Category Archives: Economics

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.

The Free Capital Fallacy: Some observations on capital and operating costs of various transit technologies in the Minneapolis St. Paul region

Much earlier this year The Transit Camera posted operating cost comparisons among Minnesota transit operators (reproduced below). The UMN Transitway (owned by the University, operated by a contractor, with no payment required (i.e. free to ride), subsidized by the University and student fees) had the lowest cost per ride.

LRT came in at $2.66 / ride, Metro Transit bus came in at $3.55. Of course part of this is that the LRT was operating one good (high demand) route, while buses include a mix of high demand and low demand routes.

For the sake of argument, assume the operating cost difference is in fact $0.90 per ride. Assume the capital costs differences for a service are $713,162,915. (This understates the capital costs of bus, but we undoubtedly overstated their operating costs for comparable routes, since there are always economies of density, in both operating and capital costs). There are always arguments about which capital costs should be attributed to what (e.g. parking ramps, road improvements, etc., so this may overstate the actual capital costs of a minimalist train system. These are however the official LRT numbers for Hiawatha LRT (the Blue Line).

The difference in operating costs would not make up the difference in capital costs until there were 792 million rides, ignoring interest rates. At 10.498 million rides per year, this would take 75 years. The life of the facility is probably less than 75 years.

I call the assumption that lower operating costs outweigh higher capital costs the “free capital fallacy”.
If capital were free, and the lifespan infinite, i.e. interest rates were zero and the capital never deteriorated, and demand patterns never changed, only today’s operating costs would matter. The option with the lower operating costs, all else equal, would be the best. Eventually the difference in operating costs would recover the difference in capital costs.

In fact, capital is not free. (Though some bloggers might think so.) Interest rates, while low, and near zero sometimes for the public sector, are not actually zero, or negative.

Thus, we need to trade-off capital and operating costs, and look at Net Present Value.  Depending on the interest rate, sometimes the lower capital/higher operating cost option is better, and sometimes the higher capital/lower operating cost option is better. (Obviously, the lower capita/lower operating cost option would dominate).

It is time once again for my annual Minnesota Dept. of Transportation Transit Report system cost comparison. As before the overall focus of this bit of information is on comparing fixed-route operations from the various agencies across the state. A comparison of 2011 costs can be seen here. This is only a small part of the information contained in the report. If you have an interest in learning more about these and other transit providers in Minnesota I recommend reading the report in its entirety.

2012 Cost Per Ride Comparison for Minnesota Fixed-Route Transit Providers
Provider Operating Expenditures Ridership Cost/Ride
UNIVERSITY OF MINNESOTA TRANSIT $6,080,021 3,197,701 1.90
WINONA TRANSIT SERVICE* $597,320 255,132 2.34
METRO TRANSIT: LRT $27,886,232 10,498,236 2.66
ST. CLOUD METRO BUS $6,295,883 2,230,106 2.82
GREATER MANKATO TRANSIT SYSTEM $1,556,183 449,930 3.46
ROCHESTER PUBLIC TRANSIT $6,083,428 1,739,071 3.50
METRO TRANSIT: BUS $245,215,781 69,069,539 3.55
DULUTH TRANSIT AUTHORITY $12,390,741 3,155,423 3.93
MAPLE GROVE TRANSIT $4,220,797 826,879 5.10
PLYMOUTH METROLINK $3,589,498 496,964 7.22
EAST GRAND FORKS TRANSIT*** $266,588 36,847 7.23
SOUTHWEST TRANSIT $7,799,059 998,960 7.81
METRO VAN POOL** $1,416,216 179,013 7.91
LAKER LINES $945,816 96,513 9.80
LA CRESCENT APPLE EXPRESS**** $260,690 25,749 10.12
SHAKOPEE TRANSIT $1,276,055 125,557 10.16
RUSH LINE $385,081 37,015 10.40
RAMSEY STAR EXPRESS***** $567,616 42,263 13.43
TRANSIT LINK** $6,658,057 312,639 21.30
METRO TRANSIT: NORTHSTAR $16,419,740 700,276 23.45
Notes: *Winona operates service under contract for WSU and St. Marys  **Not fixed-route service, included due to being part of overall Twin Cities Metro area system structure  ***EGFT service operated under contract by Cities Area Transit  ****Apple Express operated under contract by La Crosse MTU ***** Ramsey service discontinued with opening of Ramsey Northstar station
Source: 2013 Transit Report – A Guide to Minnesota’s Public Transit Systems (MnDot)

The Transportation Empowerment Act as a Model for Conservative Policymakers | The Agenda

Reihan Salam at The Agenda writes  The Transportation Empowerment Act as a Model for Conservative Policymakers. He quotes Enterprising Roads. He writes:

Meanwhile, other conservatives states might eventually establish public road enterprises, as the University of Minnesota transportation economist David Levinson has proposed:

The United States should follow Australia and New Zealand’s lead, and transform its state Departments of Transportation (or the highways divisions thereof) into separate, publicly regulated, self-financing corporate entities. Full-cost accounting—as already performed by Arizona’s Department of Transportation—constitutes a necessary first step in this direction. In making the transition, policymakers should strive to impose regulation only where absolutely necessary, to minimize the anti-competitive effects of any such regulation, and to leave social objectives to the government, thereby freeing road enterprises to focus on economic ones. Accordingly, road enterprises should be permitted to pursue cost-effective contracting and public private-partnerships as they see fit.

The new road enterprises should also be given latitude to make greater use of user fees—as opposed to general revenue—for funding their activities. Such charges are not just more efficient and equitable than traditional funding sources; if properly designed and implemented, they are also better suited to reducing congestion through effective pricing. Vehicle-miles-traveled charges, weight-distance charges and electronic tolling are all options that road enterprises should be free to pursue.

Over time, states will develop transportation strategies tailored to their particular circumstances. Densely-populated states like New York and New Jersey might choose to devote resources to creating Helsinki-style mobility networks while a state like Utah might instead choose to invest in a more expansive road network to support exurban development. States would no longer be hampered by the imperatives of national politics, and the most cost-effective, consumer-friendly state transportation bodies will find eager imitators across the country.


Bus Toll Lanes

Complementing recent discussions about transit systems, RF passes this along about Bus Toll Lanes. The idea is basically a HOT lane  (e.g. MnPass) where the transit agency helps finance the lane and gets an equity stake in the BTL, so revenue (profit) is dedicated for the bus service. Obviously, whether this pencils out depends on local conditions, demand patterns, costs, etc. This might work where a bus lane by itself would not have sufficient buses per hour to fully utilize the capacity, but coupled with a limited number of toll users it would, and it has enough toll users to justify installing ETC equipment.

Transit advocates may perceive that this is a highway use raiding what are seen as scarce transit funds. This is particularly an issue with grants; at least loans would get paid back. Sadly we are very silo-ed in the  transportation sector, so achieving multi-modal solutions like this is challenging. Ideally with a Transportation Bank, the mode would not matter, just whether it could pay back the loans.

Some reports from Tampa are here. They write:

Imagine a transit solution that reduces traffic congestion and pays for itself

By combining the individual strengths of transit and tolling, Bus Toll Lanes gives travelers a real choice by providing sustainable, competitive options.  This public partnership will fund the construction and operations of this transit solution.

“BTLs offer premium transit service on dedicated lanes added to local highways.

These dedicated transit lanes allow private vehicles to pay a toll to travel in the lanes.

With tolls collected electronically, (no toll booths, no toll booth congestion) all vehicles in the lane will maintain free-flow operating speeds.

Construction and operation of the Bus Toll Lane would be funded with a combination of public transportation sources (such as federal grants) and tolls collected from users.

Toll revenue collected from private vehicles are re0invested into the transit agency to at least cover the operational and maintenance expenses.

Combining short-term public transit capital project funding with long-term toll revenue and  real-world business practices, BTL is an innovation that creates a financially feasible, self-sustaining public transportation solution.”

How to Make Mass Transit Financially Sustainable Once and for All | CityLab

I have a post up at CityLab (was Atlantic Cities): How to Make Mass Transit Financially Sustainable Once and for All: The seven-part case for operating public transportation as a public utility.

The words “transit” and “crisis” have been associated in the American lexicon for nearly 60 years. It is time to recognize this as a chronic condition rather than a temporary event. Current strategies have not placed transit on a financially sustainable path.

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