by Rafael
Future HSR feeder services cut back, raise fares
The San Francisco Chronicle reports today that Caltrain will raise fares and cut service:
The board took no action on the $99.4 million budget plan Thursday - that will come later this month or early next month - but voted unanimously to declare a fiscal emergency. That move allows the transit agency to bypass state environmental reviews and enact service cuts and fare hikes at an accelerated pace.The decision follows similar ones by BART, SF Muni and AC Transit in the East Bay. Squeezed by cuts in the state budget, reduced commuter ridership and lower sales tax revenues at the county level, all of these bureaucrats essentially have no choice but to increase revenue and/or cut services to plug rapidly expanding holes in their respective budgets.
Down south, Metrolink is also raising fares, but LA Metro will maintain both fares and service levels in FY2010. Indeed, it boasts of service enhancements, even as it cuts expenses by $130 million and taps into reserves. Note that many of these "enhancements" are actually cuts in selected bus routes.
NCTD also intends to maintain both service levels and (most) fares in the coming fiscal year, having already implemented cuts and fare hikes in the current one. MTS in San Diego has passed a framework budget but warns of further cuts to come as it fills in the details.
The mixed picture suggests that Southern California, long considered a bastion of the automobile, now actually has a mass transit network in better fiscal health than the Bay Area. However, the reprieve will only be temporary if the recession last longer than expected.
Special elections have consequences
Amtrak California aka Caltrans' Division of Rail is funded by the state of California, which is all but bankrupt. Since voters rejected a delicate compromise in a complex package of propositions put to them last month, chances are subsidies for the Pacific Surfliner, Capitol Corridor, San Joaquin may well be slashed severely in coming weeks as lawmakers in Sacramento figure out how to balance their budget through cuts alone. Unfortunately, while service cuts and/or fare increases are required at multiple levels in the short term, they also set in motion a vicious circle of ever-decreasing ridership and ever-greater traffic on the state's highways. That's exactly the opposite of what is required for a sustainable recovery and population/economic growth in the long term.
Of course, California is hardly alone in its budget woes, but very few states require a 2/3 majority to pass a balanced budget. Considering its population now exceeds that of Canada, which requires just a simple majority, perhaps it's time to admit the obvious and amend the pertinent sections of the state constitution in 2010 such that the change is hard to reverse. You can either have high taxes and high-quality public services (e.g. dense transit networks at multiple distance scales) or, low taxes and few public services. The other permutations are simply not sustainable, there is no tooth fairy and also no prospect of reasonable compromise.
Having sole authority and responsibility for balancing the budget tends to concentrate the minds of politicians on both sides on drafting feasible, coherent multi-year policies instead of engaging in ideological trench warfare. In addition, there could well be a drop in the number of spending decisions taken via single-issue ballot propositions, especially expensive ones without a dedicated revenue stream. And yes, while I am in favor of California HSR, I do believe direct democracy was a bad way to get it off the ground. Such mega-projects ought to be proposed and promoted not by bureaucrats but by elected officials who are directly accountable to the people.
Turning a vicious circle into a virtuous one
Meanwhile, Secretary of Transportation Ray LaHood is trying to plug a hole of his own in the federal highway trust fund. With healthcare and electricity infrastructure high on the President's domestic agenda, it is possible the next major transportation bill won't be passed before the 2010 midterm elections. For now, expect Congress to kick the can down the road, i.e. to take on more debt rather than raise federal fuel taxes, a concept that is widely perceived as politically impossible. Then again, so was electing an African-American POTUS a couple of years ago.
However, at some point, both the state of California and the Obama administration will have to reconcile their lofty ambitions of green energy and transportation systems with the hard reality that investments in such infrastructure will only pay off if perpetuating the status quo becomes prohibitively expensive for private businesses and consumers alike. No pain, no gain. Both should cut other taxes if and when they can, but they really need to ramp up those on petroleum-based fuels to gradually reduce total vehicle-miles traveled per capita, to partially shield consumers from oil price volatility and, to boost the utilization rates of fixed-cost transit infrastructure (incl. bicycle paths).
Ironically, sharply higher gas prices are also exactly what the domestic auto industry needs to increase profits per sale after it sheds excess unit volume capacity in the context of its present restructuring effort. GM in particular is risking the farm - soon to be your farm - on its expensive E-Flex architecture, essentially electric drive with an "emergency" generator to extend the range.
Meanwhile, HSR already has a proven track record of returning operating surpluses after an initial ramp-up period, overseas and even in the Acela corridor. There is every reason to believe it will thrive without annual subsidies and perhaps even cross-subsidize local and regional connecting transit operations. In the long run, HSR will prove a far superior investment to paving over ever more land with asphalt, precisely because it promotes an alternative to land development patterns that rely on cheap oil while creating additional new opportunities for the US manufacturing sector.
67 comments:
Ironically, sharply higher gas prices are also exactly what the domestic auto industry needs to increase profits per sale after it sheds excess unit volume capacity in the context of its present restructuring effort.
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Robert, stick to what you know.
true, but this doesn't have much to do with the special election, which would not have come remotely close to dealing with the budget shortfall this year, and most likely would have deepened it in the next several years.
i agree that HSR and everything else is imperiled by a budgetary process that lets both the majority and the minority off the hook for responsibility for running the government (the former because they can't pass anything without a supermajority, the latter because hey, they aren't in control of the legislature, so it can't be their fault). there is no way back to sanity or solvency other than simple majority budgeting and taxes.
democracy only works when the populace can throw the bums out and get a different direction in govt every couple of years. the 2/3 rule is frustrating that, so it needs to go.
psst, rob dawg, try reading the author byline bit more carefully.
I stand corrected. It is Rafael that has no idea of the mechanics of transportation funding.
Higher gas taxes are certainly justified by increasing scope and cost of the things we expect to be covered by those fees. That said make no mistake the consequences within the domestic auto industry will not help in any way.
@ Rob Dawg -
I happen to be a mechanical engineer specialized in engine and drivetrain development, so I actually do know a thing or two about the cost/benefit calculations carmakers have to make. The substantially higher fuel economy required by the latest CAFE standards will require substantially more advanced, i.e. expensive technology.
Consumers will only be prepared to pay a premium large enough to maintain overall profit margins on vehicle sales if the ROI horizon of that premium is short enough, i.e. if fuel is expensive enough. Examples: Europe, Japan.
Legislating high fuel economy while keeping the fuel cheap virtually guarantees that the billions being poured into Detroit right now will buy no more than a stay of execution. There's nothing wrong with a $0.02/gallon hike every month for about a decade as long as there are counterveiling cuts in other taxes. Let people earn net cuts in their marginal tax rates by being smarter consumers.
Seems to me you had a bit of a knee jerk reaction to the notion of higher gas taxes, as if cheap gasoline were your birthright. Considering the awful state of roads and bridges in many parts of the country, fuel taxes are obviously not high enough to cover their maintenance, never mind achieving strategic objectives related to reducing oil imports and carbon emissions. Federal gas taxes have not been raised since 1993, not even to adjust for inflation, because politicians are too cowardly to tell their constituents the uncomfortable truth.
Btw: it's perfectly fair to ask motorists to pay more in order to fund expanded mass transit, because the latter reduces congestion on the roads. It's simply not sustainable to perpetuate the transportation mix of the 20th century forever, if only because there is only so much land available for adding highway lane-miles in built-up areas.
In that sense, the scope of what fuel taxes are supposed to pay for should be widened, though I still think all tax revenue from all sources ought to go into a single general fund.
I have wondered this and hopefully one of you can answer it. Does Acela turn a profit (or come close)?
The Northeast Corridor as a whole, Acela and Northeast Regional recoup their operating costs but do not recoup capital costs.
The Acela is profitable, as is the Northeast Regional in good years. In FY 2008, the two services made $1 billion in revenue and incurred $640 million in operating expenses. Systemwide depreciation is $500 million a year, but most of that is the expenses that went into building the Acela in the late 1990s; if you include that, you get that the NEC basically breaks even.
Ben said... "I have wondered this and hopefully one of you can answer it. Does Acela turn a profit (or come close)?"
Spokker said... "The Northeast Corridor as a whole, Acela and Northeast Regional recoup their operating costs but do not recoup capital costs."
And, of course, none of its competitors recoup their full capital costs, with the highway fund covering capital costs of a portion of the road network with hefty cross subsidies.
An operating surplus is the equivalent of airlines or buses "turning a profit", where its taken from granted that they do not have to cover their full capital costs.
I think it's important to keep in mind that the worst of this recession is over. Most of the jobs that are going to be lost, have lost, and the economic stimulus money has just barely begun to kick in. i feel in my bones that we will be seeing an overall upturn in the economy by christmas - money won't be falling from the sky, but the worst is over. They is for lawmakers - and they aren't very bright - not to panic, but to hold stil and ride it out. They warned us that deep cuts would come after this special election and they are going to make them, including closing all the state parks for the summer. Which is fine. californians need to realize that these things need to be paid for. We don't pay nearly enough for what we get here as it pertains to a very nice lifestyle. Even a poor family can take a trip to angel island for a picnic on a nice day. We really have it made here in spite of what the haters say. As for amtraks california services, I havne't heard afno y cuts coming ( remember we get federal money to help absorb any cuts and the state pays mainly for our rolling stock, not our labor) So all it means is new car orders being put on hold. In the meantime, part of the ARRA money as well as other federal money has already been directed to buy and rebuild more rolling stock, in addtiona to that there is a whole list of station and maintenance improvements, right here in california, that are moving ahead on federal money regardless of the state's budget. Now, local transit is hurting bad and that is an ongoing funding flaw at the local and sate level that needs to be fixed once and for all. The important thing is to keep your eye on the ball becuase by the time we we get hsr done, and don't give up on local transit, we will be booming again and the coffers will be full. Relax it will be ok.
sorry about my typing dyslexia, but again amtrak and hsr will be fine, and local transit will bounce back eventually and in time.
Higher fuel taxes would also have the impact of causing shippers to consider shipping more by rail and less by road, since trucks burn so much more fuel than do trains per pound per mile (sorry, I'm not an engineer so I won't say per kg per km, I'm sure there's some special notation for that, right?). And since trucks cause so much more wear and tear on our roadways than do cars, this would both lessen the destruction, and place the payment for the destruction where it belongs.
One interesting side effect of the recession, by the way, is that Amtrak's long distance services should be doing much better. Freight rail traffic is down significantly from the peak, and given that the railroads were operating perilously close to their actual capacity, there's a lot more slack in the system now, and Amtrak's trains have a much higher chance of getting there on time. Just look at amtrakdelays.com and the tendency of the Sunset Limited to arrive in LA an hour early almost every time.
yes the trains are running on time much to my dismay as I'm out several hundred a month in overtime) and it's due mainly to the completion of a lot of trackwork in the past two years and the fact that there is no frieght traffic. My borther works for UP as an engineer and work is way down. - starlight, zephyr, etc - all coming in early. Of course complaints are practically non existent which is nice but still, I like to eat.
What it does go to show you though is that if we had a proper national rail policy and infrastructure, rail would be more comfortable and more reliable then air travel. all we need is track.
lb-mile/gallon is what you are looking for Robert. Or kg-km/litre for the metric folks.
The recession's effect on the Northeast Corridor is the opposite. In the Northeast, Amtrak competes with the airlines for the high-end market, leaving the low-end market to the low-cost buses. The low gas prices are also making trains less competitive with cars. The Northeast Regional went into operating losses at the end of last year, and the Regional and Acela combined went into loss at the beginning of this year, as did Chicago-St. Louis, which made a small profit in fiscal 2008.
I don't where you get HSR lines being profitable. That is bunk.
In point of fact they all lose money, with exception of the Japanese system. They are all heavily subsidized by the governments.
Passenger rail in the US, will never make a profit, and it is not making a profit now. Amtrack is getting about 1.5 billions every year to cover their deficits.
What a bunch of nonsense saying higher gas prices will produce higher profits for the auto industry. It simply is not a matter of the domestic capacity, but the foreign competition that has killed off the domestic industry. What is a truth, is higher gas prices mean more profits for the oil industry.
Looking back in history, something nobody seems to want to do, in the mid 1950's GM had about 54% of the auto market here and was killing off all the competition. GM was forced to keep their market share down, so their competitors could survive. Chrysler was later rescued for the first time.
Why should then GM have thought much about being competitive? When they were competitive the government squashed them. That was beginning of their demise.
Rafael's post here makes no sense and doesn't correlate with the facts.
As for posts that talk about the 2/3 majority being the problem with the State's budget. The state already is #1 or #2 on the on the list of highest taxed states in the country. The problem is the State has not for years been living within its revenues, even through they are so high. What is needed is certainly not more expenditures, such as High Speed Rail, but plenty of cost cutting, which is where we are finally headed.
"The problem is the State has not for years been living within its revenues, even through they are so high."
Spending has largely kept up with population growth and inflation to the penny. It's taxes that aren't high enough to cover basic operating costs. It's like a broken record at this point. Legalize marijuana. Repeal prop 13.
THE STATE CAN'T TURN A PROFIT SHUT IT DOWN lol
Anonymous 4:06pm: How much profit do freeways make? How much profit do airports make? Oh right, those are heavily subsidized too. If you are going to complain about subsidies, why single out passenger rail?
@Bianca
Its not that I complain about rail passenger subsidizes; what I complain about is the notion, the premise upon which this project is being promoted, is that it will make a profit --- not only a profit but a big profit. A profit that is not only going to furnish the funds to pay for the extensions to Sacramento and San Diego, but is going to yield a profit to its, thus far not to be seen, private investors. It some kind of dreamworld
Just how dumb do they think we are?
And, BTW, airports do make a profit for some agencies. Look at SFO for example.
I note that gas prices are already inching up, in the neighborhood of $3 a gallon again...
elfling
"As for posts that talk about the 2/3 majority being the problem with the State's budget. The state already is #1 or #2 on the on the list of highest taxed states in the country. The problem is the State has not for years been living within its revenues, even through they are so high. What is needed is certainly not more expenditures, such as High Speed Rail, but plenty of cost cutting, which is where we are finally headed."
========
California is #17 on state taxes. Right in the middle.
The 2/3 is exactly the problem, and has been wreaking havoc with the budget for 15 years. The idea was that you'd have to build a coalition, that the result would be bipartisan, but the practical effect is that 5 or 6 people end up running an extortion scheme, to fund their pet project or cut their pet tax. In this last budget, one of the Republican holdouts wanted - and got - $30 m for horse racing. You'll find examples of that in every budget for the last 15 years. It's only now that it's catching up.
The "cost cutting" you are happy about is a mirage. We'll close the state parks, which generate $2.28 for every $1 spent. Here's some cost cutting: let's eliminate the DMV. I mean, sure, they bring in more than they cost, but think of the one-year savings from not having to issue driver's licenses or make license plates. Let's eliminate the CHP: let people clean up after their own accidents. Personal responsibility, don't you know. In 5 years, when the state is back on its feet, we can build a new one from scratch. Right?
elfling
I really want to see more toll roads so that each freeway pays for itself. I'd also like to see airlines pay their own way but they don't. Even with the taxes that are collected on tickets, they still end up filing for bankruptcy every decade or so. HSR can make an operating profit though it may not make enough to cover capital cost outlays, SNCF is profitable and expanding. Infrastructure is paid for by the public and operations are private. The key to bond payment and capital outlays for infrastructure could be a tax on the rail ticket just as you pay taxes on your airline ticket. The state of california would collect the tax to pay off bonds and fund future bonds and the ticket prices sans tax would go to the operator. As we all know, those $49 plane tickets are not $49. They are $49 plus blahbiddy blah plus gobbledygook plus bibideebobbideeboo by the time you enter that card number. i don't have a problem with a 10 percent "facility charge" on hsr tickets
California can't cut its way to prosperity and the upcoming cuts are only going to make things worse.
Californians reject cuts again and again. Californians WANT high speed rail, and they WANT service and the WANT pretty freeways with landscaping and fancy designs built into the sound walls. Nobody wants california to look like texas. Go to Houston and see what "on the cheap" look likes. You will run screaming back here. There is a lot of waste in government but the majority of that waste is due to private sector extortion. The state contracts everything out and private companies rape the taxpayers. The biggest fraud of all is something that was invented back in the 80s called a "consultant" This was invented by people who figured out that they could charge you to tell you what you should either already know or are getting paid to find out. So we the taxpayers pay twice. We pay the people we hire in government to do a job. Then they hire a "consultant" to do the job for them so they can go to lunch with the lobbyist, then they send us both bills. If we stopped paying twice and made sacramento do its own work then we'd have twice the money left over. i remember when the "consultant" was first invented. I said, what the hell is that and how do you become one' ( (just out of high school) it sounded fancy and complicated. Now I understand it. Its a big pile of bullshit thats what it is. its like "realtor" or " middle management" Lots of people who do little or nothing but get paid anyway because they have the ability to convince you that you need them.
Look, the California state budget is almost 40% higher on a pure dollar basis than it was in the time of Grey Davis. There is no excuse for this rampant spending in a state that actually LOST residents for many years post the Grey Davis period. There are a few really horrendous drains on the budget right now that need to be dealt with: pensions and state employee costs, prisons, and a few other hot buttons. Its not the CHP (outside of the pension issues), its not the schools, it is flatout runaway spending that needs to be controlled and if you ask me, some spending caps need to be reinstated. The whole "cut to the bone" dogma wears a little thin. California should NOT be spending significantly more on services today than in the 90s. Private sector salaries have barely increased since that time for one thing.
private sector pay went through the roof in the 90s and early 200s' are you kidding? I was in san francisco and had to step over passed out 20 year old millionaires every time AIW lked down the street. Meanwhile government workers were struggling to survive in a state where the cost of living was being driven though the roof due to the private sectors drunken spree. Cut from the top and leave working people alone. You should be fighting for better pensions for everyone not stabbing fellow working folks in the back. Shame on you. The republican symbol should be a pig not an elephant. fascists.
@Anon at 4:34 PM
SFO sits on 2,700 acres of prime real estate (an area larger than the entire city of Burlingame!) that it receives rent-free from the City of San Francisco. With that kind of mega-subsidy, any business in the world could make a profit.
Wow! I never thought of that. and the city has a budget crises. We should tax those plane tickets with a "san francisco beautiful" tax to go to pay for city services. I'm going to email that to supervisor daly first thing monday! problem solved yay!
@BAR -
"There is no excuse for this rampant spending in a state that actually LOST residents for many years post the Grey Davis period."
What in the world are you talking about? There hasn't been a single year in the past 100 where California lost residents. Perhaps you're talking about domestic out-migration? That has happened in several years, but has ALWAYS been VASTLY made up for by international immigration. We add close to a Wyoming every year, net.
All of this stuff is easily accessible on the Census website under the ACS data.
california's population in 2000: 33,871,648
california's population in 2009: 38,292,687
that's an increase of 4,421,039 people
inflation rate between 2000 and 2009: 32%
health insurance premiums/corporate profit margins over the period have far outstripped inflation, and since we still do not have a public health care system that could hold those costs to the state govt down. every employee has health insurance, so whenever the insurance corporations jack the premiums up, state expenses go up as well.
and then factor in the rapid demographic shift of the population to both ends, like a barbell, putting more demand for both senior- (health care, pensions) and youth-related (k-12 educations) programs.
40% isn't bad, when you look at how the state's actually changed in that period.
BAR:
"There is no excuse for this rampant spending in a state that actually LOST residents for many years post the Grey Davis period. .
.
Don't be a dolt. California has never EVER seen a decrease in population. Certainly not since Davis left office. This state has increased in population every year I have been here by 350k - 700k.
In 1980 the population was around 24 million.
In 1990 it was 29+ million
In 2000 it was 33+ million
In 2003, when Davis left office, the state population was 36+ million. Each year therafter, population grew by no less than 385,000 each year; consistent with the previous 25 years.
Today, the state has 38.2 million people. By 2050, it'll be around 60 million.
Don't be fooled by media's ignorant reporting concerning of people leaving the state.. that's only one factor. Mortality rate is another.
Oh... I did not see what Sam had written. However, we responded with the same.
I prefer the California Department of Finance for demograpghic data... much much more thorough of an effort than the US Census achieves in non-decineal years.
If nobody else does, then I will mention that the TGV is highly profitable, and the LGV Sud-Est has fully paid off its construction; the HSR systems in Korea and Taiwan are profitable, too, though less so than originally envisioned.
Take a good look at these charts and see how otu f whck things are- first of all they complain about the prison budget but the welfare budget is THREE TIMES THAT why are we paying for all these deadbeats? 30 billion per year and all it does is attract losers to our state. Cut em off and they'll leave or starve. 30 billion per year could build high speed rail to everyones front door. Also the education budget.... Im sorry but the thieving little gun toting graffiti tagging felons in training are wasting our time and money. pul em out of school, give em a shovel or escort them to the state line. Why are we going without luxuries so deabeats losers crackheads and felons can get a free ride? Enough. I am so freakin pissed off when I look at these charts I could just freaking....... i will not vote republican I will not vote republican I will not vote republican...... whew... The dems better get their shit tother and get back on the side of working folks ASAP. enough!
Build the high speed rail. Round up all the losers. Tie them to the 400 miles of track - I think they should just about fit... then run them over with the train, very quickly of course ( its high speed) then use the welfare savings to pay off the bonds and build phase two.
Alon Levy wrote:
"...the HSR systems in Korea and Taiwan are profitable, too, though less so than originally envisioned."
It is just this kind of just plain erroneous information that drives me nuts.
Look at:
http://taiwanjournal.nat.gov.tw/ct.asp?xItem=52064&ctNode=413
Taiwan High Speed Rail seeks funds injection
... I hope this give readers here a true picture of HSR economics.
SNCF profits rise
International Railway Journal , Oct, 2006
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FRENCH National Railways (SNCF) recorded profits of 533 million [euro] in 2005, more than doubling its performance in 2004. Long-distance passenger, and freight operations are credited with this growth. Operating profits increased from 1.6 billion [euro] in 2004 to 1.8 billion [euro], as SNCF tightened its grip on operating costs, and a restructuring of its freight sector, which is now focusing on operating profitable flows.
Then:
SNCF profits plunge by 48%
International Railway Journal , April, 2009
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[ILLUSTRATION OMITTED]
FRENCH National Railways (SNCF) saw its net profits fall by 48% from 1.12 [euro] in 2007 to 575 million [euro] last year, despite a 7% increase in turnover to 25.2 billion [euro]. Earnings before interest, tax, depreciation, and amortisation grew by 12% to 2.6 billion [euro].
Net profits were dented by a depreciation charge for SNCF's infrastructure and engineering division of 325 million [euro], an increase in depreciation due to a rise in capital investment, and higher interest payments because of an increase in long-term debt from 4.5 billion [euro] to 6 billion [euro] as a result of acquisitions.
Long-distance passenger traffic recorded an 8% growth in revenue, due to the opening of TGV Est and increased ridership on international services. Local and regional passenger turnover showed an increased of 7%, with TER services recording a growth rate of 9.3% and Transilien Paris commuter services 3.3%
WHAT does this mean?
SNCF is profitable. High profits in a good economy, lower profits in a bad economy and when doing heavy investing. but profitable nonetheless.
The same for Taiwan. Profits are down for everybody globally and Its not permanent.
Highways are paid for by highway users, so they do essentially pay for themselves. The Highway Trust Fund (the federal gas tax) funded most highway construction and even a great deal of transit capital projects. The idea that auto-users don't pay for their infrastructure is wrong.
Many airports were built as military facilities or civic booster projects, so the initial construction was subsidized. Airport expansion are typically paid for by airport revenue. Landing fees and parking revenues can actually make airport operations quite profitable. Just look at SFO as the City's cash-cow.
So are you telling me that caltrans doesn't receive any state money? and the cities and counties aren't paying for roads out of their general funds?
@jim
Where do you think a lot of the general fund income comes from?
Why do you think they raise the gas taxes?
Gas taxes and vehicle fees should be raised because they do not cover the costs.
also:
Record cross-channel sales at Eurostar
Tuesday, 13 Jan 2009 11:55
Strong traffic at Eurostar despite fire
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Eurostar has reported record results for 2008, with ticket sales up 10.8 per cent over the course of the year.
The Channel Tunnel passenger service carried some 9.1 million passengers over the period – a figure which would have been higher still but for disruptions to services following a fire on freight services in September.
Sales were boosted by a 21 per cent increase in passenger numbers during the first quarter, following the service's move from Waterloo to a purpose build station at St Pancras International.
Improved accessibility to the station for UK travellers has led to an increase in traffic from the regions according to Eurostar.
In total full-year ticket sales increased to £664 million from £599m in 2007 Eurostar reported.
"The idea that auto-users don't pay for their infrastructure is wrong."
The Texas DOT disagrees.
wow texans admit this? of all people. amazing. they have the ugliest freeways too. they all look like they're made out of flimsy tinkertoys that you could knock over with a sneeze.
tinkertoys
Spokker, answer the simple question: who paid/pays for the highway system??? I am not saying that this is the wisest financing and urban design strategy, but auto-users are paying for their infrastructure. You can complain about the "externalities", but auto-users are paying the bills for the actual construction and maintenance.
Where do the federal funds for transit come from? It's not from fares, it's from the gas tax paid by auto-users.
"You can complain about the "externalities", but auto-users are paying the bills for the actual construction and maintenance. "
They're not, though. That's the entire point of the link I posted.
And yes, people can complain about the negative externalities of auto-use. They are very real. Soldiers are dying in Iraq to keep our gasoline relatively cheap.
Highways are paid for by highway users, so they do essentially pay for themselves.
No, they don't. The most cost-effective highways have a recovery ratio of 0.5. Most have a far lower ratio.
"Where do the federal funds for transit come from? It's not from fares, it's from the gas tax paid by auto-users."
And from income tax paid by non-users, sales tax paid by non-users, etc. Roads draw tremendous funding from the general funds of the federal government, state governments, and local governments.
Alon and Spokker,
You point out links from Texas about using tolls to fund roads instead of just the gas tax. Great, I am all for that, but who is paying for these tolls? The general tax-payer? No, it's the auto-users themselves. They are subsidizing their own infrastructure. What's so hard to figure out about this??
If you have to bring up wars in the Mideast as an implicit subsidy for cars, you are really stretching for an answer to fund alternatives. Oil is a global commodity that literally runs the global economy (and well into the foreseeable future), and the US itself actually doesn't get much oil from the Mideast. Mideast oil goes more to Europe and Asia. Even if the US had very high gas taxes -- which I actually support -- the auto-users would still be paying for their infrastructure! It is transit that is freeloading off auto-users by tapping the gas tax. Again, I am OK with basic transit subsidies, but don't come up with this crap that transit and HSR need huge subsidies from non-user sources. Auto-users do actually pay for what they use in terms of infrastructure.
@Fred Martin: Did you read that link?
"Applying this methodology, revealed that no road pays for itself in gas taxes and fees. For example, in Houston, the 15 miles of SH 99 from I-10 to US 290 will cost $1 billion to build and maintain over its lifetime, while only generating $162 million in gas taxes."
"This is just one example, but there is not one road in Texas that pays for itself based on the tax system of today."
Since gas tax does not cover even half of the full cost of road construction and maintenance, highways receive a significant subsidy from general sales or income taxes, including those paid by non-users.
Fred - if those tolls EXISTED, then you would be correct. They don't. So where do you think the money that WOULD BE MADE from the tolls to cover the full costs is coming from NOW?!?!?
you can't argue with them using reality. It doesn't register. It's just like the republicans pretending that what they say is still relevant.
And it should be noted Texas isn't exactly a hotbed of anti-road, anti-oil activity.
@jim What in the world is this "welfare budget" that you're talking about?!? The term "welfare" doesn't even appear anywhere in the budget PDF you link to! Maybe you're referring to "Health and Human Services"? You do understand that the vast majority of HHS spending is Medi-Cal, right? Medi-Cal is a federally funded, state administered program that provides health insurance to children that would otherwise be uninsured. I'm glad you're taking such a principled stand against providing kids with health insurance. Stupid deadbeat kids...if they weren't so lazy they'd drop out of elementary school and go get a job with health insurance like the rest of us!
@Fred SFO is a "cash cow" for the city of SF like Amtrak is a "cash cow" for the federal govt. Actually, in proportional terms, Amtrak is much, much less of a drain on the Federal budget than SFO is on the city of SF.
As I said above, SFO receives 2,700 acres of prime real estate rent free from the City of San Francisco. In the past three fiscal years, SFO has made a loss of $18 million, $22 million, and $70 million respectively. If the city were to instead develop the land, they could expect to net at least $5 billion ($5,000 million) from the land sales alone, and then another $100-200 million per year in property taxes going forward.
Don't get me wrong, I think the city and the greater Bay Area do need an airport. But it's absurd to pretend that we aren't giving that airport a humungous subsidy to help it survive.
@Fred
The idea that roads are completely funded out of gas taxes or other user fees is also a completely false myth that for some reason continues to be survive (certainly the construction lobby doesn't mind).
Fuel taxes don't come close to covering total spending. California collected $3.5 billion in fuel taxes last year and it cost us $2.75 billion just to fund CHP + DMV. Virtually all the money was gone before we even got to maintaining the first mile of roadway, let alone building anything new.
Furthermore, even just talking maintenance and operations, almost all of the fuel tax money goes only to state and federal highways. County and local roads are paid for by property taxes and sales taxes. Guess what, of the 4,000,000 miles of roadway in the US, only 900,000 are owned by the states and Federal government. The other 78% is covered by general fund tax dollars!
"But it's absurd to pretend that we aren't giving that airport a humungous subsidy to help it survive."
And the airport should be subsidized. Just like roads. Just like trains. It's infraustructure that allows other economic activity to occur.
And you know what, they can all be used to complement each other.
mike, some counties also offer basic freeway emergency services to stalled motorists at no extra charge.
Run out of gas? LA Metro will be glad to give you a gallon to get you started again. Flat tire? They'll change it for you. For free. Just dial #399! The service is offered 24 hours a day.
You can't get live help with transit routes 24 hours a day. If you need help you have until 7pm to call on weekdays and until 4:30pm on weekends.
It's ridiculous how nobody ever thinks of these subsidies for vehicles yet complains endlessly about transit subsidies.
Mike - that health and human services budget is a lot more then insuring kids. I have no problem with healthcare for US children, truly disabled folks, and the elderly. But what I see outside my window everyday are thousands of losers being subsidized. and we shouldn't be giving tax breaks to people for having children, we should be taxing them more to discourage it.
Offering some assistance is one thing - but look at the size of that slice to pay for lazy layabouts to sit around on my porch drinking and hootin and hollerin all day and into the night until the paramedics come to get them and take them to the emergency room on the public dime. There are thousands of them here and it goes on 24/7. EVery friday I open my check and see that I get 600 dollars out of 1000. then I say, well I don't mind paying my share, but where does it go? wars, israel, losers, schools for the loser's kids, and on and on. All I ever asked for was clean subway, I clean sidewalk and maybe a nice hsr system. NOthing else. I get none of the above for my 1600 a month - meanwhile the things I pay for are covered with graffiti and filth, and I have the same losers asking me for money when Im coming home at the end of my shift. Why am I working and going without while these people are partying all day on my dime?
Look at the Asset Value Index "methodology" the Texas study is applying. It's saying that X new miles of certain highway do not generate the traffic (and the spot fuel consumption resulting in the fuel taxes) to cover the cost of the new highway section. That is nominally correct. Gas taxes are losing their purchasing power, hence the increased interest in tolling, which is a good thing. Expensive new construction is non-sustainable in terms of gas tax financing, but you are missing the main point! The highways are still being funded by the fuel taxes (and increasingly tolls in Texas), not general tax revenue! Hell, Texas is taking 1/4 of its gas tax revenue to fund schools. Transit also taps this gas tax. Expensive new highway construction also gobbles up these gas tax revenues, but the highways are nonetheless still financed by gas taxes.
I am not supporting new highway construction, but I am pointing out that the original highway builders did establish a system of taxation by USERS to fund their infrastructure. This is the central point that seems to be willfully ignored when talking about transportation subsidies. HSR is currently not doing this, since user fares will not come close to paying off the capital costs. HSR has to get more serious about its financing, and the funds should come mostly from those who actually use and benefit from the system: fares, express freight fees, special value capture property taxes on new development near stations, local contributions from redevelopment funds, parking fees near stations, etc. So far, CHSRA has not been serious about this at all, and it's just expecting state and federal general revenue to cover its shaky finances.
By the way, the companies that build highways are the EXACT same ones that would build HSR.
Concerning SFO, it could certainly be more efficiently managed, but SFO does generate revenue and patronage jobs for the City of San Francisco. Actually, SFO's operations should be privatized, and then SFO could start paying sales taxes and property taxes on all that land (currently tax-free because of its public status). SFO is inefficient, but it is nonetheless a money-spinner for SF.
CHSRA should also sell naming rights to the stations. If Diridon wants to name an HSR station after himself, he should pay for that opportunity. Companies should be given the opportunity to pay for putting their name on this infrastructure.
I see Diridon Station has been put at the front of the federal stimulus funding list to receive $500 million. It's increasingly clear what this is all about. The station improvements should be funded through local financing, since their claim to supporting "federal" inter-state commerce is extremely weak.
Just as all loop and spur interstates should never get federal funding.
http://www.nytimes.com/2009/06/09/business/09gas.html?hpw
Of note, at the end:
"Experts who follow the auto industry see a silver lining of sorts in the rising [gas] prices. The government, which recently bailed out two of the three Detroit carmakers, is pressing the companies to build smaller, more fuel-efficient cars.
'The manufacturers need high gas prices for people to accept those cars,' said Maryann Keller, an automotive consultant. 'Gasoline prices motivate behavior.'"
Looks like Rob owes Rafael an apology.
Most oil price forecasters will tell you that we are currently in a oil price slump due to the global recession, and that once the economy recovers, the prices will rebound to summer 2008 rates and beyond. The era of oil being cheaper than the equivalent unit of bottled water is over, and this is a good thing for getting serious about energy alternatives.
Now is the time to impose a significant gas tax, when consumers would not feel the pain so acutely due to the depressed fuel prices. Since raising a gas tax is very difficult politically, it should be done in conjunction with lowering another tax, such as a general sales tax. General sales taxes are notoriously regressive, but taxing fuel is a great way to stimulate alternatives to the energy status quo.
New gas taxes should not be funding new highway construction or any new construction projects for that matter; rather, they should fund the operating and maintenance costs of the existing transportation system. The surplus should go into general revenue, to compensate the reduction of sales tax revenue for local and county governments. The cost of new capital transportation infrastructure should be borne by the parties that expect to receive the most direct benefit from the investment. This implies local and regional financing, since the local area and region expect to benefit most. We are not building the interstate highway system anymore, so only genuinely "federal" cases deserve federal capital funding. It's ridiculous that Rod Diridon Station is applying for $500 million from the federal government when San Jose has done so little to maintain and develop that station over the years.
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