Transportation

Private Roads, Public Costs

A growing number of states are considering arrangements in which a private operator provides an up-front payoff or builds a new road in return for decades of escalating toll receipts. The report assesses these deals and identifies a number of problems, including: 

· Private toll roads typically require greater toll hikes to generate the same upfront payment that could be generated without privation.

· Private deals lead to serious loss of public control that hinders future transportation planning and typically force public payments to compensate private companies if policies reduce toll traffic.

· Deals are often conducted with inadequate public disclosure or input.

· States generally lack the capacity to oversee or enforce private road agreements

· Problems are compounded by the fact that contracts typically extend 50-plus years in order to obtain large federal tax subsidies.

The study examines 15 completed private road projects and 79 others that are proposed or underway.

The report, which provides numerous public opinion survey results on private roads, also provides six basic principles for protecting the public from bad road privatization deals.

Report | Georgia PIRG Education Fund | Transportation

Economic Stimulus or Simply More Misguided Spending?

President-elect Obama has declared that the next recovery plan must do more than just
pump money into the economy. It will also create the infrastructure that America needs
for the 21st century.

This fall, Congress asked states to submit lists of “ready-to-go” transportation
infrastructure projects that could be funded by the stimulus package. Lists from nineteen state departments of transportation (DOTs) show that the broader goals articulated by President-elect Obama will be undermined if Congress, the Administration, and the states do not establish forward-looking rules for spending stimulus funds.

Only about one-third of state DOTs have released to the public the project lists they
submitted to Congress. However, a majority of the nineteen that have come to light are
badly out of touch with the current trends, public priorities and transportation system
needs that underpin the President-elect’s declaration. Most stimulus project lists from
state DOTs prioritize new highways while paying relatively little attention to repairing
crumbling bridges and roads and even less emphasis on forward-looking transportation
options, such as public transit and intercity rail. As a result, they are contrary to
President-elect Obama’s stated intention to use smart spending to reduce America’s
dependence on oil and emissions of global warming pollution.

On average, the nineteen states would spend more than 75 percent of funds on
highways and only 17 percent on public transit or intercity rail. In fact, seven states
would allocate 1 percent or less, including four that would allocate nothing at all. This
would be a step backward from even the grossly inadequate 20 percent share received
by transit in federal transportation laws since the 1970s. It runs counter to Americans’
stated preferences, declining automobile use, and rapidly increasing transit ridership.
Of the fourteen state lists for which adequate data on types of proposed highway
spending were available, states on average would divert the majority of highway funds
for new and expanded roads rather than addressing their backlog of repair and
maintenance projects. More than a third of states would use less than a quarter of road
funds on backlogged repair or maintenance.

To prevent a misspending of recovery funds, Congress the next Administration and state
leaders should apply six principles:

(1) Any road funds should go first to maintenance and repair of structurally deficient
bridges and roads, not new highways or lanes;
(2) The combined total for public transit, intercity rail, and bicycle and pedestrian
projects should be no less than funds for highways;
(3) Public transportation funds should include support for operations so agencies
can accommodate the rising demand.
(4) Surface Transportation Program highway funds should be distributed as under
current law so that a portion of resources flow directly to metropolitan areas that
know best about which local projects are needed;
(5) All states, cities, and agencies should publicly disclose the stimulus lists they
have submitted;
(6) Direct recipients of stimulus funds should report on how money was spent and
any transportation spending that it displaced.
The economic recovery package will present an opportunity to advance widely
recognized, new transportation priorities for the 21st century. It will be up to Congress,
the Obama Administration, and the states to make sure that happens. So far, however,
too many of the states are off to a troubling start.

News Release | Georgia PIRG Education Fund | Transportation

PIRG on National Expert Blog about Transportation Stimulus

President-elect Obama is correct to liken an infrastructure stimulus to Eisenhower’s historic initiative to create the Interstate Highway system. That endeavor set the patterns for America’s car-dominated transportation network and suburban growth throughout the second half of the twentieth century. The coming stimulus similarly presents a tremendous opportunity to advance transportation goals for the twenty-first century.

It is critically important how infrastructure stimulus money gets spent. It is not enough to simply spend money. Nor should Congress assume that more transportation is always better. As many have pointed out, America’s transportation system isn’t just broke; it’s also broken. In fact, transportation contributes to many of America’s most pressing problems. Consider:

  • Each year Americans waste billions of dollars and millions of hours stuck in traffic – a problem that is often made worse by construction of new highways.
  • Our transportation system is also the chief source of our nation’s addition to oil, consuming two our of every three barrels, and leaving our nation vulnerable to volatile prices and hostile foreign regimes.
  • Cars and trucks are the biggest end-user source of global warming pollution. We will not succeed in reducing these emissions unless we allow Americans to reduce the number of miles they drive.
  • Finally, too many transportation projects like Alaska’s infamous “Bridge to Nowhere” have been embarrassing boondoggles that erode confidence in government and divert dollars from more productive uses. 

Clearly, not every infrastructure dollar is equally good for the public interest. As state Departments of Transportation eagerly offer lists of favored projects, how should Congress and the Obama administration decide?

 There needs to be a commitment to spend for results rather than simply to inject dollars. The reason that there is such wide consensus that our national transportation system is dysfunctional is because the current system primarily collects gas taxes from the states and then pumps those dollars back based on outdated formulas forged by political compromises that had nothing to do with achieving national goals. For decades, the federal government has spent billions of dollars on highway projects with little evaluation and no accountability. That must change. Spending is not based on allocating dollars where they will yield the greatest results. There are not even clear goals for what the transportation system should accomplish.

 Thus the next Congress should should spend taxpayers’ money more wisely by focusing transportation dollars on solving our nation’s biggest problems. Federal transportation money should be spent only on projects that produce real results over the long haul – for example, by reducing our dependence on oil, curbing global warming pollution, alleviating congestion, improving safety, and supporting healthy, sustainable communities.

 A rough guide for what that change looks like can likened to the difference between the early Detroit bailout requests and the emerging counter proposals. Rather than simply throw more money toward continuing failure, the emerging consensus seems to be that funds most go toward a fundamental shift in the business model and in the mix of vehicles that get produced. No less substantive change should be demanded from a stimulus package for our dysfunctional transportation system.

As part of ensuring accountability, state DOTs should report on the results of how transportation stimulus money gets spent. That sounds like common sense but it would actually be a major shift from the current system. States should report back on the extent to which the projects funded with stimulus money increased or decreased jobs, energy security, carbon dioxide emissions, vehicle miles traveled. Perhaps the second installment of a two-year package would be allocated according to how well states advance national goals with the first installment.

Other priorities for spending transportation stimulus should also advance the nation toward future goals. Emphasis should be placed on expanding clean, efficient transportation choices for Americans by prioritizing investment of new funds for light rail, commuter rail, rapid bus service, high-speed intercity rail and other forms of modern public transportation. At least as much money should be allocated to these transportation choices as to roads and highways. In doing so, federal policy will encourage transportation investments that build dynamic and accessible communities, where more Americans can walk, bike or take transit to get where they need to go. Meanwhile stimulus money allocated to roads and bridges must prioritize "fixing it first." Investment should go to maintenance and repair of America's crumbling bridges, not massive new highway expansions. 

The United States Public Interest Research Group (U.S. PIRG) has signed up growing support for these basic principles from over 100 public officials from state, local, and federal government as well as other civic leaders. 

 

To see a list of the principles and signatories see:http://www.uspirg.org/issues/transportation/more-and-better-transit/transportation-principles-signers

 

To see more about U.S. PIRG’s positions and reports on transportation, see: http://www.uspirg.org/issues/transportation

 

For an in-depth report on America’s transportation challenges and solutions, see:http://www.uspirg.org/uploads/2q/fV/2qfVu2ZrflTk-TnRQEDdDw/A-Better-Way-to-Go-vUSPIRG.pdf

To view this and future blogs by Baxandall and Krieger, go to http://transportation.nationaljournal.com/2008/12/how-should-infrastructure-stimulus-be-spent.php

Report | Georgia PIRG Education Fund | Transportation

Squandering the Stimulus

America’s dependence on oil has become increasingly painful. Two thirds of oil in the United States goes to transportation, with the largest share consumed by cars and trucks. As the rising price of gasoline makes driving more expensive, Americans have sought alternatives by driving a little less and riding public transportation more. 

Unfortunately, government policy does too little to help Americans drive less. Energy experts generally agree that the era of cheap gas is over. Scientists likewise agree that road-based global warming pollution must be reduced. But lawmakers have not taken enough steps to help Americans consume less at the pump. On the contrary, overall government policies continue to encourage more driving at the expense of alternatives, leaving Americans poorer, stuck in worsening traffic, and emitting dangerous levels of global-warming pollution. 

Nothing illustrates how the lack of transportation options hurts consumers and our economy more than the fact that, since approval of the tax rebates in February, Americans on average have already spent the amount of their stimulus checks at the pump. The standard stimulus rebate check for American families with a joint filing couple and a child is $1,500. As of this week, the average family household will have already spent over $1,500 at the gas pump since February 13th when President Bush signed the tax rebate checks into law.  

The situation is akin to families signing over their rebate checks to big oil companies like Exxon Mobil or sending them to oil-producing countries like Saudi Arabia. We can reduce our crippling dependence on oil through long-term solutions that will make it easier for Americans to drive less. Modern buses, light rail, commuter rail and other forms of transit more efficiently move passengers with less fuel. 

Transit also reduces traffic congestion and encourages more compact development patterns which, in turn, further reduce the amount Americans must drive. Existing public transportation already reduces America’s oil dependence. Analysis by Georgia PIRG shows that net oil savings from public transportation totaled 3.4 billion gallons in 2006, the last year for which full data on transit agency and ridership is currently available. These oil savings are enough to fuel 5.8 million cars for an entire year and to save about $13.6 billion in gasoline at today’s prices. 

In metro Atlanta, public transit saved 88 million gallons, the equivalent of $359.2 million at today’s gas prices. Comparing spending on transportation in neighborhoods with different access to rail and bus routes underscores the gas-saving benefits of public transit, according to newly released analysis by the Center for Neighborhood Technology (CNT) as part of a Brookings Institution project. Based on analysis of 2000 Census data in 52 metro areas, neighborhoods with the best access to transit routes spent an average of $728 monthly on all transportation costs, including gas, insurance, upkeep, and transit fares. Households in communities with the least access to transit, by contrast, spent an average of $925 per month.  Public transit solutions can do far more. 

At present, underfunded transit agencies are struggling to keep up with the record volume of riders. Despite the success of new rail lines and bus routes around the country, a long line of new transit projects remains stuck on the drawing board due to lack of funding. Federal, state, and local governments must invest in solutions to oil dependence through more and better public transportation. 

Report | Georgia PIRG Education Fund | Transportation

A Better Way To Go

America’s automobile-centered transportation system was a key component of the nation’s economic prosperity during the 20th century. But our transportation system is increasingly out of step with the challenges of the 21st century. Rising fuel prices, growing traffic congestion, and the need to address critical challenges such as global warming and America’s addiction to imported oil all point toward the need for a new transportation future.

This report shows why rail, rapid buses and other forms of public transit must play a more prominent role in America’s future transportation system. America has grown more dependent on car travel with each passing year. America has more cars per capita than any other nation in the world. The number of miles driven on America’s highways has doubled in the last quarter-century, and our reliance on cars for transportation is at the root of many of America’s most intractable problems. For example, with two out of every three barrels of oil the United States consumes each year used to fuel our transportation system, our economy is hindered by oil price spikes and our national security vulnerable

This report shows that every American can benefit if we expand the reach and improve the quality of transit in the United States. By making a bold, national commitment to expand and improve transit, the United States can address many of our greatest challenges and create a transportation system built for the needs of the 21st century. Existing public transportation already plays a key role in addressing key problems faced by America:

-In 2006, transit saved an estimated 3.4 billion gallons of gasoline in the United States—enough to fuel 5.8 million cars for a year. In monetary terms, transit saved more than $9 billion that would otherwise have been spent on gasoline.

-In 2005, transit prevented 540.8 million hours of traffic delay, according to the Texas Transportation Institute, equivalent to more than 61,700 people sitting in traffic for an entire year. The monetary value of those savings was $10.2 billion.

-Transit reduced global warming emissions by nearly 26 million metric tons in 2006. In New York state alone, transit avoided 11.8 million metric tons of carbon dioxide pollution—more than was produced by the entire economies of Rhode Island, Vermont or the District of Columbia.

For every dollar invested in transit, America saves nearly two dollars in avoided costs on top of the economic development benefits. In 2005, federal, state and local governments spent $30.9 billion to provide transit services (not including fares). These investments yielded at least $60 billion per year in benefits from reduced vehicle expenses, avoided congestion, global warming emission reductions, reduced road expenditures, reduced spending on parking, and avoided traffic accidents. In other words, investment in transit more than pays for itself even before accounting for its direct economic stimulus.

Despite transit’s many benefits, America has historically underinvested in transit. The paper lays out a plan for expanding America’s transit network paid for by more efficiently allocating costs among those who will reap the benefits.

Report | Georgia PIRG Education Fund | Transportation

Road Privatization

Privatization of toll roads is a growing trend. During 2007, sixteen states had some privatized road project formally proposed or underway. In the last two years Indiana and Chicago signed multi-billion dollar private concession deals for public roads for 75 years and 99 years respectively. As a result of these deals, toll rates on these roads will increase steadily and revenues will be paid to private company shareholders rather than to the public budget.

Encouraged by the enormous anticipated profits that private road operators will reap from these deals, Wall Street investors and high-priced consulting firms have promoted similar deals to other states and local governments. Although offering a short-term infusion of cash, privatization of existing toll roads harms the long-term public interest. It relinquishes important public control over transportation policy while failing to deliver the value comparable to the tolls that the public will be forced to pay over the life of the deal.

Proposed deals to construct new roads or bridges that would be privately operated are a more complicated matter. There may be instances where private companies can deliver services that the public sector currently lacks and can not efficiently create. However, private deals for new construction should also follow the principles outlined below to adequately protect the public interest. Any potential advantages of privately construction should be weighed against the disadvantages of private financing and control.

Governments have a long history of outsourcing service delivery on public thoroughfares. Private companies, for instance, operate gas stations and food service at public rest stops. But the public interest is best served by outsourcing only those functions where public capacity is lacking and where continual competition exists for privately provided service.

In general, privatization makes sense only for activities where the private sector has a clear comparative advantage over public provision of those same services. The common characteristics of road privatization deals are that they enlist a private intermediary to borrow large sums of money backed by a schedule to collect multiple decades of steadily increasing toll rates. Private proposals should thus be judged according to the relative costs and benefits of enlisting this intermediary to borrow and to hike tolls. Governments can borrow upfront sums at substantially lower cost than can private companies. Government is also more democratically accountable than private companies when it comes to setting tolls. (In fact, according to a chorus of investment analysts, a chief contribution of the private intermediary is precisely that it can diminish public accountability for future toll hikes). Thus toll road concessions are a bad idea precisely because they outsource activities where the private sector is less capable of serving the public.

In addition to an inability to ensure that the public will receive the full value for its future toll revenues, privatization of toll roads entails a number of additional problems. Over the long-term, these may be of even more serious concern:

• Loss of public control of transportation policy due to a fragmented road network, and an inability to prevent toll traffic from being diverted to local communities, or to change traffic patterns on toll roads without paying additional compensation to road operators.

• An inability to ensure fair or effective privatization contracts due to leases that last for multiple generations and therefore can not fully anticipate future public needs.

• The upfront privatization payoff is a short-term budget fix that does not address long-term budget problems and requires drivers and taxpayers to pay more over the long term.

For both existing toll roads and new construction, the safeguards to protect the public interest against bad privatization deals can be expressed in seven basic principles:

Public control retained over decisions about transportation planning and management;

Fair value guaranteed so future toll revenues won’t be sold off at a discount;

No deal longer than 30 years because of uncertainty over future conditions and because the risks of a bad deal grow exponentially over time;

State-of-the-art maintenance and safety standards instead of statewide minimums;

Complete transparency to ensure proper process;

Full accountability in which the Legislature must approve the terms of a final deal, not just approve that a deal be negotiated; and

No budget gimmicks because a deal must make long-term budgetary
sense, not just help in the short term.
 

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