According to The Washington Post, the New Jersey Department of Transportation irritated FHWA Division Administrator Robert J. Clark with traffic board messages such as, “We’ll be blunt/Don’t drive high” and “Hold on to your Butts/Help prevent Forest Fires.”

Clark sent a cease and desist letter to New Jersey DOT claiming that using highway signs for such messages does not “promote the safe and efficient use of the roadway, does not serve a highway purpose, is inconsistent with both law and regulations, and increases the liability risk to the owner of the roadway facility.” 

In dropping the hammer, Clark relied on a revised section of the 2009 Manual on Uniform Traffic Control Devices that reads, “Messages with obscure or secondary meanings, such as those with popular culture references, unconventional sign legend syntax, or that are intended to be humorous, should not be used.”

Federal bureaucrats are not exactly known for their sense of humor, but it is worth noting that highway safety is one area in which New Jersey DOT excels. In Reason Foundation’s Annual Highway Report, New Jersey routinely ranks in the best 10 states for having the lowest fatality rates. The state most recently ranked 4^th in overall highway fatality rate, 9^th in rural highway fatality rate, and 18^th in urban highway fatality rate. New Jersey ranks much worse in categories such as the efficiency of highway spending, quality of pavement conditions, and traffic congestion delays. Perhaps Mr. Clark should worry more about the conditions of highways. 

And New Jersey is not the only state to be threatened. According to the Post and Governor’s Highway Safety Association, some states were warned they could lose federal funding if they continued including humorous messages. 

Yet the federal rule on ‘appropriate’ signs seems to be enforced haphazardly. Tennessee used, “Ain’t nobody got time for a wreck, slow it down.”

Pennsylvania’s recent holiday message was, “Only Rudolph should drive lit/Plan a sober ride.”

Virginia has used, “This isn’t NASCAR, slow down.”

And Mississippi displayed, “Texting and driving? I’m the problem it’s me.”

None of the state highway administrators complained about these messages. Apparently, being lit, NASCAR racing and Taylor Swift lyrics are fine to reference on digital highway signs, but holding on to your butts is not.

The most critical question for drivers and highway officials is straightforward: Do highway safety messages on digital highway signs improve safety?

With relatively limited data, the answer is not clear. Trip Shealy, a Virginia Tech transportation engineering professor, studied how the public responded to such messages and concluded that drivers believed they were effective and were not concerned with their appropriateness.

Shealy’s researchers hooked 300 participants to brain monitors and found that messages using humor or wordplay triggered more brain activity. Put another way, humorous messages are more likely to reach the intended audience. The study found:

The results indicate people perceive all types of non-traditional safety messages as effective. Messages about distracted driving and driving without a seat belt, messages meant to provoke a negative emotion, and messages using statistics are perceived to most likely change driver behavior.

However, a Transportation Research Record study, “Does Displaying Safety Messages on Dynamic Message Signs have Measurable Impacts on Crash Risk?” found that while there were marginal decreases in nighttime crash activity and speeding in places with the messages, neither finding was statistically significant.

A Science magazine study found that when Texas motorists were shown the number of fatalities in the area, the number of crashes actually increased slightly:

Contrary to policymakers’ expectations, we found that displaying fatality messages increases the number of traffic crashes. Campaign weeks realize a 1.52% increase in crashes within 5 km of DMSs [dynamic message signs], slightly diminishing to a 1.35% increase over the 10 km after DMSs.

An Old Dominion University study found:

Results indicate that multi-page messages increased crashes by 1.5% in 2019, and reduced vehicle speed around DMS by 2-4%, relative to single-page messages. Although DMS can provide valuable, actionable information to drivers, DOTs should be more selective in the timing and formatting of messages as to not impose additional externalities on drivers.

A separate panel by the Transportation Research Board indicated that message signs should be simple and not humorous. But the study’s 120-person sample size was much smaller, and it did not find any evidence that humorous signs were bad, but rather “appropriate signs” fit more with transportation departments’ missions.

“Appropriate” can probably be replaced with “boring.” Yet, boring messages do not seem to reduce fatalities, considering the U.S. traffic fatality rate has been on an uphill climb for most of the past decade. 

The best example of the importance of capturing the audience’s attention may be in aviation, which is dramatically different than highway safety but offers some lessons. Southwest Airlines has always used humor in its safety videos. Delta Air Lines did as well during the 2010s. On one flight I was on, the flight attendant directed passengers to place the mask on their child with the greatest earnings potential first, and then help others. I looked around, and almost every passenger was paying attention to the flight attendant. In contrast, Delta’s current sanitized safety videos are ignored by 75% of passengers. A 2015 article in the journal Safety Science found that recall of safety messages improved with humorous briefings. Safety incidents on planes are extremely rare, and airline passengers are different than drivers, but I would much rather be on a plane with passengers who know what to do in an emergency, even if they are making calculations about their child’s future earnings.

On roads, we cannot conclusively say that dynamic message signs improve safety. But we also cannot say that they make safety worse. Highways are owned by the states, not the federal government, and there needs to be overwhelming evidence for FHWA to threaten to pull, let alone justify pulling, a state’s highway funding.

State transportation departments should be able to experiment to find what works best for their highways and drivers.

The post FHWA administrators want to stop humorous traffic safety messages appeared first on Reason Foundation.

Since the 1990s, there have been several attempts to build a publicly funded or financed high-speed rail line linking Dallas and Houston. Ultimately, none of these efforts succeeded. Most recently, in 2013, Texas Central Partners proposed building a privately financed high-speed rail line between the two largest metro areas in Texas. When the project was announced, many passenger rail researchers thought it was an intriguing concept. Privately funded or financed infrastructure could be 20% cheaper than publicly funded infrastructure. In addition, Texas Central’s point-to-point system presented an alternative to California’s three-sides-of-a-square line linking Los Angeles with San Francisco via many much smaller cities.

However, Texas Central’s vision for its project did not match the realities on the ground. Cost estimates quickly swelled from $10 billion to more than $30 billion by April 2020. This author’s quantitative analysis of potential ridership projected 1.4 million passengers per year, a far cry from the 5.9 million passengers per year Texas Central claimed.

A train with such a low ridership could not come close to generating the revenue or profits that Texas Central promised. Given the hundreds of millions of dollars in annual subsidies that would be required to operate Texas Central’s project, private investors showed little to no interest.

Texas Central’s proposal also faced significant opposition. Farmers, ranchers, and other landowners objected to having their land bisected by a train traveling at 200 miles per hour over 30 times each day. Elected officials between Dallas and Houston mobilized to voice their constituents’ opposition to the project. The Texas Legislature passed a law prohibiting the state from spending any funds on the project.

The Environmental Protection Agency refused to sign off on Texas Central’s preferred station in downtown Houston, forcing the company to move its southern terminus to the western suburbs. Finally, freight rail lines objected to Texas Central’s proposed signaling system because it would interfere with existing communications technology.

Facing delay after delay and setback after setback, Texas Central appears to have finally accepted reality. By late June 2022, Texas Central’s chief executive officer and all of its board members had resigned.

Texas Central still faces legal challenges that must be addressed. Due to the company’s ongoing financial difficulties, it remained delinquent on its 2021 property taxes into 2022 and has yet to pay its homeowner association dues in several impacted counties. Despite these facts, it remains unclear whether Texas Central has abandoned the project permanently or merely placed it in hibernation.

Assuming Texas Central attempts to resuscitate the project, this brief examines four barriers to doing so: (1) the continually escalating costs of building and operating high-speed rail, (2) the limited and declining pool of potential ridership, (3) Texas Central’s status as a zombie company, and (4) the lack of federal or state support for Texas Central’s project.

Texas Central High-Speed Rail: A 2023 Update

The post The current status of Texas Central’s proposed high-speed rail line linking Dallas and Houston appeared first on Reason Foundation.

The Major Bridges P3 deal is the state’s latest use of public-private partnerships to modernize and rebuild bridges. Pennsylvania’s Rapid Bridge Replacement Project used public-private partnerships to rebuild over 550 bridges on collectors and local roads in the northeastern and southwestern parts of the state over the last decade.

Initially, the Major Bridges project was conceived as an availability payment public-private partnership (P3) with tolling. However, the courts ruled that Pennsylvania’s public-private partnership law did not allow existing capacity to be tolled. As a result, the state decided to use a pure availability payment P3 model (with fuel taxes, general funds, or sales taxes as the revenue sources).

This project was split into two phases for environmental permitting reasons. The $2.3 billion first phase includes $1.8 billion in private activity bonds (PABs), the highest dollar value of PABs for any U.S. P3 project. It also includes $200 million in equity from the private partner–Macquarie, a $140 million mobilization and milestone payment, and $150 million in interest.

Unlike many public-private partnership projects, the first phase of the Major Bridges P3 project does not include a Transportation Infrastructure Finance and Innovation Act (TIFIA) loan because the project financing schedule was too compressed. However, the state and concessionaire are examining a TIFIA loan for the second phase. PennDOT wanted to complete the project by the end of Gov. Tom Wolfe’s administration. While incoming Gov.-elect Josh Shapiro’s administration supports the project—Shapiro approved the project as Pennsylvania attorney general—delays lead to additional costs, which must be priced into the project. It took only three weeks for phase one to move from commercial close at the end of November to financial close in December.

This Major Bridges project helps Pennsylvania and provides four essential takeaways for other states considering public-private partnerships.

First, PennDOT included a major provision to build support among the local contractor community in the state. The P3 requires 70% of project construction to be subcontracted to local firms. Most P3s are able to subcontract a majority of the construction. While a local work requirement can increase costs by barring cheaper external contractors, it typically increases support from smaller construction firms that might otherwise be political obstacles to P3s. Given that much of the work will be completed locally, the trade-offs involved in this provision can be politically savvy overall.

Second, bundling works. The state combined nine projects into two by bundling multiple projects (either multiple bridges or roadways). That minimizes the number of project managers and the administrative support required for each project, and it also reduces the per-project costs to taxpayers. Bundling is not advantageous just for transportation projects. For example, Prince George’s County, Maryland, has bundled school renovation projects. Many jurisdictions could bundle services like fire stations and libraries.

Yet, few state transportation departments have chosen to bundle bridges. Besides Pennsylvania’s bundling, Georgia, Massachusetts, Missouri, Nebraska, New York, Ohio, Oregon, and Rhode Island are the only states with bundled bridge contracts for maintenance. And none of those states has used a public-private partnership in those bundles, even though several have strong P3 laws.

Third, state transportation departments can complete projects quickly if they prioritize and use best practices for public-private partnerships. Pennsylvania reached financial close on the Major Bridges P3 less than five months after the pre-development contract was restarted (a court struck down the original P3 tolling law in early July, requiring changes to the project). The expeditious closing was aided by a detailed pre-development agreement (PDA) that spelled out different contingencies.

Contrast that with the slow-moving I-270/I-495 managed lanes P3 project in Maryland, which was first unveiled in 2017. That project adopted a progressive design-build model (somewhat like a PDA) in early 2022. In fairness, Maryland had to be more deliberate with that project due to the challenges with its much-delayed and costly Purple Line light-rail P3 project. However, Maryland’s initial approach to the I-270/I-495 public-private partnership also led to many of the project’s delays.

Finally, while this availability payment P3 reached financial close, Pennsylvania still has a long-term highway and bridge funding challenge. Since Pennsylvania cannot toll the bridges, it will need to take revenue from other projects, likely other highways that need to be widened and/or maintained. The gas tax, the primary revenue source for PennDOT and other state transportation departments, is losing its purchasing power and mileage-based user fees, the likely successor to fuel taxes, are still in the testing phase in the state.

Pennsylvania could use tolling to help rebuild and expand its Interstate highways today, but tolling is not allowed under the state’s P3 statute, so the state legislature should revise the P3 law to allow tolls. PennDOT clearly understands how to enter a P3 and finance long-term infrastructure. But until the state has a reliable revenue source, its capacity will be limited.

The post Pennsylvania finalizes public-private partnership deal to rebuild nine highway bridges appeared first on Reason Foundation.

Express Toll Lanes Reduce Congestion

• The variable toll adjusts based on traffic congestion.
• Most express toll lanes are managed to keep traffic flowing at 45 miles per hour or more during rush hours.
• Today, 60 express toll lane projects across the country are providing commuters with faster and more reliable alternative to congested highway lanes.

Express Toll Lanes Are Sustainable

• Variable tolling is able to offer drivers and transit vehicles a congestion-free travel option even when traffic volume in the general lanes increases.
• Since ETLs handle more vehicles per hour during peak periods than regular lanes do, regions with express toll lanes need to add fewer regular highway lanes.
• The same gas-powered vehicle going 45 miles per hour in a toll lane generates fewer greenhouse gas emissions than it does in stop-and-go traffic in general lanes.

Express Toll Lanes Are an Important Transit Solution

• Express buses using ETLs offer faster, more reliable service than buses in congested lanes.
• ETLs provide a semi-dedicated right-of-way that buses use free of charge.
• Transit agencies operate more buses that transport more passengers in corridors with express toll lanes than in corridors without ETLs.

Express Toll Lanes Are Optional

• No one is required to use an expres toll lane.
• No one is required to pay a toll unless they choose to use the toll lane.
• Most commuters tend to use ETLs for time-sensitive trips, such as going to the airport or picking up a child from daycare before late fees begin.
• People choose ETLs when they believe the value of their time savings exceeds the toll.

The post How express toll lanes benefit drivers appeared first on Reason Foundation.

HOV Lanes Are Either Too Full or Too Empty

• Most HOV lanes suffer from “empty lane syndrome,” where the lane is underutilized.
• In other cases, HOV lanes are nearly as congested as regular freeway lanes during peak periods.
• This is the “Goldilocks problem”: HOV lanes are too crowded or too empty, but never just right.

Most People in HOV Lanes Are Not Carpooling

• As many as three-quarters of people using HOV lanes legally are either family members traveling together (fam-pools) or a parent driving kids to school (school pools) but neither situation removes vehicles from the roadways in the way that carpool lanes were intended to remove cars.

Large Fractions of HOV Lane Users Don’t Belong In the Lanes

• Enforcement of HOV lanes is difficult and costly.
• Solo drivers or cars with fewer than the required number of passengers add to traffic congestion in large urban-area HOV lanes.
• A 2018 study found 84% of the vehicles in Tennessee’s HOV lanes were violators.

As States Kept Adding HOV Lanes, Carpooling Declined

• Between 1995 and 2005, HOV lane miles doubled from 1,500 to 3,000 lane miles, but carpooling plummeted from 19.7% of commuters in 1980 to only 8.9% in 2019.

Changes in US Commuting Mode, 1980-2019 (percent of total)

HOV lanes have failed to stimulate carpooling or reduce congestion and emissions. States are increasingly converting the lanes to high-occupancy toll (HOT) lanes, where pricing keeps traffic flowing smoothly, reducing tailpipe emissions.

The post HOV lanes have failed to reduce traffic congestion or emissions appeared first on Reason Foundation.

U.S. highways are facing a perfect storm of infrastructure nearing the end of its design life, growing travel demand, and an increasingly unreliable revenue stream. By tapping into private capital, public-private partnerships (P3s) provide one tool to stretch existing state department of transportation (DOT) resources further.

Public-private partnerships provide many additional advantages. They help shift risk from taxpayers to the private sector. In the current inflationary environment, speeding up project delivery could reduce costs as well as bring innovation and new ideas to roadway construction. Finally, P3s provide long-term asset management and performance.

This how-to guide for implementing a highway public-private partnership is designed both for states that have appropriate enabling legislation but have implemented few P3s (most states) as well as states that lack enabling legislation.

This guide has the following components:

• An explanation of P3s, detailing what P3s are and what they are not, as well as why transportation agencies would want to use them;
• How to set up a dedicated transportation P3 program in a state, including enabling legislation, a P3 Office, and a P3 steering committee. States with dedicated P3 Offices have more robust and successful P3 programs;
• How to differentiate between solicited and unsolicited proposals, and to prioritize projects and implement screening;
• Project stage development, including analyzing value for money;
• An explanatory roadmap and useful checklist for a project procurement process;
• An examination of a state’s responsibilities after a project reaches financial close but before it opens to the public; and
• A P3 state review and audit process for ensuring the private party meets the terms of the contract.

Since the first U.S. highway P3 was implemented in 1995, 11 states have entered into more than two dozen design-build-finance-operate-maintain (DBFOM) P3s. While that number is not overwhelming, P3s tend to be used for the largest, most complicated projects valued at more than $500 million (termed mega-projects).

However, compared to other countries, the U.S. lags in public-private partnerships. Most of the P3 activities have occurred in a handful of states because those states have better, clearer legislation and less political interference. While overall population is a factor (with more populous states entering into more P3s), Virginia (the 12th most populous state as of this writing) has entered into more P3s than any other state. New York (the 4th most populous state) has not entered into any P3s.

With declining fuel tax revenue, growing miles traveled, and aging infrastructure, the U.S. can no longer depend on government funding alone. Similar to other countries and other types of infrastructure, the U.S. must finance highways over the long term. Public-private partnerships provide an appropriate financing vehicle for large projects, along with innovative funding sources such as tolling and financing tools, including Transportation Infrastructure Finance and Innovation Act (TIFIA) loans and private activity bonds. These tools allow DOTs to stretch existing resources further.

It can be challenging for a state to enter into its first P3. But it can also be very rewarding. States that use this how-to guide can be rewarded with infrastructure that is built sooner and remains in good condition during the life of the infrastructure.

How to Implement a Highway Public-Private Partnership

The post How states can implement highway public-private partnerships appeared first on Reason Foundation.

For example, Plan Bay Area 2050, the official regional long-range plan finalized by San Francisco’s Metropolitan Transportation Commission and the Association of Bay Area Governments in Oct. 2021, used a scenario-based process they called Futures Planning to examine “which strategies that could be advanced by local jurisdictions, regional agencies, or the state in the coming decades are effective under a variety of uncertain conditions?”

The first part of the process created three divergent scenarios it called “futures.” The second part analyzed and simulated how the Bay Area would likely fare under each scenario, assuming no changes to regional strategies. The third part identified strategies to address future challenges assuming changes to regional strategies. The future challenges were different in each scenario but consistent in the second and third parts.

In the first hypothetical scenario, “Rising Tides, Falling Fortunes,” the federal government reduces funding to cities and states, and international cooperation declines. In the second scenario, “Clean and Green,” an “aggressive” carbon tax is implemented, “electric vehicles become nearly universal,” and automation and telecommuting increase. In the third scenario, “Back to the Future,” the Silicon Valley economy is thriving, there is increased infrastructure investment, and a comprehensive immigration reform bill helps drive population growth in the Bay Area.

To test each of these scenarios, the Metropolitan Transportation Commission (MTC) examined a variety of external forces, including two environmental forces (like earthquakes), four economic forces (such as tax rates), five land-use forces (like shifts to telecommuting), six transportation forces (autonomous vehicles, for example), and nine political forces (like changes to trade and immigration policies). After compiling these forces, MTC created 35 strategies: one revenue strategy, six economic strategies, six environmental, nine housing, and 13 transportation strategies.

For the transportation inputs, each of the 13 strategies is rated on a scale from one to three stars, with three stars being the most effective at meeting the program’s goals and one star being the least effective. For some reason, operating and maintaining the region’s road and transit network received only one star. Meanwhile, adding new general-purpose lanes and interchanges, as well as converting high-occupance vehicle, or carpool, lanes to high-occupancy toll (HOT) lanes and adding additional HOT lanes received three stars. Adding new transit capacity, including rail lines, earned two stars. Creating a network of bus lanes received three stars. Building a new transbay rail crossing received two stars.

One problem with this approach is that MTC created an overly complex process with so many arbitrary decisions embedded in it that only people with a master’s degree in transportation planning can even begin to figure out what the plan is claiming. And even for those folks, this confusing process is a puzzle that requires a lot of effort to piece together.

A second problem with this scenario planning is the evaluation process used. Building new capacity should never receive a higher score than operating and properly maintaining useful existing assets. It’s not clear what unbiased model based on moving people and goods effectively would prioritize building new rail lines in the Bay Area when per capita ridership has been dropping for years or how that would score better and be more of a priority than maintaining highly relied upon roadways, which are also what buses use. Clearly, the scenarios are either ineffective or logically flawed.

To MTC’s credit, the agency ignored some of the results of the scenario planning and prioritized maintenance and existing operations over new projects in the long-range plan. But that did not noticeably change the exercise’s bias in favor of rail transit.

A third problem is that the 2050 plan spends 56% of all its funding on transit projects and another 4% on projects to support transit. Most of the transit funds go to new rail projects even though existing rail lines are underused. In the final plan, less expensive, more flexible bus rapid transit seems to be an afterthought, despite scoring higher than rail in the scenario planning process. Only 6% of trips in the Bay Area were made by transit in 2015, a number that is now far lower as many Silicon Valley workers and companies continue to embrace remote work after the COVID-19 pandemic. There is almost no new roadway capacity in the final version of the plan, even in parts of the Bay Area suffering from significant traffic congestion, despite more road capacity enhancements receiving three stars in the exercise.

A fourth problem is, despite federal law requiring it to be primarily a transportation plan, only six of the 26 criteria used to select plan projects are related to transportation. Compare that to the nine related to political dynamics. There is no escaping politics and things like trade policy certainly impact infrastructure needs, but guessing about nine unknowable and arbitrary political forces is too high a number to significantly influence a 30-year regional transportation plan.

How do cities and regions learn from the Bay Area to avoid or fix these problems? First, urban planners need to come up with realistic scenarios. One could favor realistic technology such as electric vehicles, one could forecast slow population or economic growth, and one could favor something resembling the status quo.

However, for a long-range transportation plan to be useful, it has to be realistic based on the best data and trends we have access to now. The status quo scenario cannot resemble an apocalyptic wasteland from a movie, nor should the technology scenario predict everyone getting to work on shared hoverboards. In Silicon Valley computer firms, the saying used to be garbage in, garbage out. Put in bad data, and you’ll get nonsense from it. Transportation planners could run the Bay Area scenarios and models it chose dozens of times and still not get credible data to create an effective, viable long-range mobility plan for the region.

Planners need to be sensitive to real-world conditions and budget constraints. It does not make sense to spend so much money on new rail capital projects when rail ridership is declining and showing no sign of returning amidst telecommuting and technological trends. Similarly, he amount of money devoted to maintenance in Plan Bay Area 2050 cannot bring highways and transit to a state of good repair. California’s highway system is perennially in the bottom 10 nationwide, largely because the roadway pavement is in terrible condition.

Rather than creating dream scenarios and the transportation systems planners would like to build from scratch, scenario planning is only effective if planners utilize realistic user and budget scenarios with solid data and extrapolation techniques that create realistic models designed to best serve the people who will actually be using the transportation system in the next few decades.

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RAISE grants follow in the footsteps of the Transportation Investment Generating Economic Recovery (TIGER) and the Better Utilizing Investments to Leverage Development (BUILD) grants. While some of the evaluation criteria changed, the name change is more of a branding exercise. This year, 936 project sponsors applied and 166 projects, or 18%, were provided funding. 

According to USDOT, RAISE grants “help urban and rural communities move forward on projects that modernize roads, bridges, transit, rail, ports, and intermodal transportation and make our transportation systems safer, more accessible, more affordable, and more sustainable.”

That goal seems reasonable. However, for the 50% of the program directed to urban areas, the criteria seem to boost non-highway projects in urban areas: 

Projects were evaluated on several criteria, including safety, environmental sustainability, quality of life, economic competitiveness and opportunity, partnership and collaboration, innovation, state of good repair, and mobility and community connectivity. Within these areas, the department considered how projects will improve accessibility for all travelers, bolster supply chain efficiency, and support racial equity and economic growth—especially in historically disadvantaged communities and areas of persistent poverty.

As I have outlined previously (here, here, and here, as well) any federally funded transportation grants should have several minimum requirements. First, the projects should be related to transportation. When the Department of Education awards grants, for example, it does not examine habitat preservation. The Department of Transportation should focus its review criteria on transportation goals and needs. Second, federal grants should support national infrastructure projects. Highways, airports, freight rail, and passenger rail are national in scope. Ideally, the grants should have clear policy goals. For example, the G.W. Bush Urban Partnership Agreements (UPA) and Congestion Reduction Demonstration Program (CRD) grants had a specific focus on reducing congestion. 

To determine whether the RAISE grants meet these minimum requirements (national, related to transportation, focused), we built a spreadsheet of all 936 project sponsors that applied for funding. Given that in past years, grants were overwhelmingly awarded to members of Congress on the transportation and funding committees, as well as members of the sitting president’s party in swing districts, we examined committee membership as well. Table 1 details these characteristics. 

Table 1: Fiscal Year 2022 RAISE Grant Awards 

Of the 166 projects awarded RAISE grants, just 90 projects, or 54%, were directly related to transportation. In terms of being in the national interest, only 17 (10%) of the federally-funded projects met that criterion. In fact, the projects that were not funded were more likely to be related to transportation or in the national interest than projects that were funded.

There was not a specific focus of the project. There were “conventional” projects such as bridges, airports, and freight rail projects. There were also “novel” projects, including those that connected communities, green infrastructure, electrification, and traffic calming. By awarding funding to so many different types of projects, the federal grants don’t prioritize any specific goal, such as reducing traffic congestion on Interstate highways. 

However, the 2022 RAISE grants did perform better than in past years in the politicization aspect. While 37% of funded projects were in districts of members who are on the House Transportation Committee and/or Appropriations Committee, 34% of projects overall were in those congressional districts. Projects located in a district of a member of Congress on a relevant committee were not more likely to receive funding, however—a change from earlier rounds of grants. And members of the Senate Transportation (including Banking, Commerce, and Environment and Public Works) and Appropriations committees were less likely to have funded projects, than members of the Senate overall. 

There may be a couple of reasons for the committee membership findings. This program is heavily backed by leadership, and leadership did receive a disproportionate share of projects, so it doesn’t matter whether rank-and-file members’ projects were funded. It’s also possible that the program has become so popular that the administration does not think Republicans will do much to change the program when they regain control of Congress. (It’s important to remember that former President Donald Trump made only minor changes to the TIGER Program when he assumed control.)

Finally, the Infrastructure Investment and Jobs Act, or the bipartisan infrastructure bill of 2021, was not written and passed through the normal committee process. As a result, congressional committee members likely had even less influence on the final bill’s language than they would’ve through the typical process. In fact, despite Democrats controlling Congress, only 47% of the RAISE grants approved in 2022 went to Democratic-held districts.

For comparison, our review of the 2021 fiscal year RAISE grants found:

Of the 90 projects funded with Rebuilding American Infrastructure with Sustainability and Equity grants in 2021, only nine projects (10%) were national in nature. Of the 90 projects funded by RAISE grants, 50 projects, 56%, were related to transportation. The other projects funded were primarily focused on environmental remediation, economic development, or other factors. Of the projects not selected, 496 (74%) were related to transportation. Of the 90 projects funded, 41% were located in congressional districts represented by members of a transportation or financing committee. Only 15 of the 90 projects funded by RAISE, or 17%, were projects submitted by a state government

Despite the many problems with the RAISE grants, there were some worthwhile transportation projects funded by them this year. Maine received funding for improving the I-95 at Hogan Road Improvement Project. Ohio received funds to improve U.S. 6 in the Sandusky area, a major arterial. The Port of Los Angeles received funding for a freight rail bridge to ease goods movements.

But for each of those projects, there are also projects getting grants that harder to explain to federal taxpayers, such as a shared-use path in the Hartford area, a complete streets project in rural Oklahoma, and the electrification of a transit garage in Wisconsin. 

Going back, at least the last three presidential administrations have failed to allocate discretionary federal grants to their best uses. The Biden administration continues to award funding to projects that are neither transportation-related nor in the national interest of federal taxpayers.

The current RAISE program lacks a clear objective. Until policymakers and political leadership at the U.S. Department of Transportation are serious about developing a grant program that uses quantitative metrics to prioritize projects that could help solve national transportation problems, Congress should consider stopping the program that has largely become an executive branch earmarking tool. 

The post Federal RAISE grants continue to fail to prioritize key transportation projects appeared first on Reason Foundation.

Summary

This property tax amendment would change the Georgia constitution to allow local governments to grant temporary property tax changes for properties damaged by disaster events and located within disaster areas. Some details of the tax relief mechanism and rules governing local government use of this power will likely need to be legislated.

State Rep. Lynn Smith (R) sponsored the constitutional amendment after an EF-4 tornado—the Enhanced Fujita Scale ranks tornados from zero to five, with five being the most devastating—hit Coweta County in the southwestern exurbs of Atlanta in March 2021. The Federal Emergency Management Agency (FEMA) rejected individual disaster assistance, however. In July 2021, the Atlanta Journal-Constitution reported:

In a letter this week to Gov. Brian Kemp, the Federal Emergency Management Agency wrote “the impact to the individuals and households from this event was not of the severity and magnitude to warrant the designation of the Individual Assistance program.” Such assistance includes financial aid and services for people with uninsured expenses…In May, President Joe Biden declared a disaster in Georgia, making federal funding available for state and local government recovery efforts in Coweta and other counties. But many residents with uninsured property losses are still struggling in the wake of the storm, Newnan Mayor Keith Brady said.

…FEMA issued a prepared statement Friday, saying Kemp appealed its “original denial of Individual Assistance and FEMA found that its original evaluation was correct.”

“The biggest factor when determining the need for either public or individual assistance is whether the state and local jurisdictions have the resources available to meet the recovery needs,” the agency said.

In addition to the federal government’s decision not to provide federal taxpayer-funded assistance, state law prevented any type of tax breaks for property damaged by natural disasters. Therefore, Coweta County homeowners had to pay property taxes on 1,726 homes that were destroyed or damaged.

Rep. Smith said officials in the city of Newnan “wanted to be able to give some tax relief in 2021” but were not able to do so. The amendment was passed unanimously by both chambers of the Georgia State Legislature.

Fiscal Impact

The average Georgia property tax bill is $1,771 per year. If this figure is applied to all 1,726 homes devastated by the 2021 tornado to give an estimate, exempting those families from paying taxes would reduce total property tax revenue by $3.1 million annually. 

However, the amendment would not apply just to the Coweta County homes. All property in Georgia that is affected by various natural disasters could be exempted from property taxes, which would increase the fiscal impact. For example, if three percent of properties qualified for exemptions in a year, that would total $204 million per year. 

Proponents’ Arguments For

Proponents wanted federal taxpayers to aid the tornado victims. “It still breaks my heart that federal funding was denied for individuals, but HR 594 would allow local governments to step in and provide an alternative pathway to direct relief for citizens in the future, especially if the federal government in Washington fails to do so,” State Rep. Lynn Smith (R) stated.

She added that the amendment “provides this option to communities who may face the same devastation that Coweta County did last year.”

Opponents’ Arguments Against

There were no arguments against the bill. No members voted against the bill. However, 29 members of the Georgia House of Representatives and one state senator abstained. Further, there were no Democratic cosponsors, potentially indicating limited support from Democrats. 

Additional Discussion

When a property is damaged due to a natural disaster, FEMA determines whether state and local governments have the resources to provide sufficient aid. The largest factor in FEMA approving or denying aid to homeowners is if a county and/or city government have the resources to provide their own financial aid. Local officials In Coweta County and the city of Newnan wanted to waive the collection of property taxes, but state law prevented the county and city from taking those actions. As a result, Rep. Smith sponsored an amendment to allow counties to waive the collection of property taxes from those homeowners whose property is uninhabitable.

On one hand, the legislation provides important relief to homeowners. It does not require local governments to provide funding. Rather, it allows governments to waive the collection of property taxes.

If the federal government does not provide resources, state and/or local governments can provide direct financial resources, waive property taxes, both, or neither.

However, this amendment also creates three policy challenges, each relating to wealth transfers. First, many homeowners in Coweta County were underinsured or uninsured. This property tax relief bails them out. And in the future, it incentivizes homeowners to underinsure their own properties because they may expect other taxpayers to foot the bill.

Second, the tax exemption could lead to a major loss in revenue for counties. Georgia has 159 counties and thousands of cities. If fires, flooding, hail storms, tornados, and other issues can prompt property tax exemptions, it is easy to see the number of exemptions growing exponentially in the years to come. And, even if only 3% of homes had property taxes waived in a given year, the statewide loss would be more than $200 million. Counties are likely to try to offset those losses by imposing higher property taxes on other homeowners or new taxes or fees.

Finally, the tax exemption allows FEMA’s outdated, 20th-century approach to disbursing disaster aid to continue. Currently, FEMA justifies whether to provide federal aid based on the average income and wealth of a region. Yes, many of the homeowners in Coweta County lived in mobile homes and were below the average federal income, but FEMA ruled the local and state governments had the funding to assist them rather than asking federal taxpayers to do so. Going forward, FEMA could improve by determining this type of federal aid based on census block grants, a more detailed geographic unit.

The post Georgia temporary property tax change for disaster areas amendment (2022) appeared first on Reason Foundation.

The gas tax is no longer a reliable revenue source. The federal fuel tax has lost 25% of its purchasing power in less than two decades due to vehicles with more fuel-efficient internal combustion engines becoming more commonplace on our roads. Electric cars don’t pay fuel taxes. Hybrids and fuel-efficient cars drive further on the gas taxes they pay.

With the best-selling car or truck in America— the Ford F-150 truck —now available in electric form, and top-selling cars such as the Toyota Camry and Honda Accord available as hybrids, all for less than $40,000, more fuel-efficient cars are going to be on America’s roads, and the fuel tax is going to become even less useful over the next 10 years.

The most promising replacement for the gas tax is a mileage-based user fee (MBUF), also known as a road usage charge (RUC) in some parts of the country. As the name implies, with a mileage-based user fee drivers pay for roads based on the miles they drive.

Two major national transportation research commissions have recommended replacing fuel taxes with MBUFs. Three states—Oregon, Utah, and Virginia—have already started implementing versions of permanent MBUF programs. Oregon’s program is open to all drivers. Utah’s program requires drivers of electric vehicles to pay a mileage-based user fee since they don’t pay fuel taxes. And Virginia’s program requires drivers of vehicles with Corporate Average Fuel Economy (CAFE) ratings of 25 miles per gallon or more to participate in the MBUF program or pay an additional annual fee.

Many other states, from California to New Hampshire, have conducted mileage-based user fee pilot programs. Other states plan to begin pilots in the next year. Pilot programs are the best method of determining whether MBUFs are feasible. Implementing MBUFs poses both real and perceived challenges, including collection costs, the rural vs. urban driver funding burden, privacy, and security.

As part of the Infrastructure Investment and Jobs Act (IIJA), Congress set aside $75 million over five years to continue the Strategic Innovation for Revenue Collection (SIRC) program to fund mileage-based user fee pilot programs in the states. The program requires a 20% match from non-federal entities conducting their first MBUF pilots. While $75 million is a relatively small amount of funding (compared to other federal programs), if each pilot costs approximately $2 million, the feds could fund 47 pilot programs. Some pilots will cost more, of course.

The Eastern Transportation Coalition managed a $4.5 million pilot involving nine states a few years ago. In 2017 and 2018, California conducted a multi-year pilot examining pay-at-the-pump pricing and global positioning system (GPS) technology. With the federal program, metropolitan planning organizations and local governments are also eligible, so there are new opportunities for multi-jurisdictional regional pilots within states. Therefore, while pilot program funding from the federal government is available, it is far from unlimited.

But one of the biggest problems right now is not the funding or the timeline. Some states are not seeking replacements for the fuel tax, and many are actively avoiding testing mileage fees. There are legitimate debates and concerns over whether a mileage-based user fee is the best successor to fuel taxes, but that should strengthen a state’s resolve to conduct a thorough test program.

If MBUFs work—great, problem solved. But if they don’t, the state can move on to trying something else. Yet, instead of conducting pilot programs to find a replacement for fuel taxes, some politicians are either spreading misleading information about mileage fees or sticking their heads in the sand.

Pilot programs can show drivers and lawmakers what works and what doesn’t. It can also help get rid of misinformation. One common claim from critics of mileage fees is that the government will be able to spy on you. A state pilot program would show drivers and stakeholders that non-GPS options exist and range from calculating mileage without knowing a vehicle’s location to flat annual fees, both of which have been tested successfully by states.

By avoiding MBUF pilot programs, states are letting other jurisdictions shape how MBUFs will be implemented on a federal and state level. If mileage fees continue to be seen as the long-term, sustainable replacement for the gas tax, a series of best practices will emerge. What works in Georgia may be very different than what works in California. By conducting its own pilot program, Georgia has the chance to find what works best for the state and its drivers.

The only way to create a program that is best for your state is to give your drivers the option of participating in a test of how a mileage-based user fee program might work.

The California Air Resources Board recently voted to ban the sale of new gasoline-powered cars in 2035 and require all new cars and trucks sold in the state to be zero-emission vehicles by that year. There will undoubtedly be court battles over the mandate, but several other states are expected to follow California’s lead. “New York, Oregon, Washington state and Rhode Island officials confirmed to CNN they plan to adopt California’s rule,” CNN reported after California’s announcement.

As electric cars become more and more common, states need viable ways to replace gas taxes. Those states that don’t find replacements will fail their workers, businesses, and economies as they struggle mightily to find the money to maintain their roads.

The post The gas tax is no longer a reliable revenue source appeared first on Reason Foundation.

1. A mileage-based user fee has advantages compared to the gas tax:

• Fairness: MBUFs ensure that the drivers who use highways are the ones who pay for them.
  • Choice: MBUFs give users more options over how and when they pay the fee.
  • Transparency: Most people don’t know what they currently pay in fuel taxes. MBUFs are much more transparent to users. Drivers see what they pay and what they get for their money.
  • Better Incentives: MBUFs can give better information and incentives to drivers and state transportation departments on the efficiency, quality, and costs of roadways.
  • Flexibility: MBUFs allow states to properly prioritize and adjust highway expenditures as conditions, consumer demand, and technology change.

• A mileage-based user fee pilot can examine common concerns:
  • Privacy: Pilot programs typically use private account managers to test MBUF options and policies and ensure drivers have privacy and control over their data.
  • Double Taxation: MBUFs should be a replacement for fuel taxes, not a supplement to them.
  • Diversion: MBUFs can be dedicated to roadways, unlike gas taxes and other infrastructure funding sources, which have been diverted away from their primary purposes.  
  • Costs of Collection: These costs are currently higher than the gas tax but decrease with scale.
  • Equity: Fuel taxes can be regressive. They impact low-income families, who tend to have less fuel-efficient vehicles. MBUFs charge for road use, not fuel use, and are less regressive than gas taxes.
  • Rural Drivers: Rural drivers already typically pay more in fuel taxes due to the longer distances and less fuel-efficient vehicles they tend to drive. Thus, rural drivers can benefit from MBUFs.

• Mileage-based user fees are already widespread in the United States:
  • Twenty states and two multi-state coalitions have conducted MBUF pilot programs.
  • Closer to Georgia, North Carolina and Virginia have already run MBUF pilot programs.
  • Virginia, as well as Oregon and Utah, have moved ahead with permanent MBUF programs.
  • The Federal Highway Administration provides grants to states to test MBUFs.

The post Testing mileage-based user fees as a replacement for Georgia’s gas tax appeared first on Reason Foundation.

As COVID-19 becomes endemic and more Americans return to the office, vehicle miles of travel per capita are reaching or exceeding their pre-COVID peak.

As a result, traffic congestion is returning in many urban areas, particularly during afternoon peak periods.

While the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) provides some funding dedicated to reducing congestion, not every solution requires a multi-billion dollar highway expansion.

To improve traffic speeds, provide commuters a choice, and enhance bus service, state departments of transportation (DOTs) and local governments have been converting their high-occupancy vehicle (HOV) lanes into high-occupancy toll (HOT) lanes or express toll lanes (ETL).

Despite more than two dozen conversions over the past 15 years, there are still 97 pure HOV lanes in operation.

This brief examines why and how high-occupancy vehicle lanes are converted, how much the conversions cost, and how high-occupancy toll and express toll lanes have performed.

It analyzes the advantages of HOT and ETL lanes compared with HOV lanes and examines the political considerations of conversions.

Finally, the brief lists the HOV lanes that could be converted to HOT lanes or ETLs in the future.

The post Converting high occupancy vehicle lanes to high occupancy toll lanes or express toll lanes appeared first on Reason Foundation.

Ways To Change Transit Service Design for the Better

• Adjust geographic coverage by redesigning existing bus routes to serve population centers, adding service on weekend days, and reducing it during off-peak periods.
• Improve bus-run times by consolidating stops and using technology to speed up trips, such as transit signal priority.
• Take a holistic approach that integrates fixed-route services, on-demand services, private services, bike-sharing, ridesharing, and (eventually) automated vehicles.

Improving Transit Governance

• Transition most transit agencies into mobility management agencies that coordinate services across public, private, non-profit, and contracted transit entities.
• Contract with quality private and non-profit operators wherever possible, as other developed countries do.
• Eliminate laws that prevent competition and protect transit monopolies.
• Improve accountability and transparency by setting performance goals to be met by all transit providers.

Changing Transit Funding

• Eliminate federal transit subsidies for capital projects and provide subsidies for operations and maintenance in ways that reward transit agencies that provide high-quality, low-cost services.
• Provide user-side subsidies to transit-dependent customers that allow them to use the vouchers or funds on whichever transit service is best for them.
• Charge transit-choice riders—those with access to another transport mode—the full price of providing the transit services to them.  

21st Century Transit: Free Market Transit Policy

The post How to improve transit service for today’s workers and commuters appeared first on Reason Foundation.

With several states, including Georgia, Florida, and New York, passing bills to suspend state gas taxes, President Biden recently called for other states to do the same and began pushing for a three-month holiday from federal motor fuel taxes. A White House aide told Politico, “A federal gas tax suspension alone won’t fix the problem we face. But it will provide families a little breathing room.”

Fortunately, the idea faces bipartisan opposition in Congress. Some Senate Republicans, including Senate Minority Leader Mitch McConnell (R, KY), have called it a fiscally irresponsible political stunt.

The president’s political party is also loudly opposed to suspending the gas tax. House Speaker Nancy Pelosi (D, CA) questioned whether the policy would lead to savings at the pump. Transportation and Infrastructure Committee Chair Peter DeFazio (D, OR) was more direct, saying, “Suspending the federal gas tax will not provide meaningful relief at the pump for American families, but it will blow a multi-billion-dollar hole in the Highway Trust Fund, putting funding for future infrastructure projects at risk.”

“Barack Obama was right. A gas tax holiday was a bad idea in 2008 and it’s a bad idea today,” Sen. Bernie Sanders (D, VT) tweeted.

Sen. Sanders is referring to then-Sen. Barack Obama’s opposition to suspending the gas tax when Republican presidential candidate Sen. John McCain proposed suspending the gas tax from Memorial Day to Labor Day during the 2008 presidential campaign. At the time, then-Sen. Obama said:

“We’re arguing over a gimmick that would save you half a tank of gas over the course of the entire summer so that everyone in Washington can pat themselves on the back and say they did something. Well, let me tell you, this isn’t an idea designed to get you through the summer, it’s designed to get them through an election.”

Obama was right back then and he is right now. There is no certainty that significant savings would be passed along to customers. A recent Penn Wharton study found that President Biden’s gas tax suspension proposal would have relatively minor financial impacts on typical households:

“We estimate that suspending the federal excise tax on gasoline from July to September this year would lower average gasoline spending per capita by between $4.79 and $14.31 over three months, depending on geographic location and modeling assumptions, and lower federal tax revenue by about $6 billion during that period.”

Temporarily suspending the motor fuel tax would blow a massive hole in a significant revenue source for the recently passed Infrastructure Investment and Jobs Act (IIJA). Congress and the White House increased transportation spending by $415 billion over the 10-year budget window. The Highway Trust Fund, used to fund federally-supported highway and transit projects, is already strained, and a gas tax holiday would worsen an already bad situation.

The fuel tax suspension would also weaken the users-pay/users-benefit principle of highway funding. For more than 50 years, federal highway funding has been based on the concept of motorists who use roads paying to build and maintain those roads in proportion to how much they drive. Suspending the gas tax and presumably making up the difference by shifting money from general taxes or adding to the deficit means Americans who don’t drive or drive less than others are forced to subsidize the roads other drivers use.

If the Biden administration is looking to lower gas prices, it has more promising policy options. In the near term, it could waive ethanol blending mandates and relax economic sanctions on oil-producing countries. Over the long term, it could encourage more domestic oil production and the construction of new refineries.

Suspending the fuel tax is also a lot easier than reinstating it. What politician wants to be on record supporting a tax increase later this year if inflation and prices are still rising?

Politicians consistently emphasize the need to properly build and maintain roads and infrastructure and often claim that current transportation funding is inadequate. Suspending the federal gas tax is a bad idea that would negatively affect the country’s roadway system without significantly lowering gas prices or helping drivers.

The post President Biden’s gas tax holiday is a bad idea appeared first on Reason Foundation.

For the past 100 years, Washington’s highway network has depended on per-gallon taxes on gasoline and diesel fuel. The gasoline tax was first enacted in neighboring Oregon in 1919, and within a decade it was adopted by all of the then-48 states. Nearly all states dedicated the revenue from these fuel taxes to the construction and maintenance of their roadway systems. Unfortunately, Washington state’s fuel tax has become unsustainable as a long-term revenue source for two reasons.

First, combustion-powered automobiles are becoming more fuel-efficient.

Second, the number of electric and hybrid vehicles is increasing exponentially. The tax has been compared to a rock star on his farewell tour. The fuel tax has served Washington state well for 100 years, but it is time to begin considering a more sustainable user fee as its replacement.

This problem of declining highway revenues was first studied by a special committee of the Transportation Research Board of the National Academy of Sciences in 2005. It concluded that fuel taxes would not remain viable as the primary highway funding source for the 21st century.

In response, Congress created the National Surface Transportation Infrastructure Financing Commission to examine how surface transportation should be funded over the long term. After considering many different alternatives, the commission concluded that (1) the original users-pay/users-benefit principle should be retained and (2) the best way for users to pay would be a charge per mile driven, rather than per gallon consumed. The commission also recommended that the road usage charges (RUCs) replace the fuel taxes, rather than supplement them.

In the 16 years since that Financing Commission report, Congress has authorized federal funding for state departments of transportation (DOTs) to carry out a number of pilot projects in which motorists and truckers operate their vehicles under a hypothetical RUC collection system. In Washington, the State Transportation Commission (WSTC) was tasked with determining whether RUCs could be a replacement for the fuel tax.

The commission created a 30-member steering committee consisting of state legislators, stakeholders, and associations that represent various interest groups from throughout the state. The committee oversaw a 2018 statewide pilot consisting of a little over 2,000 drivers.

In 2020, after analyzing the results of the pilot, the WSTC issued a number of suggestions to the legislature and governor for pursuing a gradual transition to an RUC system.

However, before any transition occurs, Washington policymakers need to answer several questions about how the RUC revenue will be used, RUC program options, and the privacy of an RUC system. Further, state leaders need to examine whether they will start collecting RUCs on all highways at the same time, or start on certain types of roadways. Finally, officials must decide when and how to sunset the fuel tax.

This policy brief focuses on how Washington policymakers might implement RUCs.

First, it estimates the potential declines in fuel tax revenue over the next 30 years.

Second, it discusses the general lack of understanding among some policymakers and the public about the need to transition to a new roadway funding revenue source.

The brief details the state’s RUC pilot project and how to ensure Washington state implements an RUC system in a way that preserves the long-standing users-pay/users-benefit principle.

Next, it suggests a policy framework for how to develop a permanent road usage charge program in Washington and suggests an implementation order that builds on systems already in place on portions of the state’s major highways.

After that, it details how to solve RUC problems that must be addressed before a permanent RUC system is implemented.

Finally, the brief suggests some next steps.

This brief recommends beginning the transition with Washington’s limited-access highways. Washington’s Good to Go charging system could be extended to non-tolled Interstates and freeways as those highways are modernized over the next two decades. The charges to use a limited-access system should be stated on a per-mile basis. And customers paying these new electronic per-mile charges should be given rebates for the amount of fuel taxes that they have incurred for the miles driven on limited-access highways with RUC in place.

When this step is completed, about 40% of Washington’s vehicle miles of travel will have been transitioned from paying per gallon to paying per mile. Customers will receive regular statements documenting the miles they drove and the amounts they were charged via mileage-based user fees.

Once the transition of the limited-access system is well under way, Washington should begin planning the transition of state and local roadways to a per-mile charging system. Reason Foundation asserts that before the state implements an RUC, lawmakers must enshrine privacy and data security protections in statute, reduce administrative costs to prevent unnecessarily high per-mile charges, reduce construction costs, and resolve ideological disagreements regarding constitutional protection of RUC revenue to ensure that money is dedicated to highways only. These are worthwhile and necessary prerequisites to a successful and user-fee-based road-usage charge being implemented in Washington state.

In the near term, Washington policymakers should take an additional step to prepare for an RUC on limited-access highways. Drawing on the findings of the Transportation Research Board’s study on the future of America’s Interstates, Washington should study the need for modernizing the limited-access system. This study should be conducted corridor by corridor and include cost estimates and timeframes for modernizing highway segments. The feasibility of financing these projects based on bonding the revenue streams should be an integral part of this study. Similar statewide studies have been conducted in Connecticut, Indiana, Michigan, and Wisconsin.
In addition, Washington state policymakers should support Congress’ effort to reduce or eliminate the 1956 ban on using tolls on the Interstate system. Washington state owns its highway network, and the federal government should not be telling Washington how to operate its roadways.

Road usage charges are critical to creating a long-term, sustainable funding mechanism. However, road usage charges must be implemented carefully. If Washington state policymakers follow the recommendations in this brief, the state can be among the leaders in implementing RUCs.

The post How Washington state can transition from the gas tax to road usage charges appeared first on Reason Foundation.

These types of arguments over whether to spend transit’s limited resources on operations or new capital projects occur all over the country so the underlying issues are relevant not just to Georgia but to the nation. 

Understanding the current tension in Georgia requires a brief history of transit funding in Atlanta. When MARTA was created in the late 1970s, the Georgia General Assembly mandated the agency spend 50% of its funds on capital projects and 50% of its funds on operations. At that time, MARTA had two heavy rail lines to build plus a spur line. Fast forward 35 years, the rail system was built out—at least in jurisdictions that wanted rail service. During the Great Recession of 2007-2009, sales tax revenues declined, as is typically the case during recessions, and MARTA did not have enough money to operate its systems. Thus, the General Assembly relaxed the 50/50 capital/operations requirement, allowing a larger percentage of the funding to go to day-to-day operations. 

One of the benefits of relaxing the requirement was that MARTA was able to operate more bus service. Former MARTA Chief Executive Officer Keith Parker made increasing the frequency of bus service, improving vehicle cleanliness, and increasing reliability hallmarks of his tenure. 

Parker’s changes helped transit-dependent customers—people who rely on transit to reach jobs—the most. These customers take more transit trips per capita than transit-choice customers, who have access to an automobile and choose to ride transit. Parker believed that, from a policy perspective, these transit-dependent riders were MARTA’s core customers, which is why he focused on bus operations. 

Just as MARTA was maximizing its bus operations, the COVID-19 pandemic hit. Overnight, transit ridership plummeted. Between May 2019 and 2022, the region’s bus ridership decreased by 30% to 50% and rail ridership dropped by 50% to 80%.

To mitigate revenue losses from fewer riders during the pandemic, Congress passed the Coronavirus Aid, Relief and Economic Security (CARES) Act and the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act signed by then-President Donald Trump, and the American Rescue Plan (ARP) Act of 2021 signed by President Joe Biden. Together, the three federal bills provided $69.5 billion to transit agencies across the United States.

But the federal stimulus funding is slated to run out next year and transit ridership hasn’t returned to pre-pandemic levels in most areas. Currently, rider revenue covers only 20% of MARTA’s operating costs, about half of its pre-pandemic percentage. 

Today, transit-dependent riders are now a greater share of MARTA’s total ridership. A transit agency conducting a rational analysis of its customers and what its short-to-medium-term future looks like would shift resources to make sure it can serve those transit-dependent bus riders rather than building rail lines. But MARTA has been criticized by some transit advocates for taking such an approach.

Part of the criticism stems from MARTA’s plans. In 2016, Atlanta voters approved an additional half-penny sales tax, bringing the total sales tax dedicated to transit to 1.5 cents for every dollar. After voters approved the tax, in 2017, MARTA approved a plan to use the expected $2.7 billion in proceeds for 29 miles of light rail, 13 miles of bus rapid transit, new bus routes, and enhanced existing bus routes. Since 2017, MARTA has spent more than half of the new sales tax revenue on bus and paratransit services, including capital costs. The agency has set aside $134 million for capital expansion, but that’s not enough for some. For example, Matthew Rao, an architect who owns property near the BeltLine, told the Atlanta Journal-Constitution rail construction should be prioritized over day-to-day bus operations:

Matthew Rao, an advocate for transit on the Atlanta Beltline, said spending so much on bus operations undermines the will of voters who believed they were supporting new transit lines.

“MARTA has misspent money on operations that was intended to fund capital projects,” Rao said.

MARTA officials say their expansion plans are still moving forward. But they say rising construction costs — not the bus spending — may force the agency to revisit those plans…

But MARTA appears to be backing away from the light-rail lines it announced in 2018. In February it said it will pursue cheaper bus rapid transit instead of rail on Campbellton Road. In April it said it may pursue bus rapid transit on the Clifton Corridor. And MARTA’s capital programs chief recently said light rail on the Atlanta Beltline may be too expensive to compete for federal funding.

News of the bus spending only increases Rao’s suspicion that MARTA never intended to build light rail on the Beltline.

“This makes everything so much worse that we thought,” he said. “We have to recoup that money.”

A lot has changed over the past five years. Today, inflation is soaring and construction costs are way up. The COVID-19 pandemic has devastated transit ridership and may have fundamentally altered its future. MARTA’s transportation planners correctly realize that operating a transit system in 2022 is not the same as in 2017 and they have rightly adjusted their plans accordingly.

For the record, MARTA has always questioned rail on the BeltLine. In 2005, a five-person expert panel made up of the president of the American Public Transit Association, three Georgia Tech transportation professors, and the leader of one of the country’s largest transportation consulting companies raised major red flags about the rail project’s feasibility, lack of ridership projections and revenue. The report said:

As was noted to the Panel by several speakers, the amount of revenue generated from the TAD is expected to cover only about half of what will be needed (and depending on the design and technology involved, this could be an underestimate). It is highly likely that additional sources of funding will be necessary to cover the costs associated with capital investment. Also, very little information (and in some sense interest) was available on the expected operating and maintenance costs…

The Panel is surprised at the paucity of credible information relating to expected ridership of the BeltLine alternative. Of all the information generated in support of the BeltLine concept, ridership appears to be the least studied or understood. This is perplexing because much work less central to transit viability has been done on the concept.

And, as I detailed 11 years ago, one major reason MARTA agreed to build rail transit on the BeltLine was the public pressure brought on by the Sierra Club rallying its activists to pack public meetings and loudly demand rail, not buses.

In Atlanta and beyond, some transit advocates need to rethink their priorities. Transit’s core function is to provide mobility to low-income residents and workers who do not have access to automobiles.  Building costly rail lines in hope of getting financially-secure residents to give up their cars isn’t a good use of taxpayers’ transportation funding and is a disservice to those who need quality, reliable transit.

The post Calls for Atlanta to cut bus services for transit-dependent riders in order to build rail for higher-income groups appeared first on Reason Foundation.

One of the advantages of bus rapid transit is that it is customizable. Some transit corridors need BRT heavy service, where buses operate in a dedicated lane. These are corridors with more than 20 buses per hour with traffic congestion so severe that buses cannot operate efficiently in mixed traffic.  

In other corridors, likely about other 90% of BRT surface street corridors, are suited for BRT lite, which operates in mixed traffic. The Transportation Research Board considers transit signal priority (TSP) the most important part of any bus rapid transit system, more important than buses having a dedicated lane. Transit signal priority allows buses to receive a priority green traffic light (five to 10 seconds before other vehicles at the intersection receive a green light) or extend the existing green traffic light by up to 30 seconds. When a BRT vehicle reaches a TSP-enabled intersection, the traffic light is more likely to be green, providing quicker, more reliable bus service for riders. This feature and reliability is crucial to making bus rapid transit a premium transit product for commuters and transit-optional riders. 

In terms of infrastructure projects and improvements, transit signal priority is relatively cheap for local governments to install. It costs around $5,000 per intersection if the existing software and controller can be upgraded or $20,000 per intersection if the current software and controller need to be replaced.

Studies have shown that transit signal priority improves bus rapid transit service substantially. On average, bus travel times are reduced by 15% and key intersection delays are reduced by 50% when using transit signal priority. On longer routes, TSP can eliminate around 10-to-15 traffic signal stops. In addition, TSP can help reduce greenhouse emissions from combustion-engine buses because it prevents idling by keeping vehicles moving at a constant speed. Transit signal priority also improves the performance of battery-powered buses since it reduces travel times and allows more consistent charging times. 

Most transit agencies have installed transit signal priority on their high-priority routes. But as I learned at the BRT conference, many transit agencies are not using TSP at this time. In general, there are four reasons transit agencies give for foregoing transit signal priority benefits. 

First, some transit agencies say they’d only use TSP for a small fraction of the time buses operate. For example, one agency said it only uses TSP if buses are 10 or more minutes late. But if a bus is that far behind schedule, it will be almost impossible to make up the time. It would make more sense to use TSP proactively to prevent buses from becoming late in the first place. Another agency said it only uses TSP during morning and evening peak periods. Yet this very large metro area sees congestion for 10 or more hours a day, seven days a week. Given the way the pandemic has changed travel and work schedules, this is a missed opportunity to improve travel speeds throughout the day.

Turf battles are the second reason that transit agencies don’t use transit signal priority systems. Basically, these battles amount to the transit agency wanting to use the TSP service but the roadway operator, usually a local department of transportation (DOT), does not. Often this conflict comes down to communication about the rules of TSP (when to provide a green signal) and how often TSP can be used per hour. Most local transportation departments want to provide better transit service, so compromises should be possible.

The third reason that agencies don’t use TSP is because the system components are poor. Just like everything else in the intelligent transportation systems world, TSP can be designed well or designed on the cheap. Some agencies have tried to cut corners and install cheap $3,000 intersection controllers or operate TSP on systems with software that is not fully compliant with them. In the case of TSP, agencies should view purchasing the right, quality technology as a wise investment with the potential to improve transit speeds and ridership. 

The fourth and final reason that some agencies don’t use TSP sounds like a conspiracy theory and certainly occurs very rarely, but there are a few cases where some local or transit officials may not want bus rapid transit to succeed because they prefer other projects. For example, the mayor’s office may have wanted a light rail system or expansion and thus isn’t supportive of bus rapid transit. Or perhaps the transit agency board wanted BRT heavy service, so they refuse to use transit signal priority in the short-term because it might show BRT lite meets their needs. In some instances, there is dysfunction in the governmental decision-making process. 

Clearly, all of these reasons are problematic and should be overcome when transit signal priority would improve bus rapid transit service. Elected officials and transportation leaders need to collaborate to create a plan for using transit signal priority systems because bus rapid transit lite is one of the most cost-effective, high-quality transit options available, but if officials aren’t going to use TSP, they shouldn’t call it BRT.

The post Bus rapid transit systems need to use transit signal priority appeared first on Reason Foundation.

Governments have used long-term public-private partnerships (P3s) for surface transportation projects for the past 60 years. As documented by José A. Gómez-Ibáñez and John Meyer, the phenomenon began in the 1950s and 1960s as France and Spain emulated the model pioneered by Italy prior to World War II.1 Italy’s national motorway systems were developed largely by investor-owned or state-owned companies operating under long-term franchises (called concessions in Europe). In exchange for the right to build, operate, and maintain the highway for a period ranging from 30 to 70 years, the company could raise the capital needed to build it (typically a mix of debt and equity). The model spread to Australia and parts of Asia in the 1980s and 1990s, and to Latin America in the 1990s and 2000s.

Nearly all the projects in those regions from the 1950s to 1980s were financed based on the projected toll revenues to be generated once the highway was in operation. Some projects went bankrupt as a consequence of reduced traffic and revenues during severe economic downturns (e.g., the oil price shock of 1974), leading to the nationalization of some companies. In the late 1990s and early 2000s, however, the governments of France, Italy, Portugal, and Spain all privatized their state-owned toll road companies and formalized the toll concession P3 model. Australia has allowed several concession company entities to go through liquidation, with the assets (in each case major highway tunnels) being acquired by new operators at a large discount from the initial construction cost.

Other governments in Europe adopted a different form of highway concession. Generally, not favoring the use of tolls, they created the concept of availability payments as a means of financing long-term concession projects. In this structure, the company or consortium selected via a competitive process negotiates a stream of annual payments from the government sufficient (the company expects) to cover the capital and operating costs of the project and make a reasonable profit. The capital markets generally find such a concession agreement compatible with financing the project, via a mix of debt and equity. Since no toll revenues are involved, this model applies to a much broader array of transport and facility projects, including rail transit and public buildings. In the highway sector, nearly all long-term concession P3 projects in Canada, Germany, the UK, and a number of Central and Eastern European countries have been procured and financed as availability payment (AP) concessions.

In a small but growing number of cases—major bridges, as well as highway reconstruction that includes the addition of express toll lanes, for example—governments collect the toll revenues and use the money to help meet their availability payment obligations. These cases are called “hybrid concessions” in this report.

Seven of the top 10 worldwide P3s that reached financial close in 2021 used availability payments, continuing a growing trend over the last seven years. The increasing use of AP concessions has enabled P3s for projects that do not generate their own revenues, as well as hybrid concessions in which toll revenues help the government cover the costs of its AP obligations.

Part 2 Private Highway Projects

Part 3 International Surface Transportation Infrastructure 2021
3.1 Largest International Surface Transportation Public-Private Partnerships
3.2 Countries Reaching Financial Close On First P3
3.3 International P3 Activity By Region

Part 4 U.S. Surface Transportation Concessions, 2021
4.1 Largest U.S. Surface Transportation P3s
4.2 2021 Surface Transportation P3s

Part 5 Federal Policy On P3 Concessions
5.1 Surface Transportation Reauthorization
5.2 Overview Of Financing Tools
5.3 Other Federal Tolling Policy

Part 6 P3 Legislation And Highway Activity Per State
6.1 Overview Of State P3 Legislation
6.2 2021 State Legislative P3 Activity
6.3 State Concession Activity

Annual Privatization Report 2022 — Surface Transportation

The post Annual Privatization Report 2022 — Surface Transportation appeared first on Reason Foundation.

Recently, and infamously, CEQA prevented the University of California-Berkeley from expanding because students would have had nowhere to live. In The New York Times, Ezra Klein wrote:

Zoom out from the specifics, though, and look at what it reveals about how government, even in the bluest of blue communities, actually works. Why was it so easy for a few local homeowners to block U.C. Berkeley’s plans, over the opposition of not just the powerful U.C. system but also the mayor of Berkeley and the governor of California? The answer, in this case, was the California Environmental Quality Act — a bill proposed by environmentalists and signed into law in 1970 by Gov. Ronald Reagan that demands rigorous environmental impact reviews for public projects and that has become an all-purpose weapon for anyone who wants to stymie a new public project or one that requires public approval.

There are laws like this in many states, and there’s a federal version, too: the National Environmental Policy Act. They’re part of a broader set of checks on development that have done a lot of good over the years but are doing a lot of harm now. When they were designed, these bills were radical reforms to an intolerable status quo. Now they are, too often, powerful allies of an intolerable status quo, rendering government plodding and ineffectual and making it almost impossible to build green infrastructure at the speed we need.

As blowback to the Berkeley case mounted, some political leaders took concrete action. State Sen. Scott Weiner, a Democrat, told Politico, “CEQA is the law that swallowed California.” State Sen. Weiner introduced a bill that would exempt student and faculty housing from CEQA. The Los Angeles Times reported:

When CEQA recently threatened thousands of young Californians’ admissions to the state’s flagship public university, legislators had enough. They introduced a bill to let the students enroll, passed it unanimously, and Gov. Gavin Newsom signed it all within four days.

But CEQA needs to be permanently reformed for more than just student housing. CEQA needs to be reformed for all physical infrastructure such as housing, transportation facilities, and hospitals.

CEQA was passed in 1970 and signed into law by Ronald Reagan just as the federal government was enacting the National Environmental Policy Act (NEPA). CEQA goes further than NEPA, requiring more public input and comprehensive analysis.

When it was passed, CEQA was designed to study the effects of new roadway construction on the environment. Yet, state legislators have expanded CEQA’s jurisdiction to include almost any new type of construction. Major amendments to the act were passed in 1972, 1976, 1978, 1984, 1989, 1993, 2010, and 2019. Additionally, small changes are made to CEQA almost every year.

As a result, today, CEQA evaluates change from the existing conditions, short- and long-term impacts, direct and indirect changes, cumulative changes, and local and regional plans for both county and state governments. State and county governments need CEQA attorneys on their staff just to explain how to interpret the new rules.

For example, simply determining the required type of CEQA review is challenging. Certain types of projects can be exempt; governments have lots of discretion. And governments interpret the statutes in wildly different ways. A project to convert high occupancy vehicle (HOV) lanes to high occupancy toll (HOT) lanes may be exempt from CEQA in Los Angeles County but not in San Francisco.

Further, the CEQA review process is not linear. Governments move through CEQA’s six stages at the same time often ping-ponging back and forth. For example, to widen I-15 in San Bernardino County, the California Resources Agency (CRA) determined an environmental impact report was necessary. Caltrans determined the scope and then moved on to the initial study. Yet after that initial study, CRA required Caltrans to go back and broaden the scope of analysis.

Finally, groups that are not affected by an infrastructure project often use CEQA as a type of log-rolling activity to prevent projects they oppose. For example, NIMBY groups often use the act as grounds to oppose the construction of any multi-family housing projects in places like San Francisco, even though they and their property would not suffer any harm from the proposed project.

As bipartisan calls to fix CEQA grown, what can California do?

First, the state could exempt housing projects from CEQA. New housing, desperately needed in many parts of the state, is not a major contributor to greenhouse gas emissions.

Second, the state should limit changes to CEQA statutes to every 10 years. Environmental review laws were never designed to be changed every year and preventing the incremental overreach that has plagued the state would be wise.

Third, California could introduce quantitative valuation metrics, and remove unclear qualitative evaluation metrics currently used, to guide these reviews and policies. The act could mandate major infrastructure projects undergo a benefit/cost analysis with a requirement of 1.5 or higher benefits-to-costs needed to build. CEQA analysts need to detail the exact benefits of the proposed project, such as 100 hours of reduced congestion along with the trade-offs and exact costs, such as a 10-decibel increase in noise for 10 houses.

Finally, California could raise the bar for filing citizen-driven CEQA lawsuits. Since CEQA lawsuits prevent needed infrastructure and often lead to a wasteful loss of time and money, lawsuits should be limited to California Circuit Courts. Plaintiffs should be required to have a vested interest in the case doing away with the current problem of people in places like Napa County suing to stop a construction project in Orange County. The lawsuit should also be required to be environmentally related. For example, people should not be allowed to use an environmental law as the pretense to stop a project because they want to force the groups involved to use labor unions or pay union wages.

A lot of policymakers now recognize many of the California Environmental Quality Act’s flaws and how it is being abused in ways that contribute to the state’s growing housing and infrastructure problems so there’s growing hope for finally fixing it.

The post How to make overdue reforms to the California Environmental Quality Act appeared first on Reason Foundation.

As inflation rises, the cost of buying a home is also going up even more because the 30-year residential home interest rate has increased from less than 4% to almost 5.5%. Rising inflation is also causing Americans to spend more on basic staples, such as food and gasoline, and Americans have fewer savings available than at any time in the last three years, with the average savings rate decreasing every month but one since July 2021. The result of these and other trends means homeownership is increasingly out of reach for many working-class and middle-class Americans. 

The biggest changes to housing policy need to be made at the local level, where governments need to make changes to zoning laws, building-approval processes, and height limits that prevent more housing from hitting the market. 

The Washington, D.C., region is a prime example of how harmful housing regulations reduce supply and drive up prices. The region has the fourth most expensive housing stock in the country, despite lacking the oceans and the mountains that serve as natural geographical barriers in the other metropolitan areas— San Francisco, New York, Los Angeles, and Honolulu—that make up the rest of America’s five most expensive housing markets. 

The first step is to relax Euclidean zoning regulations. Despite the demand for townhouses and smaller houses, Prince George’s County, Maryland, still has a preponderance of single-family homes zoned on a one-acre or larger lot. Local planners should allow mixed-use zoning as long as there are no public health problems (the original justification for Euclidean zoning).

The region should allow buildings to be set closer to the road, stop requiring that developers include a minimum number of parking spaces for residential developments, and allow multiple housing types to be constructed in the same development.

In suburban areas, single-family homes, cottage courts, and side-by-side duplexes might be a good fit. In central cities, cottage courts, side-by-side duplexes, and small multiplexes might be appropriate. Let all options and choices bloom.

The region also needs to eliminate onerous restrictions for the reconstruction of multi-family housing. Arlington County, Virginia, likes to fashion itself as one of the most progressive communities in the country. But its zoning code reads like it was written in 1922 instead of 2022. Arlington Now spotlighted how Arlington County’s zoning process is making multi-family housing too expensive to build. Renovating multi-family housing on an existing lot requires a community review, a planning commission approval, and county board approval. Yet, renovating a single-family home requires a board of zoning appeals review only. The multi-family review process should be streamlined. 

Fast-growing areas also need to eliminate growth restrictions, such as large lot zoning, agricultural reserves, height limitations, and floor area ratios. 

Suburban Loudoun County, Virginia, has a de facto urban growth boundary along U.S. Route 15 preventing growth in the western half of the county.

Montgomery County, Maryland, has set aside a third of its total land area as an agricultural reserve limiting growth northwest of D.C., even as the region’s metropolitan planning organization (MPO), the Washington Metropolitan Council of Governments, reports that there is virtually no agricultural activity in this “agriculture reserve.”

Meanwhile, the District of Columbia imposes a height limit of 130 feet. The height limit was not enacted to prevent structures from being taller than the U.S. Capitol but is a 19^th-century relic that was intended to ensure a fire truck’s ladder could access the top floor of a building and could clearly be done away with now.

Fairfax County, Virginia, has a strict floor-area-ratio (FAR) limit—the ratio of a building’s floor area to the lot, of 0.25. This ratio prevents building on 75% of a property. Similar suburban districts across the country have FARs of 0.40 or higher. 

In addition to getting rid of these bad policies, leaders also need to fight back against Not In My Backyard (NIMBY) activists. Many NIMBYs make bogus claims, such as building more housing will lead to more crime, less tree cover, and negatively change neighborhood character. While some of these concerns are understandable, they are often exaggerated and can almost always be reasonably addressed or debunked.

For example, key environmental areas can be protected without preserving all of the nation’s abundant farmland. It would take about 30% of existing U.S. farmland to feed all of America.

Eliminating unnecessary restrictions that are driving up housing prices would enable regions to build the amount of housing that metro areas need. This would help ensure housing and the American dream of owning a home doesn’t continue to become a luxury good only available to upper-income Americans. Eliminating the housing shortage, which would put downward pressure on housing prices in metro areas, would help solve one of the biggest problems facing American cities and the workers under the age of 40 they hope to attract.

The post Steps metro governments can take to address housing affordability, skyrocketing prices appeared first on Reason Foundation.