Generate Revenue! (mostly)

The Heritage Foundation has just published a report advocating greater use of public-private partnerships in transportation finance (“Can Public-Private Partnerships Fill the Transportation Funding Gap?”), the latest in a long string of reports in this vein from various groups.  Without getting into the merits of P3s in general (most people agree that they have their place, although disagree about what that place is), I think it is critically important to realize that public-private partnerships, in general, don’t generate revenue.

In the simplest terms, highway revenue comes from only three sources: taxes, tolls, and other people’s money (OPM).  From the perspective of a transportation agency, OPM is always the best source, but also the rarest.  Occasionally developers can be required or induced to build a piece of public infrastructure, although this usually is only what is needed to mitigate the costs they are imposing on the system.

P3s don’t normally involve contributions from the private sector.  They are typically large and complex debt instruments, which must be paid back from new or increased tolls.  Using P3s to “fill the transportation funding gap” doesn’t mean getting free money from private sources.  It means shifting the overall mix of transportation funding away from taxation and toward tolling.

The Heritage paper, in its talking points, refers to the search for “non-tax sources of revenues” in one place, at another place states that “P3s…have raised hundreds of millions of dollars”, and at another place states that they can “be a promising approach for generating additional funds.”  There is no talking point making it clear that the “additional funds” which are generated are borrowed funds and that the “non-tax sources of revenues” are new and higher tolls paid by the traveling public to pay off those debts.

In fairness, anyone who reads the whole paper carefully will understand that tolling is what they are advocating, but the top level presentation doesn’t say it, reinforcing the confusion on this issue.

The “T” Hits the Financial Wall

Boston’s MBTA transit system – which always seems to be full of promise and full of problems – has now hit the wall financially.

The MBTA yesterday began a series of public meetings on a set of proposed fare increases and service cuts that will be disastrous if fully implemented.

The system faces a $185 million operating deficit in the coming fiscal year, caused by a combination of increasing operating costs (mainly due to increasing ridership!), decreasing revenues (from a falling sales tax), and a huge overhang of inherited debt (mainly related to the Big Dig).  (See MBTA’s website.)

Rich Davey, MassDOT’s new secretary, comes from the transit side and is painfully aware of what is at stake.  Massachusetts’ transportation reform legislation, which accomplished so much, apparently did not solve the revenue problem, or at least not sufficiently to cope with the problems of the Great Recession.

Two things to keep in mind:  Increasing ridership should be a good thing, although our current transit financing system can’t sustain it.  And the Big Dig was also a good thing – despite all the ugly management and cost problems – and has helped transform Boston into a real world-class urban success story.

Gas tax anyone?

The Slow Decline of State DOT Services

I listened in today to a webinar run by the State Smart Transportation Initiative called “Small Buckets of Savings and Revenues for State DOTs.”  (They promise to post the slides on their website.)  Some of the DOT presentations included interesting ideas (such as Michigan DOT reducing salt usage through better application techniques) and some were more along the lines of straight budget cutting (Rhode Island imposing a highway lighting “curfew” late at night).  What was of more interest to me, however, was observing the signs of the continuing, slow decline of services provided by state DOTs.

Actually, most of the DOTs participating in this webinar are in better shape on the operations side than many others.  Some DOTs whose operating budgets are sheltered within highway trust funds are only just beginning to feel the pain.  DOTs who have to “live off the land” – with operating funds coming out of the general budget – are usually far worse off.

New Jersey DOT, where I spent many years, has faced steady declines in operating budgets for years.  Innovative budgeting ideas are long since past and now everything that can be shut down is shut down – rest areas have closed, dead deer carcasses litter the highways, bills go unpaid for months, and voicemail is no longer available at DOT offices.

Sometimes a “haircut” can sharpen up an organization’s planning and budgeting.  I’m afraid we are way past that in many states and headed in that direction in others.

Building a Better Gas Tax

As part of a project I am working on concerning transportation revenues, I was pleased to see the recent (December 2011) publication of a report by the Institute on Taxation and Economic Policy which makes a clear and convincing case for state gas tax increases.  The report, Building a Better Gas Tax: How to Fix One of State Government’s Least Sustainable Revenue Sources, shows that the average state has not raised gas taxes in about a decade.  If the states had been regularly raising their gas taxes in that period, keeping pace with construction costs, they would have $10 Billion a year more in hand to deal with their pressing transportation infrastructure challenges. 

The report recommends that states raise their gas taxes immediately and enact legislation indexing the tax rate to a construction price index to make it sustainable.  (The writers note that states which have some sort of indexing have done pretty well in keeping the value of their gas tax revenue stream.)

Why aren’t states already doing this?  Lack of “foresight and courage.”

The ITEP folks also add a recommendation that states adopt some sort of Low-Income Relief measure to mitigate the regressive nature of the gas tax.

The report also sounds a warning note about a trend that I believe is not getting enough attention: raids on general revenues to fund transportation.  It cites 5 states which have enacted or are planning to enact diversions of general funds to transportation.  This trend will not only “result in fewer resources for education and other public priorities,” as the writers state, I believe it will put transportation into the annual budgetary scramble with education, health, housing, and other social programs – a place we do not want to be!

I like the direct, unambiguous approach of the report: “The condition of America’s transportation system is clearly unacceptable, and cannot be improved absent funding increases.  Rather than steering government funds away from other priorities, states should increase their gasoline and diesel tax rates in order to generate that funding.”  Indeed!

New Year, New Site!

Welcome to my newly updated website -- still under construction!  More to come!