Transportation / development subsidies
or The real reason why we have traffic congestion and "sprawl"
People often complain about subsidies given to transit or urban re-development, but don’t note how road use and suburban development are also subsidized. Moreover, the former is often needed because of the latter–if driving and suburbia didn’t look so cheap, transit and urban areas would attract enough people on their own to be viable without substantial subsidies. Road & suburban subsidies have broken the marketplace, and transit & urban subsidies are really just a workaround. Overall, it would be best if we solved the real problem, and let the marketplace decide how people live–by charging people the real cost of what they use and cause.
Likewise, people complain about land use restrictions, but don’t note how using land can affect surrounding property owners and, due to development and other subsidies, taxpayers in general. The real problem isn’t that some people aren’t allowed to do what they want with their land (e.g. develop it), it is that if they are allowed to, they can foist the burdens that the use causes onto the neighborhood and onto society.
While most vehicle users do have to pay registration, gas and other taxes, there is much that these taxes do not cover:
- “Free” Federal money: A high percentage of money for Interstate (and other?) highway projects has traditionally come from the Federal government. To local decision-makers, this is “free” money–money that would go to another project elsewhere if they did not take it, money that their constituents would still have to pay via Federal taxes. And while at least some of this money may come from motorists via the Federal gas tax, if the gas tax was spent first on supply defense, pollution clean-up and other things directly related to fuel use, there would be little, if any, money left for roads.
- Sales tax-funded projects: In some places, such as certain California counties (also see this PDF), sales taxes are used to fund roads and highway projects. This can be considered “taking from the poor to feed the rich(er)” if it is true that a) poorer people drive less (because they can’t afford to drive more) and b) a higher percentage of poorer people’s income goes to sales taxes (because they only buy basic necessities and can’t invest/spend money on other things that don’t have the sales tax). Also, in places like Colorado, Illinois and New Jersey, sales tax is not charged on gasoline because it is already taxed, even though fuel taxes are for a different purpose than regular sales taxes.
Also see Utah Taxpayers Association’s view on why congestion pricing is better than sales taxes
- Property tax-funded projects: For example, the Washington County, Oregon, Major Streets Transportation Improvement Program. And in Minnesota, Road costs [are] more often being paid by property taxes, which “surprises some taxpayers”, according to Minnesota Public Radio. Also, when private land is taken to build a new freeway or other road, the land no longer generates property taxes.
- Parking: Especially outside of city centers, almost all parking is “free” (100% subsidized). People have to pay for it whether they use it or not, since the cost is added to the price of goods/services at the business providing it. Also, many jurisdictions require parking to be built with new development, assuming that people will drive there. While this is partially done to control spill-over (people parking in surrounding businesses or neighborhoods), a better way to solve spill-over would be to fix the market by charging for or controlling the surrounding parking.
- Pollution clean-up: In Portland, according to City Commissioner Sam Adams’ blog, “We know that at least 40 percent of storm-water pollution comes from roads”. The pollution is being cleaned up with a billion-dollar, sewer ratepayer-funded “Big Pipe” project. Air pollution is also a major problem in many areas. In general, gas taxes should fund pollution prevention/clean-up. Road funding, at least for freeways, would come from tolls.
- Petroleum defense: National Security Directive 26, signed by President George H.W. Bush on October 2, 1989, begins: “Access to Persian Gulf oil and the security of key friendly states in the area are vital to U.S. national security.” It is doubtful that the military was the sole reason for, or beneficiary of, the oil. Also see articles from The Independent in the UK regarding links between oil and the present battle.
- Roads funded by other taxes: According to an Oregonian article, “Historically, national forests have given 25 percent of the revenues from timber sales, instead of taxes, to the counties where the trees were growing. The money goes to roads and schools. In Coos County [...] roads will lose $1 million, one-sixth of the budget.” Also see Oregon City considers fee to pay for road repairs
Overall, according to a Federal Highway Administration article, “local governments rely primarily on general funds, property taxes, sales taxes, and other revenues unrelated to highway users to finance local road and street construction, maintenance, and operation.” Also see FHwA’s table of highway funding and spending for all divisions of government.
- Low-density development: Subsidies for low-density development can be considered indirect vehicle subsidies since transit can not work efficiently when people are spread out and longer travel distances discourage people from walking, cycling, etc. In addition, suburbs often feature poor street connectivity and other design traits that make it harder to travel without using a vehicle.
Someone who purchases a single, non-discounted fare and uses it for one boarding often pays for a high portion of their fair share of transit system costs. The cost of a person taking up one position (e.g. one seat) for a half-hour ride is small:
|cost to operate the vehicle per hour||$90*|
|capacity of the vehicle (e.g. number of seats)||40|
|half-hours in an hour||2|
|Each rider’s fair share of costs||$1-2|
This cost is about the same whether the rest of the vehicle is empty or full. However, statistics often divide the operations costs by passengers carried, in effect making people who do ride fiscally responsible for people who don’t ride.
So where do transit subsidies go?
- Paratransit: Many transit subsidies go towards providing expensive, Federally-mandated “paratransit” service for disabled riders. These services are taxi-like, going door-to-door and often serving one person at a time (and almost never more than a small group), but provide transportation to those who are unable to ride regular transit services and would be home-bound otherwise.
- Empty seats: Many transit routes/trips operate as a social service for those who would have trouble getting around otherwise (due to being poor, disabled, etc) and not because there is a high demand for them. They could serve more people at very little additional cost, meaning that the subsidy needed would go down, and not up, if more people rode. This often happens due to low-density development and the subsidies given to it.
- Transfers: A transfer can often be used for a second (return) trip if the rider is not staying at their destination for a long period of time. However, the cost to transport the rider is the same as if they had to pay another fare for the second trip.
- Passes: Daily, weekly, monthly and other passes are usually priced at a discount compared to what an average pass user would have to pay if they had to pay for each trip. However, passes can be cheaper to process since there is only one transaction and money/tickets do not have to be put in farebox at each boarding.
- Discounted fares: Youth, elderly and disabled riders usually do not have to pay the full price of transit. These subsidies should be considered as people (social service) subsidies and not transit system subsidies. The actual cost to transport one of these riders is usually not less than other riders who have to pay the regular fare. Furthermore, these reduced fares can be required by law, such as under Oregon Revised Statute 267.320.
- Free/reduced fares: In some areas/on some routes, free or reduced-priced rides are offered in order to get people to try transit. If people had to pay the full cost of private vehicle use, they would probably be attracted to transit in the first place and these promotional fares would not be needed. One example of these would be Portland’s Fareless Square.
- Rail, etc projects: Expensive projects like rail lines are sometimes built to attract people to transit who would not otherwise take it (e.g. they wouldn’t ride buses), “compete” with freeways and/or encourage efficient, transit friendly development. Without freeways and vehicle & development subsidies, they would either not be needed to attract people and development to transit or would be economically justifiable on their own. Also, the expense of these projects should be spread out over a long period of time as they can often last for decades. Boston is still using a century-old tunnel for one of its rail lines, and rights-of-way, once acquired, last indefinitely. In addition, if the cost of road use was higher (less subsidized), there would be less traffic congestion and transit would have less of a need for a dedicated right-of-way
Cyclists and pedestrians may be the most subsidized percentage-wise, however their actual subsidies relative to other modes are probably low. Cyclists cause little damage to pavement and, when using low-traffic streets, require little in extra costs. In addition, bicycles take up much less space than vehicles, meaning that bike lanes and paths can be narrower than vehicle lanes and roads, requiring less land and pavement, and that many bicycles can be parked in a space that would fit one car. In fact, many bicycle racks are placed in areas of building grounds that already exist, meaning that, unlike a parking lot, they take up no extra space. Moreover, they get health benefits including exercise, which people often do not get enough of, leading to obesity and other costly health problems.
Airports take up large amounts of land and generally do not have to pay property taxes. While they often provide their own police, fire and other services, some airports receive funding from cities’ general funds as well as federal and possibly state grants. In addition, the Air Traffic Control system is government-provided and airlines have been given huge bailouts.
Low-density: When people are spread out, all of the following infrastructure/services must be extended/travel farther to reach the same amount of people than in a compact, higher-density development:
streets — school bus service — transit service — paratransit service — water pipes — sewer pipes — electricity lines — telephone lines — cable television lines — garbage trucks — recycling trucks — postal service — UPS/FedEx/DHL/other mailing services — pizza/other delivery services — police — fire protection
Yet people who live in lower density developments often do not have to pay more for these (the added cost vs. in a more dense development).
For example, a mail carrier can serve many people in just one stop at a multi-family building; it takes much more time and fuel to serve the same amount of people living in individual houses if the carrier has to drive to mail boxes in front of each of them. Yet the price to mail something is the same for both groups. The extra school bus and paratransit service can be needed because of poor pedestrian access to schools and bus stops or good transit service not being viable. In fact, high school students in Portland don’t need any school bus service because they are able to share the public transit system, eliminating duplicate services.
New: New development can require that the capacity of the following be increased:
schools — parks — libraries — water supply (both source and main pipes) — sewage disposal (both main pipes and plant) — garbage disposal — arterial roads — police stations — fire stations — hospitals
New development often does not have to pay for the full cost of increasing the capacity of these. In fact, for the past few decades suburban districts have not been able to build new schools fast enough at same time as Portland has not had enough students to keep its schools open.
In addition, these subsidies can lead to a desire for urban renewal since they discourage people from developing in the inner city. Also, it is often cheaper to add development to existing, already developed, areas since it can use services that are already in place and increase the efficiency of them instead of requiring them to be extended to serve the new development.
- PBS’s Blueprint America: Road to the Future interview of 20th Century Sprawl author Owen Gutfreund on how the suburbs are subsidized
- “The real difference in North Bethany is that while the tax base is frozen, we will have to expand our services there,” he [Alec Jensen, Tualatin Valley Fire & Rescue executive officer] says. “And like the school district, we are entirely dependent on property tax revenue.”
It will cost far more than the fire district will bring in.
–”Get out your checkbook for North Bethany“, 8/1/2007 Oregonian column by Jerry Boone on using urban renewal and tax-increment financing (additional tax dollars collected above the “frozen” amount that the school/fire/etc districts get) for infrastructure for new development
- “It’s costing us too much to maintain so many individual homes when our money would be better used to extend the life of our larger properties” [said Margaret Van Vliet, Housing Authority of Portland's deputy executive director.]
“Instead of sending a plumber all around the city or reroofing a number of buildings, we’ll be able to put that money to better use in one or two complexes,” said Shelley Marchesi, director of policy and public affairs.
–”Housing agency forces moves“, 8/23/2007 Oregonian article
- Clackamas County is increasing rates to pay for expansion and system improvements driven by population growth. [However, they are also more than doubling System Development Charges.]
–”Sewer rates go up almost 50 percent next year“, 9/5/2007 Oregonian article
- “For many years, citizens have asked for a way to have developers pay for the impacts new developments have on their schools," explained Ron Stewart, assistant superintendent for operations. "While the Construction Excise Tax does not provide all funds needed to completely address the impact from development, it certainly will help."
–"North Clackamas School District passes new development tax", 10/9/2007 Clackamas Review article
- Also see "Growth often comes with hidden costs", an article from the Cincinnati Post and Oregonian articles on property and other taxes paying for roads and how the road system doesn’t fund itself
- Keep Texas Moving E-Newsletter: Do Roads Pay for Themselves?
- Analysis Finds Shifting Trends in Highway Funding: User Fees Make Up Decreasing Share
- BlueOregon: Highway Robbery: Exurbs win, Portland loses (and pays double)
- Tigard memo reveals closed-door negotiations on street fees: Fees get shifted from businesses to residents
- Tualatin wants to use urban renewal for road, parking projects
- Cato Institute article on How Government Highway Policy Encourages Sprawl
- “Those improvements [infrastructure] are estimated to cost about $33 million but the city is projected to have only $19 million in revenues.”
–Sherwood OKs plan for future Brookman residential area, By Tom Maurer, The Oregonian June 03, 2009, 4:28PM
- Gas taxes give us a break at the pump: Half the 1975 cost, factoring inflation; 7/02/2010 USA TODAY article by Dennis Cauchon (on front page)
- “In 2007, the Vancouver City Council enacted a $50 per employee business fee to address congestion and mobility issues.”
–City of Vancouver, Washington, USA
- “Part of TCR’s strategy for creating a more compact, walkable development involved reducing the amount of land for parking. TCR’s goal was to provide 1.1 parking spaces per unit. The City of Beaverton agreed to a variance to drop the required number of spaces from 2 to 1.6 spaces per unit; however, an adjacent property owner objected. A compromise of 1.8 spaces per unit was reached.”
–Community Building Sourcebook: Land Use and Transportation Initiatives in Portland, Oregon
- “One study found that the costs of providing streets, utilities and schools for low-density sprawl were more than 50 percent greater than for compact development.”
–Tri-Met’s Strategic Direction as of 1998
- “One thing I do find amusing is the thought that when it comes to transportation, it’s your opponent is doing social engineering.
Folks, it’s all been social engineering. When Robert Moses was drawing lines on maps in cities around the country saying where he thought freeways ought to go, that was social engineering. When the administration talks about investing billions in high-speed rail, that’s social engineering.”
–The Oregonian‘s Jeff Mapes in Battle of the bow ties: Will and Blumenauer, May 19, 2009
- Evidence of Highway Trust Fund shortfalls and other subsidies
- A series of capital improvements are driving Clean Water Services’ proposal to increase sewer and stormwater management rates by 5.2 percent for the district’s 527,000 residents in Washington, Multnomah and Clackamas counties.
Rapid population growth throughout the Tualatin River basin is also a factor in the request, said Bill Gaffi, Clean Water Services’ general manager.
“Washington County is one of the fastest-growing counties in the state,” he said, citing figures from the recently released 2010 Census. “Many of the customers we are serving today simply weren’t here even a few years ago.”
Proposed increases include a 4.5 percent rise in sanitary sewer service and a 50-cents-per-household increase for managing stormwater, controlling erosion, sweeping streets and maintaining detention ponds.
Specific proposed projects include…$4.5 million to design and build a sewer system in the fledgling North Bethany area
–Water rates may increase 5.2% in Washington County and parts of Multnomah and Clackamas counties, April 28, 2011 Oregonian article