Category Archives: Economics

“It’s a success”

There are no more common words to hear shortly after the opening of a new rail project in the United States than “It’s a success”. The forecast of the declaration of success is far more accurate the forecast of ridership or costs.

For instance, Metrorail (WMATA) claims:

Metro: Silver Line ridership remains strong

Metro today provided updated Silver Line ridership information showing that, less than two months after opening, the new line is already performing at 60 percent of its projected ridership for the end of the first full year of service. As of last week, an average of 15,000 riders are entering the system at the five new Silver Line stations on weekdays for a combined 30,000 trips to or from the new stations.

In the planning process, Silver Line ridership was projected to reach 25,000 boardings at the five new stations after one full year of service.

Metro estimates that the Silver Line is currently adding approximately 6,000 new riders — making roughly 12,000 trips — to the Metrorail system each weekday. The balance, approximately 9,000 riders, are primarily former Orange Line riders who have switched to the Silver Line.

Some outlets have used the word “success” to describe the line, as has Secretary Foxx. Certainly it is still early, and maybe the Silver Line will exceed first year forecasts, or final year forecasts, or even have benefits in excess of costs, or somehow reduce inequity in the Washington region, or lead to economic development, or any number of other objectives hoisted on transit lines. It is arguably successful from a project delivery perspective, in that it was delivered, and opened for service, but that seems a narrow way to think about success.

In contrast, another new start, Metro Transit’s Green Line, has done a bit better, even with all sorts of traffic signal timing issues. It too is heralded as a success, with ridership exceeding forecast year ridership about 3 months in.  While many of its riders were transfers from existing bus services, it clearly is serving more new people for less money than the Silver Line.

Which is more successful? Which is a better investment? Time will tell, and I will leave that to the reader’s judgment.

I have two hypotheses as to why these words are so common.

First, it may be that all projects are successful. For this hypothesis to hold, we would need to see enormous transit market share across the country after several decades of more than 20% of all transportation funding going to transit (figure 2, but also this). Sadly the evidence suggests otherwise.

Alternatively, it may be that the appearance of success is important, independent of the actual facts on the ground. Calling “success” aligns you with “Team Rail” and rewards your supporters. The illusion of success is critical to obtain future funds. No one wants to give money to an agency that actively (if honestly) claims “It’s a failure” or “It’s a disappointment”, or “We’re still perfecting it,” or even “It’s a hobby“.

I hold this latter explanation as more likely. This is not to say there are no successes in urban rail transit. There are many. Starting in 1863 with the  London Underground, rail transit globally had an extraordinarily good run for 60 years. In the US, it sort of petered out after that for the next 50 years or so, though in other countries, rail transit has continued at various levels of strengths.

Some of the lines in the past 40 years have been more successful than others, all depending on your definition of success. (For instance, a list of LRT systems by ridership per mile is here.) The best systems remain the ones built in the early 20th century, with only LA’s Metro Rail breaking the top 5 in riders per mile (and DC’s MetroRail coming 6th).  Yet as far as I can tell, all new systems have been declared successful by somebody (even the relatively low ridership per mile lines like Tampa’s TECO line, or Charlotte’s Lynx). Some are even pre-declared, like The Tide in Hampton Roads.

I find it hard to see billions being spent on the Silver Line so far to add 6000 riders (12000 trips)  as an unqualified success, (I would find it hard to see meeting these low forecasts as a success either). This is more $ per passenger than many commuter rail lines spend, which few outside the agencies themselves are calling successes (the advocates of course do use that exact word).

If spending $2B added zero or negative riders, that would be truly surprising, indicative of active destruction of money. I will just state there were plausible alternative uses of the funds that would have improved society in other ways. Every expenditure has an opportunity cost.

Do not believe or repeat the press releases of agencies and advocates uncritically.

 

 

How to account for higher quality of service in Benefit/Cost Analysis

I recently had an twitter and email conversation with Benjamin Ross about rail vs. bus benefit/cost analysis (BCA).

The problem is that conventional BCA in practice does not consider the quality differences of different modes, focusing primarily on travel time, monetary costs, and monetized externalities. Assuming everything else were analyzed correctly, this leads us to over-invest in low quality modes and under-invest in high quality modes, from a welfare-maximizing perspective.

Let’s start with a few premises

1. The value of time (value of travel time savings) of each user differs because of a variety of factors. Everyone is in a hurry sometimes, and so has a higher value of time (willingness to pay for saving time) when time-strapped than at other times. Some people have more money than others, and so find it easier to pay to save time. The related notion of value of travel time reliability (VTTR) is reviewed here.

2. We don’t actually know user value of time. (An alternative approach evaluates just based on travel time, and assumes everyone is equal, since time is just as fast for rich and poor people.  For instance Carlos Daganzo and his students (e.g. Gonzales) optimize in terms of time, and convert monetary and other costs into time, referring to value of time as a politically determined variable. E.g. section 2.3.2 here. developing a temporal value of money rather than a monetary value of time. This is not standard in transportation economics.)

3. We  assume the value of time of all users is the same in a Benefit/Cost Analysis because the alternative would bias investment toward users with a high value of time. E.g. wealthy people in the western suburbs would get more investment than poor people in the city because they have a higher value of time, which is politically unacceptable to admit, as they did not pay proportionate to their value of time (since transportation funding on major roads comes predominantly from gas taxes. In contrast for local roads it comes predominantly from property taxes, which of course are paid for more by the wealthy).  For a market good this is not a problem (rich people pay for and get better goods and services all the time, otherwise why be rich). We do BCA because transportation is a publicly provided good.

4. We have models which purport to know people’s value of time and do use that in forecasting travel demand. The ratio of coefficients to time costs and money costs is implicit in the mode choice model. The value of time is usually in practice estimated from revealed preference data, but values have a wide range depending on location and methodology.

5. Travel demand models are highly inaccurate, etc., for a variety of reasons.

6. If these models were correct, the log-sum of the denominator of the mode choice model multiplied by the value of time (determined by the coefficients on time and cost in the model), with a little math, gives you an estimate of Consumers Surplus. This estimate is not usually used in practice, as no one outside of economics and travel demand modeling believes in utility theory.

7. Benefit/Cost Analysis is much simpler (and more simplistic) than travel demand modeling, and uses travel time savings and monetary cost in estimating Consumers Surplus.

8. BCA doesn’t actually estimate CS, just change in CS, since we don’t know the shape of the demand curve, but can estimate small changes to the demand curve and assume the curve is linear. Those doing BCA often use the rule of 1/2 to find the area of the benefit trapezoid)

Area=benefit=(Tb-Ta)*(1/2)*(Qb+Qa).

Multiply the area by the Value of Time to monetize. This is shown in Figure 1.

BenRoss.001

9. This assumes the value of time experienced is the same independent of how it is experienced. Yet people clearly would pay more for a better experience. That doesn’t show up unless you have multiple demand curves (see below), and that is never done except by academics.

10. The travel demand model gives you an alternative specific constant (ASC), which says all else equal, mode X is preferred to mode Y, and will tell you how much additional demand there will be for X than Y under otherwise identical circumstances (namely price and time).

11. Empirical evidence suggests the ASC is positive for transit compared to car (all else equal, people like transit over car. Car mode shares are higher in most US markets because all else is not equal).

Usually the ASC is higher for new rail than new bus, since trains are a nicer experience. This is sometimes called the rail bias factor.

For instance Table 3 below reproduces values the FTA accepts for rail bias factors according to the linked report. The implication is that people would be willing to spend 15-20 minutes longer on a commuter rail than a local bus serving the same OD pair and otherwise with the same characteristics (except for the quality of the mode).

Much of this is just a question of modeling specification though, so e.g. the rationale includes things that (a) can be modeled and specified (but aren’t typically), and (b) may be improved for bus routes. Recent research says this number can be brought down a lot by better specification.

Mode

Constant Range (relative to Local Bus)

Rationale

Commuter Rail

15 – 20 minutes

Reliable (fixed‐guideway), vehicle and passenger amenities, visibility, station amenities, etc.

Urban Rail

10 – 15 minutes

Reliable due to dedicated, fixed‐guideway, well‐identified, stations and routes, etc.

BRT

5 – 10 minutes

Reliable when running on semi‐dedicated lanes, often times uses low access and especially branded vehicles

Express Bus

‐10 to 10 minutes

Non‐stop, single‐seat ride, comfort, reliable when running on semi‐dedicated lanes

Infrequent off‐peak service, unreliable when subject to road congestion

 

12. The Consumers Surplus from a mode choice model would reflect this with higher utility when rail is available than if bus were available.

13. The Consumers Surplus from BCA, using the rule of 1/2,  would be higher for a rail line (Figure 2) than a bus line (Figure 1) because the demand is higher.

BenRoss.002

14. The CS from BCA would not reflect fully the quality difference. It should be shown as moving the demand curve outward. The benefit from the red area (Figure 3) is missing.

 

BenRoss.003

 

 

15. The red area is impossible to estimate with any confidence, since the shape of the curves outside the known area (before and after) is unknown. I drew the total consumers surplus as a triangle (and the change in CS as a trapezoid) (Figure 3), but this is misleading. Certainly it is positive.

16. If it were a triangle, and the Demand curves were parallel, some geometry might reveal the shape, but we also don’t know the lines are parallel. In reality they surely aren’t. The high value of time folks (on the left) might be willing to pay a lot more for the improved quality than the low value of time folks on the right.

Ben Ross proposes to improve BCA and develop an adjustment factor to account for the differences in quality  between modes. He suggests we look at the number of minutes it takes to get a number of riders for each mode.

I have mathematized this. So Rq=Crail,q – Cbus,q, where R is the travel time difference at some number of riders q, and Cm,q is the travel time (cost) at which you would get q riders on mode m. 

To illustrate:

If 1,000 people ride the bus at 10 minutes and 1,000 people ride the train at 12 minutes, Ben proposes the extra pleasure (or lessened pain) of taking rail is equal in value to a time savings of two minutes.

At a given margin, this is probably approximately correct. That is, the  marginal (the 1,000th) train rider is willing to take (pay) 12 minutes 12 minutes while the 1,000th bus rider insists on 10 minutes.

The problem we are trying to construct an area (the benefit). There is no guarantee that R is constant.

  • The 2,000th rail rider might insist on 11 minutes, while the 2,000th bus rider requires 8 minutes. R2000= 11-8 =3 ≠ 12-10.
  • The 10,000th rail rider might be willing to pay 3 minutes, while the 10,000th bus rider requires -3 minutes (you have to pay them 3 minutes to ride the bus). R10000=3–3 = 6.

Now we could try to find the “average” value of R, or the value of R for the average rider.  So let’s say you have forecast 30,000 riders for a line, then you try to find R for the 15,000th rider, and apply it over the whole range.

(What travel time do you need to get only 15,000 bus riders and 15,000 rail riders, this will be much different than the actual travel time you are modeling, and it will be a higher travel time, so the model will require some adjustment to obtain this number).

This again assumes distance between the curves is fixed. Unlike the rule of 1/2, which is meant to be applied over a small area, so the curvature doesn’t really matter, the assumption here is this applies over the whole demand curve, where differences in curvature might be quite significant.

If we used the model to trace out the demand curves, we could then integrate (find the red area), but this is data that is not generally obtained or reported to the economist doing the BCA. The modeler could compute this of course if they wanted to, with a bunch of model runs, but the modeler could just use the log sum, and no one believes the model or in utility or understands log sums. So the economists takes the forecast in its reduced form, and treats the method for getting it as a black box (or magic).

So is the approximation R reasonable? Is using this value better than using the implied R of 0 which is currently done?

As Ben notes,

All we really have is our one Alternative Specific Constant. It’s tough enough to draw a single value of that constant out of the available data, we surely can’t measure its dependence on income, walkability, etc.  What we actually know is the size of the rail preference under the conditions where the data was collected that the constant was calibrated against, not under the conditions that the model is simulating.
The hard part is scaling from measurement conditions to project conditions, but there are only a few simple alternatives (per trip, per mile, per minute) so if you don’t know which is right you could show results for all of them (and accept that reality may be in between).

I don’t see how this is different from the money value of time.  Doesn’t it involve the same kind of approximation?  And an assumed method of scaling?  Measured under one set of conditions, used under different conditions.

 

I don’t think I would trust using the model to trace out the demand curves.  The delta we’re looking at is ultimately derived from that Alternative Specific Constant.
When you only have one measured data point, drawing curves inevitably pulls in assumptions that tend to get insufficient examination and can easily introduce subtle (or not-so-subtle) errors.  The only robust conclusions are the ones that you can connect directly to your measured data point.  In my opinion (derived mostly from other kinds of models, but very strongly held) the best way to proceed is to treat your measured data point as a constant, multiply it by the relevant parameters, and go straight to an answer.  Then adjust it for whatever important factors that you can point to and explain in words why your measurement didn’t account for them and why your correction is appropriate.
You can certainly compare the calculation to a black-box model that solves partial differential equations (or in the transportation case a giant matrix), but you shouldn’t believe any model results whose cause you can’t explain convincingly after you get it.  (yes, the model sometimes detects your erroneous intuition, but most of the time it’s the model that is wrong).

One Way to Deal With a Desire Line | streets.mn

Soon enough it will be Winter. Again a landscape covered with white powdery snow will reveal where travelers want to go. The first figure is an aerial shot of the former environment around the McNamara Alumni Center on the University of Minnesota campus. The second figure is in front of (behind) McNamara . Though there is a sidewalk just on the right of this image, pedestrians prefer the straight line path between the Scholars Walk and the diagonal path across Walnut from Beacon Street to the intersection of Oak Street and Washington Avenue. And why shouldn’t they? It’s cold outside. The extra few feet (extra few seconds) are not worth it, even for a cleared path.

In this Aerial photo via Google Maps you can see what the scene looked like before the recent "improvements". Pedestrians could walk diagonally across Walnut to the Scholars' Walk
In this Aerial photo via Google Maps you can see what the scene looked like before the recent “improvements”. Pedestrians could walk diagonally across Walnut to the Scholars Walk

The 2009 Campus Master Plan for the University of Minnesota is a very clear document regarding transportation. It prioritizes pedestrians, as is completely appropriate for a campus. There is nothing about “modal balance” or other nonsense. [I was involved with the development of transportation elements of the plan. I am also an employee of the University.]

Guideline 35 says:

Develop pedestrian connections that will:

  • Continue to share corridors with other modes of movement along streets or paths;
  • Enable pedestrians to take the most direct route between major destinations;
  • Prioritize pedestrian movement over other modes of travel whenever possible.

Guideline 57 says:

Design signature streets to accommodate all modes of
travel, with walking as the highest priority followed by bicycling, transit, and private vehicles.

So you would think when a desire line emerges, it would be considered for improvement since it is evidence of a direct route. Certainly you would think direct paths would be preserved rather than removed.

Desire line at McNamara Alumni Center
Desire line at McNamara Alumni Center

Sadly, this desire line used to be the regular sidewalk path until recent landscaping work done at the McNamara Alumni Center. But the people (well about 20% of the people based on my springtime count) could not be kept down by a mere four inches of concrete, they rebelled, in the typically passive-aggressive Minnesota way, by walking across the desire line rather than the rat run of the planner, especially in Winter when the curb is so conveniently hidden under snow, but even in summer, when there were dying plantings showing the ineffectiveness of the curb.

Still, I complained to campus facilities staff about the remodeling (1) making it a worse pedestrian condition, and (2) flying in the face of the campus master plan.

I am told this change was to slow down bicyclists coming from Washington Avenue to the Scholars Walk. I personally never noticed much of a bicyclist problem on the Scholars Walk, and there is Beacon Street right next door (and now Washington Avenue Mall a block away) so I doubt this will continue to be a significant problem. But perhaps a regent encountered a bicyclist.

I am also told that this was not a University of Minnesota, but a University of Minnesota Foundation decision. See the distinction? Me neither, and I work there. They share the umn.edu domain and the Foundation Board is in part appointed by the Regents. I am sure this is important for tax purposes or some such.

A tree! That's how we solve a desire line.
A tree! That’s how we solve a desire line.

Staff said they would try to get this fixed. In spring I even met onsite with a campus planner, who agreed there were better solutions. This summer there was to be work here (to fix some poor construction in the remodel I am told), so there was an opportunity to rectify the situation.

Thus I am surprised to see at the end of this past summer a tree planted where once there was a path, and later a desire line despite curbs aimed nominally at slowing bicyclists and actually just extending the trip of pedestrians (if not increasing the likelihood of their tripping). Now I like trees, but I don’t see them being planted in the middle of streets. So why is it planted where once there was a sidewalk?

Sidewalk at McNamara
Sidewalk at McNamara 1
Sidewalk at McNamara 2
Sidewalk at McNamara 2

Here we have a tree giving the figurative finger to pedestrians who want to take the most direct route between major destinations (like the Stadium Village Campus Connector Bus Stop on Oak Street and the East Bank of Campus, for instance) in direct contravention of the guidelines of the University’s officially adopted plans.

 

Footnotes:

1. If 1200 people  are each delayed three seconds, that is 1 person hour per day that is lost. I don’t know the pedestrian count, but that seems the right order of magnitude. (I know, this is America, and we don’t value the pedestrian’s time).

Desire Line at Nano Building
Just for Future Reference: Another Desire Line at Nano Building leading from the Rec Center

Bus stop amenities shorten wait | MnDaily

The article Bus stop amenities shorten wait by Jessie Baker appeared in the Minnesota Daily.

While some students say they’re content with the Twin Cities bus system, many commuters associate waiting time at stops with unhappiness and unpredictability, according to a recent University study. The research, which examined perceived waiting time at bus stations, will inform local transit authorities as they create and redesign bus stops.

Based on early statistical models, it appears that bus shelters help determine commuters’ perceived wait time when they’re actually waiting for five minutes or fewer, said Yingling Fan, a Humphrey School of Public Affairs associate professor and principal investigator for the study.

But for longer wait times, a bus schedule and a bench can help travelers feel like they aren’t waiting as long.

“The hope is that we can show that there is real value to amenities at stops and stations,” said David Levinson, a civil engineering associate [sic] professor and a co-investigator on the project.

Researchers expect to publish the paper in five months, after they collaborate with city, county and state sponsors about the results, Fan said.

Metro Transit has supported and discussed the project since it started in 2012, said John Levin, director of strategic
initiatives for the transportation authority.

“We are definitely very interested in the results of the study,” he said, adding that he feels those results will help Metro Transit design stops that lower perceived wait time in the future.

Metro Transit doesn’t yet know which amenities will stay and which will go, Levin said, but officials will pay attention to customer information, maps and other amenities highlighted in the study.

“If we understand what those factors are, that helps us understand where we should be paying attention in terms of designing those facilities,” he said.

To conduct the study, researchers surveyed people at Twin Cities bus stops to determine their perceived wait times while simultaneously recording their actual wait times using video cameras, Fan said.

The survey asked commuters questions like whether they used smartphones while waiting and how often they used transit, she said. Research assistants then collected the surveys and also photographed each participant holding the anonymous survey so they could match the replies to the video recording.

Levinson said he thought the study was designed well.

“Generally, people overestimate how much time they spend traveling on the trip, and this study corroborates that for transit,” he said.

Researchers also considered potential ties between perceived wait time and environmental factors like safety, an area’s walkability and aesthetics, Fan said.

For example, Fan said the study found that women tend to overestimate how long they wait at locations research assistants rated as unsafe.

“In the winter, it doesn’t seem like you’re waiting that long because you plan your trips around bus times,” she said.

Levinson said the study’s results will prove useful for Minneapolis public transit in the future.

“This is the beginning of a way to come up with a systematic way to evaluate these amenities,” he said.

Aside from demoting me, the article accurately represents the study, which will be available soon.

Interview with the Minnesota Civic Caucus

I was interviewed by the Minnesota Civic Caucus on August 7. This is the result.

The federal government has been spending more money contributing to highway funding than it’s been taking in for a few years. Levinson noted that Congress just passed a patch to highway funding to extend its solvency until May 2015. The question is, he said, what happens after that. The federal question has been in the news for the last few weeks.

 

The state highway funding issue has been discussed over the last year, including during the 2014 legislative session. A proposal called Move MN, which the transportation lobbies have been supporting, would raise and spend additional money for transportation.

 

There are local-level transportation funding issues, as well. Local funding, Levinson said, tends to come from general-revenue, mainly from property taxes. Unlike federal money and most state money, it’s not user-fee based. He said there would be a tax competition battle if cities were allowed to raise money by imposing gas taxes at the local level. That competition is not as bad at the state level, he said, because states are bigger and don’t have as many border issues as at the local level.

 

There is a tension between funding vs. financing. Levinson said the funding question is how we’re going to pay for transportation and the financing question is whether we pay now or later. He said traditionally in the U.S., we’ve been pay-as-you-go at the federal level, while the states have combined pay-as-you-go with some bonding.

 

Gas tax money comes into the highway trust fund, he said, and is spent immediately to build things that will last 30, 40, or 60 years. “If something’s going to last 60 years, shouldn’t future generations pay something towards its construction?” he asked. “We don’t pay for houses or cars out-of-pocket, so why are we paying for other capital expenses out-of-pocket?”

 

Levinson noted that there are deficits at the federal level, which is somewhat like bonding. At the state level, there is some bonding, but there’s no systematic approach to choose which projects are financed through bonding.

 

There is tension among modes: transit, highway, and, to a lesser extent, walking and biking. Levinson noted that more people walk than take transit and walking and biking infrastructure is much less expensive than that for highways and transit.

 

Transit has consumed 20 to 25 percent of federal capital spending over the last four decades, although transit serves only about two percent of all trips nationally. Levinson said there is tension over the question of whether the Highway Trust Fund, which is paid for by highway users, is benefitting highway users when it’s allocated for transit. Part of the reason the Highway Trust fund doesn’t have enough money, he said, is because some highway user fees have been dedicated to pay for transit.

 

Transit usage is higher in certain areas, Levinson said, noting that 40 percent of work trips to downtown Minneapolis are on transit. But regionally, transit in the Twin Cities accounts for only five percent of all work trips.

 

A very small share of people uses transit on a daily basis. That leads to the question of whether highway user fees should be used for transit, Levinson said. He noted that transit ridership has only increased a little bit over the last few years.

 

There is tension between moving freight and moving passengers. Passengers have more clout than freight, because passengers can vote, which is why the discussion is more focused on moving people, Levinson said. Recently, he said, there’s been a significant increase in Minnesota in rail shipments of oil and natural gas from North Dakota. “The capacity utilization has gotten very high,” he said, “which means there’s not much slack in the system.”

 

He noted the delays caused by these shipments have caused almost daily on the North Star commuter train, which runs between Big Lake and downtown Minneapolis. The already low North Star ridership faces higher travel times due to the increasing conflict with freight use of the same rail track, he said. The technical solution is to build more track, but cost is an issue.

 

We should attempt to solve problems by using the dual approach of getting people to behave differently, while also finding technological solutions. Levinson gave the example of reducing air pollution. One approach would be to reduce the number of miles driven, while another would be to reduce the emissions per mile from each car. And, in another example, he said a technological approach to reducing congestion would be the use of automatic cars, because they could drive closer together than is possible today. A behavioral approach would be to use road pricing to reduce demand. “There’s no reason we couldn’t do both of those things,” he said.

 

Minnesota does not need new transportation projects in order to be competitive. Levinson said there are some bottlenecks that could be addressed, but the primary problem is that we’ve been spending too much on new capital projects and not enough on operating and maintaining the existing system. “What we need,” he said, “are better road conditions and, to a lesser extent, better bridge conditions, since bridges have recently gotten a large infusion of money.”

 

We don’t repair the roads frequently enough, so the road conditions are poor.

Levinson said the problem is, in large part, the federal vs. state vs. local tension. “The federal government likes funding capital and doesn’t fund operating expenses,” he said. “The state has a ribbon-cutting problem. Politicians like to cut ribbons and you cut ribbons on new projects. You can maybe cut ribbons on replacement projects, but it’s not sexy to cut ribbons on repair projects.” As a result, he said, there is a tendency to do more capital-intensive things and not to spend as much on operations and maintenance as we should. “Keeping things in good condition now saves us money downstream,” he said. “This is a long-term vs. short-term problem.”

 

Lack of spending on repair is especially a problem on local streets, he said. There are at least four levels of government involved in transportation: federal, state, county and local. “That’s several layers too many,” he said. Some states don’t have municipal road systems and maintenance departments. “We have 192 cities in the metro area and they can’t all be experts at this,” he said. “Why do we have so many levels of government involved in roads?”

 

Air transportation connectivity is very good in the Twin Cities and the state, because we have a hub airport. “The downside of having a hub airport is that Delta has a bit of monopoly power, so the prices are higher than in other places,” Levinson said. It’d be good to bring in more airlines, he said.

 

He believes the current MSP airport is appropriately sized for the level of demand and that we don’t need a second airport. We don’t need to replace the current airport anytime in the next 40 or 50 years.

 

People are driving fewer miles than in the early 2000s, mostly because of fewer trips, not shorter trips. Levinson said the decline in vehicle-miles can be partly explained because there is a lower labor-force participation rate than in the 1990s and because people are ordering more things online today. The trend toward fewer miles driven and better fuel economy has caused a consistent decline in gas tax revenues.

 

There is discussion of moving away from the gas tax to charging fees on a per-mile basis. This may happen as more and more cars become electric, Levinson said. If the per-mile fees become acceptable, he surmised, it might also be possible to differentiate fees depending on the time of day, which could affect travel patterns.

 

The solution to the problem of getting agricultural products from field to market and to processing facilities is to add one cent to the diesel tax to help strengthen rural roads. Levinson said that during spring thaw, the soil around roads is muddy and weaker. Load restrictions require trucks to haul at half weight, or five tons per axle on local rural roads. That creates a cost for the trucking industry during about eight weeks of the year, he said. The solution is not spring load restrictions, but raising money through the diesel tax for strengthening local roads. Load restrictions also affect some suburban roads, which impacts the waste-hauling industry.

 

An interviewer pointed out that moving agricultural products on low-quality roads during harvest season, from August through November, is also an issue. Levinson said there have been proposals to upgrade rural roads, but that’s difficult, because there are so many of them. “If we had half as many rural roads, we could spend our money better on reinforcing the ones that are used more,” he said. He noted that Minnesota has paved a lot of its rural roads and should probably look at selective depaving and gravelization, so there would be half as many paved roads in the rural system. “Obviously, it’s going to be controversial, but the alternative is to pay higher taxes,” he said.

 

One interviewer commented that building roads to handle harvest time is like building a church for Easter Sunday.

 

Spin off the Minnesota Department of Transportation (MnDOT) into a publicly owned public utility that would rely solely on user fees to fund roads and transit. Levinson noted that for all of our public utilities, we have user fees that are proportional to how much we use: electricity, water and sewer, natural gas, cable, and other forms of telecommunication. “If people thought of MnDOT as a separate organization from government, they would say we should pay for transportation in proportion to how much we use it,” he said. “We could do that with gas taxes and, moving forward, with electronic toll collection and mileage-based user fees.”

 

Because MnDOT is organized as a branch of government, “it falls into the lump of government,” Levinson said. When there was a statewide government shutdown, MnDOT shut down with it. This did not need to happen. “This is part of the dysfunction we have, not just in Minnesota, but everywhere. MnDOT should be a separate organization that is not in the state’s unified budget.”

 

If the organization needed a rate increase for gas taxes, it would go before the Public Utilities Commission (PUC) and argue for the increase. “You would get more revenue for transportation and there would be less controversy over rate increases,” he said. “You would take it out of the hands of the Legislature.”

 

Levinson said the organization could be owned by shareholders, who would be the people of Minnesota. It would pay a dividend every year. He noted that the Airports Commission funds itself from user fees on airlines and passengers.

 

Transit is subsidized by the public sector from various general revenues, by highway users and by employers and is paid for in part by users. If the riders were charged the full-cost fare, the fares would triple. “If we were to triple the fares, without changing the cost of other modes, we’d have almost no users, so the system would cease to exist,” Levinson said. “People have concluded that would be a poor policy outcome.”

 

We should charge transit riders the full fares and subsidize people who can’t afford those fares out of general revenues. We should be giving money or transit- pass credit to the users, Levinson said. “If you want to subsidize poor people, subsidize them directly,” he said. “Don’t subsidize the provision of the service for them.”

 

We can’t move transit to full pricing unless we move highways to full pricing. Levinson said most European countries charge more for transportation than the full cost. They use the funds to supplement general revenues, instead of having general revenues supplement transportation, he said.

 

He said the gas tax in the U.S., which is typically less than 50 cents a gallon (state plus federal), is very low, compared to around $5.00 a gallon in many European countries.

 

Some European countries have separated out the track from the trains and have trains roll over tracks as trucks run over highways. The problem, Levinson said, is that in the rail system, the intelligence is in the tracks, but in the trucking system, the intelligence is in the truck cab. In England, passenger trains are operated over the national rail system, which is a nonprofit, quasi-governmental organization. The trains are owned by franchisees, who run trains over the public tracks.

 

The U.S. uses many more trains for freight than in Europe, where they use a lot more trucks than we do, he said. “In Europe, they put their passengers on the trains and the freight on trucks and here we do the opposite.”

 

A weight-distance tax would be a good thing. An interviewer pointed out that highways and bridges are built to standards that will accommodate heavy vehicles. Oregon uses a weight-distance tax, Levinson said, and the trucking industry opposes it. He agreed with the interviewer that such a tax makes sense, because it begins to allocate the costs to the beneficiaries.

 

We have spillover benefits in land values from transportation investments, because we’re not charging the users the full cost. If we charged the users the full cost of transportation, Levinson said, there would be a lot less spillover in terms of increased land values associated with transportation. The best way to deal with the spillover that does occur would be a land-value tax, he said, which is politically difficult to implement. There are a variety of other ways to capture the revenue: transportation utility fees, impact fees on new development, joint development, air rights, special assessments and tax-increment financing. All of those are used somewhere, but not all are considered legal in Minnesota. It would be better to do user fees first, he said.

 

Capturing some of the excess increment in land value would be a smart way of creating revenue for transportation, in the absence of increasing user fees.

 

All of the light rails in the Twin Cities are a development game. But it’s a two-way development game, Levinson said, because not only are land owners getting the public to pay for transportation, but also, almost all of the developments are subsidized. Almost all development on the Hiawatha Line have been subsidized and almost all development on the Green Line, to a lesser extent, have been subsidized. “Somebody is chomping on a cigar from this game,” he said.

There’s been a long-term consolidation in the rail sector, dating back to their founding. The number of railroads has steadily decreased over time. If the class I railroads had their way, there’d be a single railroad monopoly in the U.S., Levinson said. “All capitalists want to be monopolists.” The railroads have spatial monopoly powers to some extent already. They’re going to exploit this advantage to make as much money as they’re legally allowed to make, he said.

 


Present: John Adams, Pat Davies, Sallie Kemper, David Levinson, Dan Loritz (chair), Dana Schroeder, Clarence Shallbetter. By phone: Dave Broden (vice chair), Audrey Clay, Janis Clay, Paul Gilje (coordinator).

 

 

 

 

Privilege or Right

There is a new meme going about mis-using the term “white privilege” (and its cousin “male privilege”) to describe why white males ‘have it better’ than non-whites and non-males. (To be clear, I am not disputing that in the US in 2014, the average white has it better than the average black for a variety of historical reasons. I am also not disputing sexism exists. Lots of other types of discrimination exist as well.)

In general application, the “privilege meme” frames it wrong. The things that whites do that blacks get arrested and tasered for (such as sitting in public spaces in skyways) are not white privilege. They are civil rights violations. Everyone has the right to not be arrested in such circumstances. It is not a privilege not to be arrested for not breaking any laws.

It is a privilege to drive your car on a public roadway. You earn this privilege by passing exams, and being able to buy a car, and not violating any motor vehicle laws subsequently.

It is a right to walk. I don’t need a license to do so.

It is a right to board a bus and sit wherever you want.

It is a privilege to serve your country in public office. You earn this in an election.

It is a right to vote in an election.

It is a privilege to afford an expensive high-powered lawyer. You “earned” this by either earning or inheriting money.

It is a right not to be harassed, assaulted, or raped, or murdered.

It is a right to have an attorney provided for you, if you commit a crime such as harassment, assault, rape, or murder.

It is not a privilege to commit a crime such as harassment, assault, rape, or murder.

It is a privilege to be immune from punishment for a crime such as harassment, assault, rape, or murder. You probably didn’t earn this.