Reports

Report | Georgia PIRG Education Fund | Consumer Protection

Following the Money

The ability to see how government uses the public purse is fundamental to democracy. Transparency in government spending checks corruption, bolsters public confidence, and promotes fiscal responsibility.

State governments across the country have been moving toward making their checkbooks transparent by creating online transparency portals – government-operated websites that allow visitors to see who receives state money and for what purposes. Forty states provide transparency websites that allow residents to access databases of government expenditures with “checkbook-level” detail. Most of these websites are also searchable, making it easier for residents to follow the money and monitor government spending.

This report is the second annual ranking of states’ progress toward new standards of comprehensive, one-stop, one-click budget accountability and accessibility.

Report | Georgia PIRG Education Fund | Consumer Protection

Halfway to the Consumer Financial Protection Bureau

CFPB Implementation Team staff are making significant progress in their efforts to both build an effective agency and be ready to perform required functions by the transfer date (July 21, 2011). Based on our analysis of several key metrics, on the date halfway between passage and startup, the CFPB Implementation Team is properly focusing on key goals and outcomes. Moreover, the high‐quality of its early hires will give it the CFPB the ability to significantly broaden and accelerate its activities over the next six months.

At the same time, the CFPB has some major challenges before it. It must defend itself against ongoing special interest attacks and one‐sided Congressional inquiries. To achieve its full potential on the transfer date, it must have a director confirmed by the Senate who is committed to strong consumer protection. While the CFPB enabling legislation gives the Treasury Secretary authority to run the agency in the absence of a director after July 21, the confirmation of a director provides additional new powers current regulators do not have.

Report | Georgia PIRG Education Fund | Health Care

The Cost of Repeal

On March 23, 2010, after a long debate, President Barack Obama signed into law comprehensive federal health care reform legislation, known as the Affordable Care Act or ACA, but the enactment of the law did not end the debate. This year, Georgia’s elected officials will face their own choices about what to do about our health care system. They must ask whether repeal would make our health care work better or worse for the taxpayers, consumers, and businesses of the state. The close examination of the consequence of repeal provided in this report demonstrates that repeal fails that test. 

Report | Georgia PIRG Education Fund | Transportation

Do Roads Pay for Themselves?

Highway advocates often claim that roads “pay for themselves,” with gasoline taxes and other charges to motorists covering – or nearly covering – the full cost of highway construction and maintenance.

They are wrong.

Highways do not – and, except for brief periods in our nation’s history, never have – paid for themselves through the taxes that highway advocates label “user fees.” Yet highway advocates continue to suggest they do in an attempt to secure preferential access to scarce public resources and to shape how those resources are spent.

To have a meaningful national debate over transportation policy – particularly at a time of tight public budgets – it is important to get past the myths and address the real, difficult choices America must make for the 21st century.

Gasoline taxes aren’t “user fees.”

Highway advocates often describe gasoline taxes as “user fees” in order to argue that those funds should be used only on highways. Yet, gasoline taxes are not user fees in any meaningful sense of the term. 

  • “Fees” are not connected to “use” – The amount of money a particular driver pays in gasoline taxes bears little relationship to his or her use of roads funded by gas taxes – unlike other true user fees such as admission fees for state parks or turnpike tolls. Drivers on local streets and roads, for example, pay gasoline taxes for the miles they drive on those roads, even though those taxes are typically used to pay for state and federal highways. Efforts to ensure that residents of a given area “get back” what they pay in gasoline taxes – such as the federal equity bonus program – actually perpetuate wasteful pork-barrel spending since they allocate money with no consideration of need or the benefits those investments would deliver to society.
  • State gas taxes are often not “extra” fees – Most states exempt gasoline from the state sales tax. The substitution of the gasoline tax for the sales tax diverts much of the money that would have gone into a state’s general fund to a fund used often for the exclusive benefit of drivers. In some states, such as New Jersey, the gasoline tax is at times lower than the corresponding sales tax would be, meaning that drivers get a net tax subsidy that encourages the purchase of gasoline relative to other goods.
  • Federal gas taxes have typically not been devoted exclusively to highways – The federal gas tax began its life as a deficit-fighting measure under President Herbert Hoover decades before the Interstate Highway System.  Only during the brief 17-year period beginning in 1956 did Congress temporarily dedicate gas tax revenues to construct the Interstate network, a project completed in the 1990s. Since 1973, the gasoline tax has been used to fund a variety of important transportation priorities and has periodically been used to reduce the federal deficit.
  • Many states use gas tax revenue for a variety of purposes – While many states have historically dedicated their own state gasoline taxes to highways, that decision has not been universal. According to Federal Highway Administration data, roughly 20 cents of every dollar collected in state gas taxes, motor vehicle fees or tolls nationwide is used for public transportation and other governmental purposes.  Many of the states that do use gasoline taxes solely for highways do so because they remain bound by constitutional earmarks of gasoline taxes imposed three-quarters of a century ago, regardless of whether those decisions still make sense today.

Highways don’t pay for themselves.

  • Since 1947, the amount of money spent on highways, roads and streets has exceeded the amount raised through gasoline taxes and other so-called “user fees” by $600 billion (2005 dollars), representing a massive transfer of general government funds to highways.
  • Highways “pay for themselves” less today than ever. Currently, highway “user fees” pay only about half the cost of building and maintaining the nation’s network of highways, roads and streets.
  • These figures fail to include the many costs imposed by highway construction on non-users of the system, including damage to the environment and public health and encouragement of sprawling forms of development that impose major costs on the environment and government finances.
  • New or expanded highways are even less likely to pay for themselves in the future as changing demographic conditions and consumer choices limiting the growth in vehicle travel and fuel use that would otherwise provide the revenue for a major program of highway expansion.

Highway advocates use the “user fees/highways pay for themselves” myth in an effort to secure access to scarce government revenue for their desired public policy ends – distorting transportation decision-making.

  • Highway advocates often argue that the fact that highways come with their own built-in source of revenue in the form of gasoline taxes make them a financially conservative option relative to other transportation investments. 
  • Highway advocates often use funding myths to make public transit and other forms of transportation appear relatively expensive – diverting attention from the full accounting of costs and benefits that should be the basis of sound transportation decision-making.

To make the right choices for America’s transportation future, the nation should take a smart approach to transportation investments, one that weighs the full costs and benefits of those investments and then allocates the costs of those investments fairly across society.

Report | Georgia PIRG Education Fund | Transportation

A Track Record of Success

As America moves toward construction of new high-speed rail networks in regions throughout the country, we have much to learn from experiences abroad. High-speed rail lines have operated for more than 45 years in Japan and for three decades in Europe, providing a wealth of information about what the United States can expect from high-speed rail and how we can receive the greatest possible benefits from our investment.   

Indeed, the experience of high-speed rail lines abroad, as well as America’s limited experience with high-speed rail on the East Coast, suggests that the United States can expect great benefits from investing in a high-speed passenger rail system, particularly if it makes steady commitments and designs the system wisely.

High-speed rail systems in other nations have been able to dramatically reduce the volume of short-haul flights between nearby cities and significantly reduce inter-city car travel. In the United States, similar shifts would ease congestion on the roads and in the skies, reducing the need for expensive new investments in highways and airports. Short-haul plane trips are the least efficient in terms of time and fuel, and replacing those trips allows air travel to be more efficient and focused on long-haul trips.  High-speed rail service has almost completely replaced short-haul air service on several corridors in Europe, such as between Paris and Lyon, France, and between Cologne and Frankfurt, Germany.

 

·       The number of air passengers between London and Paris has been cut in half since high-speed rail service was initiated between the two cities through the Channel Tunnel.

·       In Spain, high-speed rail service between Madrid and Seville  reduced the share of travel by car between the two cities from 60 percent to 34 percent. The recent launch of high-speed rail service between Madrid and Barcelona has cut air travel on what was once one of the world’s busiest passenger air routes by one-third.

·       Even in the northeastern United States, where Amtrak Acela Express service is slow by international standards, rail service accounts for 65 percent of the air/rail market on trips between New York and Washington, D.C., and 52 percent of the air/rail market on trips between Boston and New York.

High-speed rail saves energy and protects the environment. In the United States, high-speed rail could cut our dependence on oil while helping to reduce air pollution and curb global warming.

·       Continual improvement– Japan’s Shinkansen system is estimated to use one quarter the energy of air travel or one-sixth the energy of automobile travel per passenger. The energy efficiency of Shinkansen trains has continually improved over time, such that today’s trains use nearly a third less energy, while traveling significantly faster, than the trains introduced in the mid-sixties.

·       More efficient – On Europe’s high-speed lines, a typical Monday morning business trip from London to Paris via high-speed rail uses approximately a third as much energy as a car or plane trip. Similar energy savings are achieved on other European high-speed rail lines.

·       Replacing oil with electricity makes zero emissions possible – Energy savings translate into reduced emissions of pollutants that cause global warming or respiratory problems – particularly when railroads power their trains with renewable energy. In Sweden, the country’s high-speed trains are powered entirely with renewable energy, cutting emissions of global warming pollutants by 99 percent.

 

High-speed rail is safe and reliable. In the United States, reliable service via high-speed rail could be an attractive alternative to oft-delayed intercity flights and travel on congested freeways.

o   High-speed rail is safe – There has never been a fatal accident on Japan’s Shinkansen high-speed rail system or during high-speed operation of TGV trains in France, despite carrying billions of passengers over the course of several decades.

o   High-speed rail is reliable – High-speed rail is generally more reliable than air or car travel. The average delay on Japan’s Shinkansen system is 36 seconds. Spain’s railway operator offers a money-back guarantee if train-related delays exceed five minutes.

 

High-speed rail can create jobs and boost local economies. A U.S. high-speed rail system could help position the nation for economic success in the 21st century while creating short-term jobs in construction and long-term jobs in ongoing maintenance and operation.

  •      Construction of high-speed rail lines creates thousands of temporary jobs. For example, about 8,000 people were involved in construction of the high-speed rail link between London and the Channel Tunnel.
  •      Well-designed high-speed rail stations located in city centers spark economic development and encourage revitalization of urban areas:
  •      A study of the Frankfurt-Cologne high-speed rail line in Germany estimated that areas surrounding two towns with new high-speed rail stations experienced a 2.7 percent increase in overall economic activity compared with the rest of the region.
  •     Office space in the vicinity of high-speed rail stations in France and northern Europe generally fetches higher rents than in other parts of the same cities.
  •     The city of Lyon experienced a 43 percent increase in the amount of office space near its high-speed rail station following the completion of a high-speed rail link to Paris.
  •     Property values near stations on Japan’s Shinkansen network have been estimated to be 67 percent higher than property values further away.
  •     Several cities have used high-speed rail as the catalyst for ambitious urban redevelopment efforts. The city of Lille, France, used its rail station as the core of a multi-use development that now accommodates 6,000 jobs.

 

The new international high-speed rail terminal at London’s St. Pancras station is the centerpiece of a major redevelopment project that will add 1,800 residential units, as well as hotels, offices and cultural venues in the heart of London.

·       High-speed rail has increased overall travel in corridors in Spain and France and the number of one-day business trips in Korea. Increases in overall travel indicate that high-speed rail is having an impact on broader economic decisions and improves the chances that high-speed rail lines can recoup their overall costs.

·       High-speed rail can expand labor markets and increase the potential for face-to-face interactions that create value in the growing “knowledge economy.” A British study projects that the construction of the nation’s first high-speed rail line will lead to more than $26 billion in net economic benefits over the next 60 years.

High-speed rail lines generally cover their operating costs with fare revenues. In the United States, a financially sustainable high-speed rail system will likely not require operating subsidies from taxpayers (although public funding is essential to getting the system up and running).

·       High-speed rail service generates enough operating profit that it can subsidize other, less-profitable intercity rail lines in countries such as France and Spain, as well as in the U.S. Northeast.

·       Two high-speed rail lines – the French TGV line between Paris and Lyon and the original Japanese Shinkansen line from Tokyo to Osaka – have covered their initial costs of construction through fares.

Properly planned high-speed rail can encourage sustainable land-use and development patterns. In the United States, focusing new development around high-speed rail stations can reduce pressure to develop in far-flung areas, reducing other infrastructure costs such as for sewers and electricity. By creating new centers of commerce and activity, high-speed rail stations can create new opportunities for riders to travel by public transportation, by bike, or on foot.

·        Cities throughout Europe have paired the arrival of high-speed rail with expansion of local public transportation options – in some cases, using new high-speed rail lines to bolster local commuter rail service.

·       Proper land-use policies in areas that receive high-speed rail stations, coupled with effective development of station areas, can ensure that high-speed rail does not fuel new sprawl.

To obtain the economic and transportation benefits experienced by other nations, the United States should follow through on its decision to invest in high-speed rail, while taking actions to maximize the benefits of that investment. Specifically, the United States should:

·       Follow through on its decision to build a national high-speed rail system akin to the commitment to build the Interstate Highway System in the 1950s. Doing so will create thousands of jobs and position the United States to meet the economic, transportation, energy and environmental challenges of the next century. 

·       Use high-speed rail to focus future development by locating stations in city centers, and planning for intensive commercial and residential development near stations.

·       Make high-speed rail stations accessible to people using a variety of transportation modes, including automobiles, public transit, bicycling and walking. The United States should follow the lead of other nations and pair high-speed rail with expansion of local transit networks.

·       Integrate high-speed rail with improvements to commuter and freight rail. Freight and commuter rail services should be allowed access to high-speed rail lines, where possible and appropriate, in order to maximize the benefits of track improvements and ensure that high-speed services will complement, rather than duplicate, current rail services.

·       Encourage private investment, but with strong public protections. Private contracts must make sense for the long-term public interest, not just act as a way to generate short-term infusions of cash. Public authorities must retain the right to make key decisions about the rail system, including fares and operations. Freight rail companies that receive publicly subsidized improvements in tracks and facilities they own should be required to ensure the access and reliability of passenger rail services that operate over those routes.

·       Keep clear lines of accountability by establish clear criteria for funding all high-speed rail projects to ensure taxpayer money is focused on the most important projects. Priority funding should be given to projects that increase ridership potential, generate economic development, reduce congestion, and foster sustainable development in cities connected by high-speed rail.

·       Guarantee transparency regarding how projects are evaluated, how decisions are made, and how funds are allocated and spent. Private partners should disclose at least as much information about their publicly subsidized operations as public entities.

·       Make high-speed rail green by investing in energy-efficient equipment, powering the system with renewable energy wherever possible, and designing and building the system to deliver strong environmental benefits.

·       Set technological standards for projects receiving federal funding to reduce the cost of high-speed rail, improve replicability of successful projects, and allow manufacturers to design for larger domestic markets. 

·       Encourage cooperation among states through federal funding policies that reward states that enter into and abide by compacts with neighboring states to conduct joint projects, synchronize route schedules, and coordinate response to operational problems.

·        Encourage domestic manufacturing through federal policy that expands the capacity of American companies to produce high-speed rail systems and components by negotiating technology transfer agreements and investing in research and development over the long term.

·       Articulate a vision for the future of America’s rail network and measure progress toward the achievement of that national vision. An ambitious but fully achievable and desirable goal would be to link all major cities within 500 miles of one another with high-speed rail by mid-century.

 

 

 

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