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

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The COVID-19 pandemic disrupted the status quo in healthcare. As we recover, lawmakers now have an opportunity to learn from our mistakes and triumphs to chart a new course. Among the most notable changes in care delivery brought about by the pandemic is the rise of telehealth. Yet as we update this report to reflect actions taken in 2022, it is hard not to notice that states have shown a surprising lack of urgency in making comprehensive updates to their telehealth laws.

While telehealth services were available long before the pandemic, millions of Americans used telehealth for the first time over the past three years. The rapid adoption of telehealth technology was enabled by emergency regulatory reforms undertaken at the federal and state levels. For example, federal officials made select changes to the Medicare program, and governors in nearly all 50 states advanced access with flexible provider licensure for new telehealth uses by executive order.

However, most of the emergency actions taken early on in the pandemic were only temporary. When state public health emergency declarations ended, and executive orders were withdrawn, many of the new flexibilities were lost. While some states recognized the benefits of regulatory flexibility and have adopted permanent reforms, a surprising number have only made minor tweaks to their laws, and most only benefit one kind of service or provider.

States must continue to refocus their efforts to ensure clear laws and guidelines are in place for innovation to emerge so that patients and providers can benefit from this helpful tool in any care delivery toolbox. Immediate action will be needed to avoid disrupting patient access to providers they gained during COVID, as other options may not exist in their community. For many patients, cutting off remote access to care is the difference between them receiving care in this manner versus no care at all.

There are four key areas where states have an opportunity to unleash innovation and embrace the potential of telehealth for expanding patient access to high-quality care:

1. Patients Can Access all Forms of Telehealth: State laws and regulations should define telehealth in broad terms that do not favor one mode of telehealth over others or preclude future innovation in care delivery. This is called modality neutrality.
2. Patients Can Start a Telehealth Relationship by Any Mode: State laws and regulations should not prohibit patients from initiating a relationship with a telehealth provider via their preferred modality.
3. Patients Face No Barriers to Across-State Line Telehealth: State laws and regulations should not prevent patients from accessing virtual care from providers licensed in other states.
4. Patients Can See Many Kinds of Providers Over Telehealth: State laws and regulations should allow providers to practice at the top of their license to take the next step toward a more quality-oriented, affordable, and innovative health system.

This report examines all 50 states in these four key areas.

This report does not cover all telehealth-related policy changes in 2022. For example, it ignores actions taken in states to expand or adopt compacts. Many of these smaller changes are not highlighted because they have severe limits, or only tweak around the edges.

By contrast, adopting this state policy agenda for telehealth innovation would remove deleterious barriers that have historically discriminated against those in certain geographies, such as rural communities or underserved urban areas.

The post State policy agenda for telehealth innovation appeared first on Reason Foundation.

In recent years, providing families with more educational options has become an important policy for state legislatures around the nation. But while learning pods, charter schools and education savings accounts dominate the discussion, cross-district open enrollment as a form of school choice shouldn’t be overlooked. Wisconsin provides a best practices model for states looking to improve their student transfer policies.

This policy brief provides evidence that many of the measures incorporated in Wisconsin’s open enrollment system have been effective and have helped to make it the largest single school choice program in the state.

Among the key findings of this report:

#1 Increasing the window for program entry increases participation. Open enrollment jumped nearly 20% in one year when Wisconsin opened an alternative application procedure outside of the normal time frame.

#2 Students move to school districts with better academics. Districts with better outcomes on state tests tend to gain more students in open enrollment, while districts that perform poorly tend to lose more students.

#3 “Donor” districts initially improve. Wisconsin school districts that lost students to open enrollment initially improved on state tests, although these effects dissipated over time.

#4 Increases in the transfer funding amount are correlated with greater district participation. As the amount of funding transferred to the receiving district has increased over time, districts have taken in more students through the program.

Policymakers in other states have much they can learn from Wisconsin’s open enrollment program. Specifically, its statewide funding amount, differentiated funding for students with disabilities, and robust transparency requirements have encouraged school district participation and increased educational opportunities for families, with more than 70,000 students now participating.

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In August 2014, Michael Brown, Jr., was shot and killed by police officer Darren Wilson in Ferguson, Missouri. The incident triggered several nights of protests and tense interactions between police and city residents. The U.S. Department of Justice subsequently launched a civil rights investigation into the Ferguson Police Department, the results of which were released in a report published by the DOJ in March 2015.

The Department of Justice report offered a scathing review of the Ferguson Police Department. Specifically, the investigation revealed widespread racial bias and discrimination within the police department. Moreover, the report noted that:

Ferguson’s law enforcement practices are shaped by the City’s focus on revenue rather than by public safety needs. This emphasis on revenue has compromised the institutional character of Ferguson’s police department, contributing to a pattern of unconstitutional policing, and has also shaped its municipal court, leading to procedures that raise due process concerns and inflict unnecessary harm on members of the Ferguson community.

Law enforcement officials in Ferguson delivered higher revenues through fines and fees resulting from municipal code enforcement. Between 2010 and 2015, fines and fees nearly doubled as a share of Ferguson’s general revenues—from $1.30 million (12%) to 3.09 million (23%). As noted in the DOJ report, fines and fees charged by the city were higher than those charged by neighboring municipalities. For example, the charge for “Weeds/Tall Grass” in a neighboring city was just $5. In Ferguson, the charges for the same violation were between $77 and $102.

Ferguson is a particularly stark example of a problem in jurisdictions across the country. Fines and fees are often used as a source of state and local government revenues. Fines and fees revenue is typically used to fund court operations, including salary and personnel costs. However, some governments rely on courts to generate revenue for other services as well. In some cases, this revenue is earmarked for a specific purpose related to the offense committed. In others, it goes to a government’s general fund or to purposes wholly unrelated to the justice system. The use of fines and fees as a source of revenue raises significant questions of fairness and may create poor incentives for law enforcement agencies, courts, and other government entities, which may be dependent on the revenues generated.

The primary responsibilities of the legal system are to promote public safety and to provide for justice. Pressure to raise revenue, at best, undermines—and at worst, directly conflicts with—those responsibilities.

When incentives are misaligned, police departments and court systems become more concerned with “taxation by citation” than carrying out their core functions. Such conflicts of interest also serve to undermine the legitimacy of the justice system among the public.

Lawmakers are beginning to recognize the problems presented by fines and fees, but fiscal concerns may present a barrier to reform.

The aim of this policy brief is to summarize existing research on the effects of fines and fees in the justice system and to present potential reforms that would resolve such fiscal concerns.

Full policy brief — Fines and fees: Consequences and opportunities for reform

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States are increasingly enacting open enrollment policies that give students options across school district boundaries. But this is only half the equation. Policymakers must also ensure that education dollars follow the child to the school of their choice, a concept referred to as funding portability. Without sufficient portability, school districts have weak financial incentives to enroll transfer students and may limit opportunities for families. Non-portable dollars also reinforce district boundaries, which lock families into public schools based on where they can afford to live, not what is necessarily best for their children.

The primary culprits inhibiting funding portability are districts that are entirely locally funded due to high property wealth, and both local education funding and state funding streams that aren’t sensitive to changes in enrollment.

New Hampshire provides a valuable case study that illustrates these problems. In total, 39 of the state’s 237 districts are off-formula and don’t generate additional state aid when new students enroll. Moreover, nearly two-thirds of New Hampshire’s non-federal education dollars are generated locally and aren’t portable across school district boundaries. As a result, most districts only receive a fraction of their average per-pupil spending amounts when enrolling additional students, which weakens financial incentives for an open enrollment program.

Ideally, school finance systems should “attach” dollars directly to students so that all state and local education funds flow seamlessly across district boundaries. States vary considerably with how close they are to this vision, and the first step for policymakers is to take stock of funding portability in their state. From there, states can take three different pathways to improve portability: comprehensive school finance reform, targeted solutions, and creating a distinct funding mechanism that supports open enrollment. While all solutions are worth considering, the most direct approach is to follow Wisconsin’s lead by establishing a stand-alone funding allotment for public school open enrollment. Three best practices can help policymakers craft this funding policy.

Uniform: Start with a Single Statewide Base Per-Pupil Amount

Open enrollment funding policy should center around a single per-pupil amount that follows students across school district boundaries, an approach Wisconsin has successfully employed for more than two decades. This provides robust transparency while also guaranteeing that all school districts are operating under the same set of financial incentives. There are numerous ways to set this amount, but policymakers should strive to maximize the share of overall state and local per-pupil funding attached to students.

Responsive: Account for Students’ Needs

Policymakers can attach weights or additional per-pupil amounts to students with disabilities and other categories of need. For example, Wisconsin provides a greater per-pupil amount for students with disabilities, plus reimbursement for costs that exceed this amount up to a specified limit, which is paid for by students’ home districts.

Incentivize: Tap into Local Education Dollars

Ideally, states should ensure that local dollars follow the child across school district boundaries. One way to do this is to deduct a per-pupil amount from home school districts’ state aid for each student who transfers out and allow it to follow the child across district lines. Tapping into local dollars ensures that districts’ incentives are maximized, and this approach negates the need for district-to-district billing of local dollars, which is undesirable because it reinforces the idea that dollars belong to districts, not the students.

Fundamentally, establishing portable education funding moves states closer to a boundaryless public education system—an idea first pioneered by Milton Friedman. In its purest form, this means eliminating residential assignment and funding students directly so that they can choose whatever option best fits their needs.

Download the full policy brief: Public Education Funding Without Boundaries

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Railroads were the first industry to face national industrial regulation, beginning with the Interstate Commerce Act of 1887. In the early 20th century, the common carrier rules imposed on railroads were applied in a similar fashion to motor carriers, pipelines, and telecommunications. The stringency of these rules on freight rail gradually increased for two generations despite vast changes to the economic landscape that resulted in growing competition from less-regulated modes of transportation.

By the middle of the 20th century, economic regulation began to take its toll on the railroad industry, favoring its fast-growing competitors in highway trucking and passenger aviation. Facing the imminent collapse of rail as a viable mode of freight transportation in the U.S., Congress began reducing harmful economic regulation of the industry in the 1970s, culminating in the Staggers Rail Act of 1980.

Four decades after partial deregulation, U.S. freight railroads are now the most extensive and productive in the world, but new competitive and policy threats have appeared on the horizon. Part 2 of this report surveys the history of economic regulation of the U.S. railroad industry. Part 3 examines the results of partial freight rail deregulation. Part 4 details emerging threats and recommends reforms to ensure the long-run productivity and viability of transporting freight by rail.

The U.S. railroad industry’s regulatory experience offers an important cautionary tale for proponents of additional regulation of the economy. History and practice show that even the best-intentioned regulations—those carefully seeking to balance the interests of the parties involved—can lead to distorted markets, reduced prosperity, and a variety of other unintended consequences.

This is not to say that regulatory balance, which was explicitly addressed in the Staggers Act, is not something to be considered. But the public interest is not served when regulators acquiesce to the demands of self-interested parties overly focused on the short-run impacts on a narrow slice of economic activity. Rather, advancing the public interest demands that regulators consider the unique characteristics of the industry in question and its role in the broader economy over the long run.

Shippers and unions, as well as the U.S. as a whole, have greatly benefited from the partial deregulation that followed the enactment of the Staggers Act. Even with the COVID-19-era supply chain chaos currently plaguing carriers and shippers alike, inflation-adjusted rail freight rates remain far below the heavily regulated rates of the 1970s.

While righting market wrongs is a powerful impulse for many, the error costs of government action frequently exceed the costs of market failures. As shown by the history of railroad regulation, the costs of government failure can not only be enormous, but can persist over many decades—and difficult to undo once in place. When it comes to railroad regulation, Congress and regulators should tread lightly to avoid repeating the mistakes of the past.

Freight rail deregulation: Past experience and future reforms

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In the United States, school assignments are determined by families’ residences, casting unseen dividing lines in communities throughout the country. These government-imposed district boundaries or catchment zones divide communities, sorting children—often by wealth or ethnicity—into schools based on where they live. Many are unaware of these divisions until they realize that access to certain public schools often comes down to where you live.

Open Enrollment Best Practices by State

For example, Kelsey Williams-Bolar—a single mom completing her degree and working as a teacher’s aide—realized that she could not continue to enroll her daughters in their assigned public school in Akron, Ohio. Not only were her daughters being bullied at school, but Akron public schools were low-performing and in poor condition.

She decided to have her children live part-time with her father in the suburbs. While there, she enrolled her children in the Copley-Fairlawn School District, where her father’s home was zoned. However, Williams-Bolar and her father were charged with felonies after a private investigator, hired by the Copley-Fairlawn School District, discovered that Williams- Bolar did not live inside the school district. Williams-Bolar received two concurrent five-year sentences (suspended to 10 days) for using her father’s address to enroll her children in a better school district. Nineteen cases, similar to Williams-Bolar’s, have been reported in eight states since 1996.

Williams-Bolar’s story illustrates how school district boundaries often serve as barriers to better education options for many families. Residential assignment can have long-term ramifications for students, even after they graduate from high school. For instance, Advanced Placement (AP) courses are a valuable tool for high school students, allowing them to receive college credit while still in high school. As of 2021, however, US News reported that nearly a quarter of high schools—mostly in rural areas—did not offer AP courses. This means that students assigned to rural public high schools could end up paying thousands of dollars more for college.

In fact, the Missouri Business Alert reported in 2020 that the difference in AP courses offered at two Missouri high schools, located less than 20 minutes from each other, could cost their respective graduates thousands of dollars. Students assigned to the rural Southern Boone High School could earn a maximum of five college credits, whereas students assigned to its more urban counterpart, Hickman High School, could earn a maximum of 18 college credits. This difference in available AP courses means that graduates from Southern Boone could end up paying nearly $4,000 more in college tuition at the University of Missouri than their peers from Hickman High.

These examples show that residential assignment locks students into their assigned schools even if they aren’t a good fit. Students need flexible education options that may not be available in their assigned district, such as specialized programming, school culture or learning philosophy, or better academic opportunities.

K-12 open enrollment provides a solution for families assigned to public schools that aren’t a good fit for their children. This policy would allow children to enroll in any public school so long as it has open seats. While 43 states have some sort of open enrollment, only 11 states have mandatory open enrollment laws.

This analysis is a roadmap for developing robust open enrollment. It explores the benefits of open enrollment, outlines the core tenets and best practices for open enrollment, examines which states have the best open enrollment policies on the books, and provides an open enrollment snapshot of all 50 states. These state snapshots show policymakers what each state is doing well, where each state falls short, and the necessary steps to establish robust open enrollment.

Reason Foundation’s Five Best Practices for Open Enrollment

1. Mandatory Cross-District Open Enrollment: School districts are required to have a cross-district enrollment policy and are only permitted to reject transfer students for limited reasons, such as school capacity. Policies, including all applicable deadlines and application procedures, must be posted online on districts’ websites.
2. Mandatory Within-District Open Enrollment: School districts are required to have a within-district enrollment policy that allows students to transfer schools within the school district, and are only permitted to reject transfer requests for limited reasons, such as school capacity. Policies, including all applicable deadlines and application procedures, must be posted online on districts’ websites.
3. Transparent Reporting by the State Education Agency (SEA): The State Education Agency annually collects and publicly reports key open enrollment data by school district, including transfer students accepted, transfer applications rejected, and the reasons for rejections.
4. Transparent School Capacity Reporting: Districts are annually required to publicly report seating capacity by school and grade level so families can easily access data on available seats.
5. Children Have Free Access to All Public Schools: School districts should not charge families transfer tuition.

This report evaluated each state on these best practices to get a snapshot of where each state stands and provides recommendations for each state to improve open enrollment practices.

State-by-state Open Enrollment Analysis

State	Total Best Practices (out of 5)	Cross-District Open Enrollment	Within-District Open Enrollment	Transparent SEA Reporting	School Capacity Reporting	Law Against Public School Tuition for Students
Alabama	0	X	X	X	X	X
Alaska	0	X	X	X	X	X
Arizona	4			X
Arkansas	1	X	X	X	X
California	0	X	X	X	X	X
Colorado	3			X	X
Connecticut	1	X	X	X	X
Delaware	3			X	X
Florida	4			X
Georgia	1	X		X	X	X
Hawaii	1	N/A	X	X	X
Idaho	1	X	X	X	X
Illinois	0	X	X	X	X	X
Indiana	0	X	X	X	X	X
Iowa	1		X	X	X	X
Kansas	4		X
Kentucky	0	X	X	X	X	X
Louisiana	1	X	X	X	X
Maine	1	X	X	X	X
Maryland	0	X	X	X	X	X
Massachusetts	1	X	X	X	X
Michigan	1	X	X	X	X
Minnesota	1	X	X	X	X
Mississippi	1	X	X	X	X
Missouri	0	X	X	X	X	X
Montana	0	X	X	X	X	X
Nebraska	2	X	X	X
Nevada	0	X	X	X	X	X
New Hampshire	1	X	X	X	X
New Jersey	0	X	X	X	X	X
New Mexico	0	X	X	X	X	X
New York	0	X	X	X	X	X
North Carolina	0	X	X	X	X	X
North Dakota	0	X	X	X	X	X
Ohio	0	X	X	X	X	X
Oklahoma	4		X
Oregon	0	X	X	X	X	X
Pennsylvania	1	X	X	X	X
Rhode Island	1	X	X	X	X
South Carolina	0	X	X	X	X	X
South Dakota	0	X	X	X	X	X
Tennessee	2	X		X		X
Texas	0	X	X	X	X	X
Utah	4			X
Vermont	1	X	X	X	X
Virginia	0	X	X	X	X	X
Washington	0	X	X	X	X	X
West Virginia	1	X	X	X	X
Wisconsin	3		X		X
Wyoming	0	X	X	X	X	X
Total States Implementing Best Practices		9/49	7/50	3/50	7/50	24/50

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High rates of incarceration in the United States have rightfully garnered significant attention from policymakers, researchers, and the public. However, community supervision programs, including parole and probation, have received comparatively little attention. This disparity is notable given the fact that the number of people under community supervision is more than twice as large as the incarcerated population.

In fact, the 3.9 million people on parole and probation in 2020 accounted for 70% of the total correctional population that year. As policymakers pursue reforms to reduce the incarcerated population, the share of correctional populations under parole and probation has increased. Supervision agencies are often under-resourced and are increasingly required to find ways of doing more with less.

Probation and parole are intended to encourage community reintegration by providing an alternative to incarceration and keeping justice-involved individuals in their communities. However, a growing body of research finds that community supervision programs may be contributing to the problem of mass incarceration in unintended ways. Individuals under community supervision are typically subject to conditions including regular check-ins, drug testing, curfews, electronic monitoring, and the payment of fines and fees. In some cases, failure to comply with these conditions can result in a revocation of community supervision and a return to jail or prison.

Of the reported 1,790,000 individuals who exited probation in 2019, only about 53% successfully completed their probation. Approximately 13% of parole exits that year were attributable to parole revocations that resulted in incarceration. Among those who were revoked and returned to incarceration, about 40% were incarcerated due to technical violations. Only 31% were incarcerated for new crimes, with the remaining 29% incarcerated for other unknown reasons.

One of the most common requirements placed on individuals under community supervision is that they have regular contact with the officers assigned to manage their cases. The nature and frequency of this contact varied depending on the specific needs and risk level of each individual under supervision. One form of contact between supervisees and officers is an in-person parole or probation meeting. These meetings often take place at an agency office and may serve a variety of purposes. Supervisees may provide updates on education and employment, receive support and treatment, and be tested for recent drug use.

Despite their importance to effective supervision, office visits are often difficult to coordinate. Supervisees frequently miss appointments due to work, education, or difficulty securing transportation. Missed appointments and time spent coordinating meetings represent opportunities to improve the use of scarce time by parole and probation officers. Eliminating these inefficiencies would allow officers to focus their time and attention on higher-risk supervisees in greater need of intensive supervision.

Moreover, failure to meet with supervising officers is among the leading forms of technical violations committed by parolees. For example, an analysis of parole violations in Michigan found that failure to report to probation officers was by far the most common type of violation, accounting for over 33% of all recorded violations.

Surprisingly, one relatively low-cost intervention that focuses on reducing the frequency of missed appointments for probation and parole supervision is supported by a growing body of evidence: sending text message reminders to supervisees regarding upcoming appointments.

To assess the potential of test-message reminders to reduce the number of missed parole and probation meetings, a randomized control trial was recently conducted among community supervision participants in Arkansas.

Our findings suggest that sending text scheduled appointments could reduce canceled and missed appointments by as much as 21% and 29%, respectively.

To be sure, there are many necessary reforms to community supervision in the United States. Policymakers should seek to ensure that community supervision is focused on rehabilitation and reintegration rather than doling out punishment. To that end, revocations and incarceration for technical violations should be limited.

Supervising officers must also have sufficient time and resources to effectively support the clients under their supervision. While certainly not a panacea, improving meeting attendance through text message alerts is a cost-effective way of reducing technical violations and improving the efficiency of community supervision programs.

Each year, more than four million Americans are under community supervision. Too often, community supervision programs like parole and probation exacerbate the problem of mass incarceration rather than diverting people away from jail and prison. Individuals on community supervision are subject to a litany of supervision conditions and, more often than not, fail to meet all of those conditions. As many as three-fourths of people under community supervision commit some form of a technical violation of their supervision conditions. These technical violations can result in incarceration, creating a supervision-to-incarceration pipeline. In fact, technical supervision violations account for approximately 23% of state prison admissions each year.

Several reforms are necessary to ensure that community supervision programs fulfill their purposes. Reforms should refocus supervision on reintegrating justice-involved individuals into society and maintaining public safety rather than punishing individuals for minor technical violations. As demonstrated in the Arkansas experiment reviewed in this policy brief, sending text message reminders is an inexpensive and effective way to improve supervision appointment attendance at a cost of just two cents per text message. Improved attendance can reduce the number of technical violations and helps make efficient use of supervising officers’ time and resources.

As the share of correctional populations under parole and probation continues to grow, making efficient use of supervision agency resources will be increasingly important. While text message reminders may only be a minor part of necessary policy reforms within community supervision, their potential impact should not be overlooked.

Full Policy Brief—

Addressing Mass Supervision In the United States: How Text Message Reminders Can Help Reduce Technical Violations of Community Supervision

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The history of drug prohibitions and enforcement efforts in the United States always reflects a kind of federalism in action. Because the federal government always lacks the resources and often the political will to fully enforce drug prohibitions nationwide, state laws and local practices will inevitably shape and color the full picture of U.S. drug policy and enforcement. When alcohol prohibition was written into our nation’s Constitution, for example, state and local officials embraced an array of different approaches to enforcing temperance, which produced a patchwork of on-the-ground practices across the nation.

In modern times, marijuana prohibitions and reforms present the most salient example of national drug policies reflecting diverse and sometimes clashing federal and state laws and local practices. Though some have explored how federal marijuana prohibition has shaped state reform efforts and local enforcement realities, few have focused attention on the most tangible and arguably most consequential aspect of federal enforcement, namely federal sentences imposed for marijuana activity.

Even while formal federal marijuana law has persisted unchanged amid state-level reforms, federal marijuana enforcement on the ground has changed dramatically. Drawing on data from the U.S. Sentencing Commission (USSC), this brief notes new federal enforcement patterns that have emerged in recent years.

The impact of marijuana prohibitions and the scope of enforcement are often documented through nationwide arrest data, in part because the numbers are enormous and in part because there is little other reliable national information on marijuana enforcement.

Yearly marijuana arrest data, as collected by the Federal Bureau of Investigation (FBI), are dynamic: as arrests for all drug offenses increased during the War on Drugs acceleration in the 1980s, the total number of possession and sale of marijuana arrests actually dipped due to a more aggressive focus on cocaine and heroin. Yet, as state marijuana reforms picked up steam, so too did total marijuana federal and state arrests—peaking at over 850,000 arrests in 2007 and averaging over 750,000 arrests annually for more than a dozen years. Starting in 2014, FBI data showed declines in total marijuana arrests and they reached a (pre-pandemic) low of under 550,000 arrests in 2019, and then hit another new low of just over 350,000 in 2020.

Disconcertingly, as the American Civil Liberties Union has documented, one pernicious consistency in marijuana arrest data has been racial disparities, with Blacks many more times likely than Whites to be arrested for marijuana possession.

While national arrest patterns tell one story, sentences imposed for marijuana convictions reflect the most significant consequence of marijuana prohibition enforcement. Disappointingly, there seemingly has been no systematic collection or analysis of marijuana sentencing outcomes nationwide since the work done by Ryan King and Marc Mauer through the year 2000.

Indeed, even with growing attention on marijuana reform, there are no recent data on how many persons nationwide are incarcerated for marijuana offenses nor any detailed accountings of the types of offenders still incarcerated for marijuana activities in the states.

However, data assembled by the USSC allow a close look at how federal marijuana enforcement has cashed out since the start of state-level marijuana reforms in the form of yearly sentencing outcomes.

Full Policy Brief: How State Reforms Have Changed Federal Enforcement of Marijuana Prohibition

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In November 2014, police pulled over a disabled veteran in South Carolina for a minor traffic violation. After searching the veteran’s car, the police discovered small amounts of cannabis. Officers gave the veteran an ultimatum: help them or face stiff charges. Out of fear of criminal punishment, the veteran agreed to a controlled purchase of cannabis— roughly 100 dollars’ worth—from her friend, Julian, in Myrtle Beach. As a result, the police had enough information to establish probable cause to obtain a search warrant for Julian’s home.

A few months later, 12 officers from a multi-jurisdictional Drug Enforcement Unit (DEU) prepared to enter Julian’s home as part of “Operation Jules”—the nickname DEU used for the raid on Julian’s apartment. The officers, dressed in face coverings and camouflage, forced open the apartment door with a battering ram and eventually fired 29 bullets at Julian, leaving him paralyzed from the waist down.

As the result of the shooting and subsequent eight-figure settlement against the DEU and the City of Myrtle Beach, several changes to policing practices in the area were made. Specifically, the DEU stopped executing search warrants and using routine traffic stops to turn citizens into drug informants. While such policy changes should be lauded, reducing such overly intrusive policing tactics should not have to come at such costs.

The Myrtle Beach case encapsulates many of the problems with policing practices today: pretextual stops, militarization, and the overpolicing of low-level offenses.4 Although various policing reforms considered by lawmakers to address some of these problems may yield favorable results, such reforms fail to consider an essential aspect of modern-day policing—its inseparable link to the drug war. Because policing tactics are designed to maximize drug arrests and seizures, law enforcement initiates frequent and unwarranted contact with pedestrians and motorists. Such contact results in the overpolicing of minority communities, increased prison populations and jeopardized public safety.

Despite the interwoven nature of drugs and policing, drug decriminalization is not often considered a reform of policing practices. However, one could argue that decriminalization should be understood as a vital tool in limiting intrusive policing practices. Drug decriminalization is typically defined as a law that removes criminal sanctions for acquiring, possessing, or transporting small quantities of drugs for personal use and replaces them with civil sanctions.

This paper adopts that definition with two additions. First, the definition includes only decriminalization laws that have been considered by courts to limit police investigative authority—i.e., laws that affect police ability to establish reasonable suspicion or probable cause. Thus, state decriminalization laws that permit custodial arrests for civil drug offenses are not included.

Second, the definition also includes cannabis legalization. The definition does not include removing criminal sanctions for the production, distribution, or sale of drugs.

This paper proceeds in three parts.

Part 2 discusses the substantive reform arguments and approach to the decriminalization debate.

Part 3 explores how drug decriminalization affects policing practices. Specifically, it describes how drug decriminalization affects police authority to expand stops, conduct searches, and make arrests for drug possession. To illustrate these effects, three case studies are examined: New York, Oregon, and Colorado.

Part 3 also examines how drug decriminalization affects departmental incentives to conduct pretextual stops and militarize police personnel and divisions.

Lastly, Part 4 acknowledges and addresses how implementation issues with decriminalization affect policing practices.

Proponents of drug decriminalization typically emphasize the reform’s utilitarian potential to reverse mass incarceration trends, reduce racial disparities within the justice system, and minimize the economic costs associated with drug enforcement. However, such arguments are incomplete because they miss an important benefit—decriminalization’s effect on policing.

Recent decriminalization legislation in New York, Oregon, and Colorado affects police authority to expand stops, conduct searches, and make arrests for drug possession. Such legislation also affects departmental incentives to conduct pretextual stops and militarize police personnel and divisions. With the diminished capacity and incentive to pursue drug possession arrests, police can redirect resources toward crimes with victims, crime prevention, and public safety.

More time and data are needed to assess decriminalization’s impact on policing thoroughly. Nonetheless, cannabis legalization in many states, as well as comprehensive decriminalization in Oregon, provides a natural case study for further examination of this approach.

Full Policy Brief: Drug Decriminalization as Police Reform

The post How drug decriminalization affects policing appeared first on Reason Foundation.

However, despite funding developments from year to year, public pension plans remain subject to an uncertain economic climate, and the next downturn can quickly widen the unfunded gap.

While there are several answers for resolving the enormous debt accrued by pension plans, the standard solution employs a systematic plan to pay off the debt over many years. Usually, UAL is not paid off as a lump sum but is “amortized” over some time.

While the two most common amortization methods are level-dollar and level-percent, only the level-dollar method ensures predictable amortization contributions from year to year. It requires lower payment in the initial years of the schedule because it creates a predictable path to solvency by ensuring that specific amounts are paid each year.

When it comes to open and closed amortization schedules, this analysis graphically illustrates that closed amortization schedules ensure a timely repayment of UAL. Open amortization schedules, on the contrary, run the risk of keeping the amortization payment continually below the interest expense. This leads to perpetual negative amortization and makes it impossible for the pension plan to pay out UAL.

It is also important to keep the amortization period short. For longer amortization horizons, like 25 years, the interest exceeds amortization, leading to wasteful spending. Keeping an amortization schedule at 15 years ensures the intergenerational equity principle, that is, to pay off UAL within the average remaining working lifetime of active members of a pension plan.

The analysis that goes into calculating the amortization schedule relies on an assumption about the payroll growth rate and discount rate to be realized. Notably, the level-dollar amortization does not rely on an assumption about payroll growth, highlighting another advantage of the method. The discount rate, however, plays a critical role in the amortization of pension debt regardless of the method chosen. Setting the proper discount rate reduces the chance that the annual payments will not earn enough returns to pay off the debt eventually.

After thoroughly evaluating these policies, best practices for amortizing pension debt call for several recommendations, these include using level-dollar amortization, a closed schedule that does not exceed 15 years and setting appropriate discount rates. Plan sponsors should adhere to these principles to ensure the pension plan is equipped to fulfill its promises to existing retirees, as well as to assure the future robust functioning of the plan.

When adopting a particular amortization policy for a public pension, policymakers must consider a number of factors and tradeoffs. Time preference and budgetary constraints may prove influential forces in selecting from among the amortization method choices.

However, from the perspective of plan solvency and intergenerational equity, there are best practices that a pension plan can follow in adopting the best possible amortization policy.

(1) The level-dollar method is better than the level-percent method. Using level-dollar avoids actuarial assumption sensitivity, the potential for negative amortization, and requires lower total contributions over time compared to level-percent.

(2) Closed amortization schedules are better than open schedules. Using a closed schedule ensures the unfunded liability will actually be paid off. The open amortization approach violates the basic principles of intergenerational equity because the unfunded liability is never paid off.

(3) The length of an amortization schedule should not exceed the average remaining service years of the plan. This practice adheres the closest to the intergenerational equity principle. Today’s taxpayers, not future ones, should fund the pension benefits of today’s government employees. A good rule of thumb is to adopt schedules that are 15 years or less.

(4) The shorter the amortization schedule, the better. Shorter amortization periods may mean a higher level of contribution rate volatility, but they save costs in the long run and allow the pension plan to better recover from a significant near-term negative experience.

(5) Discount rates should appropriately reflect the risk of the plan’s liabilities. If the discount rate is too high, the recognized value of liabilities will be too low; thus, the value of unfunded liabilities that are amortized will be too low, and the plan will risk not having enough assets to pay promised pensions.

Plans that choose to adopt alternative policies to this gold standard can still make choices that aim for long-term solvency. Specifically:

(6) If using the level-percent method, adopt a closed design with a schedule of 15 years or less. Amortization schedules should always be closed, and the shorter the schedule, the better the policy.

(7) To avoid contribution rate volatility, use a layering method. Seeking to avoid spikes in amortization payments is an understandable budgetary goal, but it is best pursued by layering closed amortization schedules, rather than by using an open schedule.

Full Policy Brief: Best Practices for Pension Debt Amortization

The post Best practices for pension debt amortization appeared first on Reason Foundation.

The hybrid retirement pension plan design, a design that typically combines a guaranteed benefit and 401(k) style individual retirement account, has seen ever-increasing interest from public sector employers in the United States since the market downturns of the late 2000s. Although hybrid retirement plans have been around for decades—notably one of the first adopters being the Federal Employee’s Retirement System—most stakeholders know relatively little about their purpose and possible structure.

A hybrid plan’s goals are no different than any other retirement benefit design’s goals: to provide adequate benefits to workers at an affordable cost to them and their employers. Yet hybrid plans are also beginning to help answer a political question in the wake of the stock market volatility in the last 20 years: What is the appropriate level of risk that employers should shoulder to provide retirement benefits to their employees? The viability of future traditional defined benefit pension plans may depend on a common outlook on this question from both employers and participants.

The recent shift toward offering hybrid plans to newly hired government employees suggests that governmental employers may be changing their perceptions of the balance of financial risk between employees and employers and whether governments should put greater risk of investment returns on employees by distancing from the traditional defined benefit pension. Employee and labor associations on the other hand, often have extreme— whether fair or not—biases against the 401(k)-style defined contribution retirement plans that are typical in the private sector.

The hybrid retirement plan offers policymakers and stakeholders a potential compromise between the two opposing viewpoints, potentially offering a “best of both worlds” blended approach.

As with the design of any pension system, the quality of a hybrid plan comes down to how it is structured. A well-designed hybrid strikes a proper balance of risk between employees and employers while putting career-long employees on a secure path to retirement and granting non-career members the flexibility they need to get the most out of their retirement contributions. Intelligently designing the defined contribution portion of the benefit is crucial, as generally half of the hybrid employee’s retirement benefits will be paid out of their accumulated assets.

When designing the DC, policymakers need to ensure proper contributions are being made by employees (and sometimes employers), grant a wide array of investment options, and offer annuities to guarantee lifetime income.
Although the path to an adequate retirement benefit may look different from a traditional pension, intelligently designed hybrids have nonetheless shown to provide relatively similar pension benefit accruals for employees—at a much lower risk to the states and local governments who provide them.

Full Policy Brief: Best Practices in Hybrid Retirement Plan Design

The post Best practices in hybrid retirement plan design appeared first on Reason Foundation.

The COVID-19 pandemic hit the transportation sector hard and perhaps the aviation industry hardest. At its worst in April 2020, U.S. air passenger transportation declined by 96% year-over-year. While air travel has rebounded since that nadir, full recovery is expected to take years, particularly for international and business travel. The passenger air transportation market at the end of the decade is likely to look very different than what had been projected prior to the pandemic.

Like all segments of the aviation market, airports will need to adjust to this new normal. Both airlines and airports received tens of billions of dollars in taxpayer bailouts in the United States, and returning the aviation industry to self-sufficiency is the only fiscally sustainable path forward.

To that end, giving airports maximum operational and financing flexibility to adjust to emerging conditions is critical to minimizing the costs and disruptions associated with aviation recovery. One important way that Congress can facilitate this flexibility at no cost to the Treasury is by modernizing the airport passenger facility charge.

The passenger facility charge (PFC) is a congressionally authorized, federally regulated local airport user fee. The PFC exists alongside the Airport Improvement Program (AIP), a federal grant program funded through aviation taxes. Together, the PFC and AIP have in recent years accounted for approximately half of total airport funding available for capital projects.

AIP funds generally can be used only for airside projects, such as runways, taxiways, aprons, noise abatement, and land acquisitions. In contrast, the PFC funds can be used for AIP-eligible projects plus numerous landside projects, such as passenger terminal and ground transportation improvements, and can be used to service debt. For commercial airports with sizable passenger volumes, these differences in flexibility have led to a strong preference for the PFC over AIP funding.

The federal passenger facility charge cap was last raised by Congress in 2000. Under current law, public airports in the U.S. can charge a maximum PFC of $4.50 per boarding for the first two flight segments of a trip, with PFC collections per passenger being capped at $9 per one-way and $18 per round-trip. Thanks to inflation, the passenger facility charge has seen its purchasing power plummet by approximately half, negatively impacting airports’ ability to address their growing list of needed improvements.

Two findings support modernizing the passenger facility charge. First, evidence suggests that PFC use has a positive effect on airport efficiency while AIP use has a negative effect. Legislation introduced in previous Congresses would have uncapped the PFC while proportionately reducing AIP authorized spending, with this change in the PFC/AIP mix expected to result in greater airport productive efficiency.

Second, major non-aeronautical revenue sources, especially revenue from parking and rental car fees, were facing heightened risks and declining prospects prior to the pandemic as travelers opted for new ride-hailing ground transportation services to and from airports. Pandemic-related concerns about shared transportation may have temporarily shifted traveler preferences back to driving modes that support parking and rental car revenue, but how long this will persist is highly uncertain. Since the PFC charges airport terminal users regardless of their use of terminal concessions, it represents a lower-risk, predictable, and sustainable revenue source.

In addition to providing airports with predictable and sustainable revenue, the PFC was also designed to promote airline competition. Beginning in the 1950s, airports negotiated long-term leases with their airline customers to lock in airline payments so as to retire debt and finance airport improvements. In exchange for this financial support, incumbent airlines received long-term exclusive-use gate leases, which they used to restrict access to new and often lower-cost entrants.

In recent years, the trend has shifted. Granting long-term, exclusive-use gate leases has faded as a concern, but limited gate availability at large and medium-sized hub airports has still been estimated to raise consumer airfares by billions of dollars every year. In addition to serving as an important airport self-help tool, the PFC can increase airline competition and thereby dilute price-setting power by dominant incumbent airlines. Air travelers can thus benefit from improved airport facilities and lower airfares.

Alternatives to the passenger facility charge are inferior from both airport revenue collection and consumer welfare perspectives. Modernizing the passenger facility charge would promote local airport self-sufficiency, airport efficiency, and reduced airfares through enhanced carrier competition as the U.S. recovers from the COVID-19 pandemic. As Congress debates the FAA reauthorization due at the end of September 2023, it should eliminate the statutory passenger facility charge cap of $4.50 to promote a pro-consumer and pro-taxpayer aviation recovery.

Full Brief: Modernizing the Passenger Facility Charge for Aviation Recovery

The post Modernizing the passenger facility charge to improve aviation appeared first on Reason Foundation.

The defined benefit (DB) pension plans governments use across the United States rely on combining contributions from members and the state with long-term investment returns. This is because they are intended to be prefunded, which ensures that retiree pension expenses are covered fully in the long run. Prefunding benefits this way allows more benefit payments to flow out of the plan than contributions are flowing in without compromising the integrity or solvency of the system.

Analyzing a public pension system’s cash flow—the rates at which money is entering and leaving the fund—is one way to anticipate imbalances in pension plans that must be fixed to ensure long-term solvency.

This policy brief uses the Montana Public Employee Retirement System (PERS) as a case study to illustrate the principles and importance of conducting a cash flow analysis of public pension plans.

Having negative operating cash flow does not necessarily indicate an inherent problem with mature pension plans. However, it can reveal certain risks that should be properly managed. Adopting a funding policy that is responsive to unfunded liabilities would minimize insolvency risk, and using a more conservative return assumption—particularly one that is aligned with short-term market expectations—would help plans better align return assumptions with funding targets.

Full Policy Brief: The impact of cash flow on public pensions

The post The impact of cash flow on public pensions appeared first on Reason Foundation.

Many people are born with or develop very serious medical problems that threaten to shorten their lives or severely reduce their quality of life. This tragedy can be avoided or ameliorated with innovative pharmaceutical treatments. Simply put, pharmaceuticals can help people lead happier, longer, and more productive lives. But pharmaceutical innovation in the United States has slowed in recent decades while pharmaceutical costs have skyrocketed, placing many vulnerable individuals beyond the hope of receiving life-changing drugs.

Between the 1970s and 2000s, the average cost of bringing a new pharmaceutical to market increased by an order of magnitude, even after adjusting for inflation. This has occurred over the same period that major technological breakthroughs have been made in the fields of computer processing, telecommunications, engineering, and even the practice of medicine more broadly. Indeed, most U.S. industries have been able to create innovative new products and push down costs since the mid-20th century.

So why has pharmaceutical development become slower and more costly? After all, big screen panel televisions are nice but not nearly as critical as health and life itself.

The U.S. government clearly understands how important pharmaceutical development and innovation are. Congress has established and financed a vast bureaucracy to oversee pharmaceutical development and passed many laws intended to spur innovation and reduce costs. Yet, it seems the more efforts Congress makes, the higher prices climb and the slower innovation becomes, imposing negative consequences on both the quantity and quality of human life. Many observers find this result understandably frustrating.

What if the way we choose to regulate pharmaceutical development contributes to these frustrating results?

Most industrialized nations have created national or supranational regulatory authorities to oversee pharmaceutical development, but not all work the same way. Comparing the U.S. Food and Drug Administration (FDA)—the agency with primary responsibility for regulating pharmaceuticals—with corresponding agencies in other countries offers key insights.

Even comparing today’s FDA to the FDA at different points in time reveals how the agency’s regulatory apparatus and relationship with industry have evolved, often with consequences for the health of private individuals. From these insights, it is possible to imagine different methods of pharmaceutical regulation that would better serve society’s needs by encouraging widespread availability of life-saving drugs at prices individuals can better afford.

This brief reviews the regulatory apparatus governing pharmaceutical development in the United States.

Part 1 examines the historical cost trends—for both time and money—of bringing an approved pharmaceutical to market.

Part 2 examines the effect of pharmaceutical regulation on human life and considers both the benefits and costs of that regulation on Americans’ health.

Part 3 explains the basic regulatory process for pharmaceutical development and examines key policy issues and economic trends that influence pharmaceutical development.

Part 4 highlights emerging special topics in pharmaceutical regulation, such as medical research into the cannabis plant and its derivatives, and the FDA’s growing scope of powers, including previous attempts to regulate common food items.

Part 5 concludes with recommendations for how best to reform the FDA’s mission to achieve the broad public goal of improving the lives and health of all Americans.

Full Brief — Focus on the FDA: Allowing the Market to Determine Effectiveness

The post How to reform the FDA appeared first on Reason Foundation.

Inflation’s impact on the purchasing power of retirement benefits and savings needs to be managed when designing and funding effective retirement plans. Periods of high inflation show how important properly designing inflation protection measures is in public sector defined benefit (DB) pension plans.

These plans have addressed this dilemma in different ways over the years with varying degrees of effectiveness. More recently, public sector pension reform efforts have often significantly changed how cost-of-living adjustment (COLA) and post-retirement benefit increase (PBI) features are designed and funded.

This brief focuses on how state and local government defined benefit public employee retirement systems have used cost-of-living adjustment benefit features to address inflation’s risk to retirement security. It also provides a set of best practices to help guide policymakers and stakeholders in designing and funding inflation protection design elements for their defined benefit pension plans.

Executive Summary

Cost-of-living-adjustment (COLA) benefits are a common feature of many public employee retirement systems used to provide a level of protection against loss of purchasing power in retirement resulting from inflation. Public defined benefit (DB) pension plans use a wide variety of COLA benefit designs and funding methods that have led to a mixed bag of outcomes for retirees and have often exacerbated existing underfunding problems.

The principal problem with most COLA benefit provisions is failing to treat it as one of the plan’s core benefit objectives and to prefund it the same way as the primary retirement benefit. Instead, too many plan sponsors apply ad hoc COLAs unevenly. In addition, there is an issue of inconsistent timing. Moreover, not enough thought is given to how actual inflation impacts those who receive the increase. And finally, too little consideration is given to how the increase impacts the total program’s long-term funding.

This brief identifies several proposed best practices to guide public plan sponsors to a more coherent and financially sustainable COLA benefit design and funding for their pension systems. The best practices include:

• Best Practice #1 – Public pension plan sponsors should create a formal cost-of-living adjustment benefit policy that is an integral part of the overall retirement plan objectives. This provides clarity for the retirees, sets expectations properly, and provides guardrails for future policymakers when faced with changing circumstances.
• Best Practice #2 – The COLA benefit design should clearly identify 1) who is eligible for the COLA, 2) what benefit the COLA applies to, and 3) when it is payable. This is necessary to force recognition of the reality that the plan cannot and should not provide unlimited inflation protection for all participants.
• Best Practice #3 – The COLA amount should reflect an objective inflation benchmark. This helps provide a more predictable amount of inflation protection and more equitable distribution of benefits for similarly situated retirees.
• Best Practice #4 –The COLA Benefit amount should be consistent, predictable, and clearly communicated to the retirees. Retirees need to have a firm understanding of what COLA benefits will or will not be provided to set expectations and to allow them to manage their retirement assets and income more effectively.
• Best Practice #5 – The COLA benefit amount should be limited. This recognizes that inflation varies over time and that the COLA benefit design distinguishes between “normal” inflation and periods of high inflation that are more difficult to predict. Establishing limits or caps on the COLA benefit is needed to allow more sustainable funding approaches.
• Best Practice #6 – COLA costs should be pre-funded as part of the overall normal cost of the retirement plan. Pre-funding of COLA benefits is essential to ensure the consistent delivery of inflation protection to retirees and to avoid the creation of unfunded liabilities. It also avoids the creation of complicated and unpredictable COLA funding schemes, such as investment gain sharing or actuarial funding margin reserve allocations.
• Best Practice #7 – COLA benefits should be subject to change for future accruals and new employees. COLA benefits should be subject to adjustment for future accruals for current active employees and for new hires to create benefit design and funding flexibility under changing circumstances.
• Best Practice #8 – Plan sponsors must stop making the same mistakes. This recognizes that it is important to break the cycle of suboptimal COLA practices.
• Best Practice #9 – New practices must refrain from trying to fix all past inflation. Not all past inflation has to be fixed. This recognizes that there are limited public funding resources, and prioritization among competing demands for the public treasury is necessary.

Cost-of-living adjustment design and funding are complicated at many levels. The need for some inflation protection for public pension retirees is clear, but resources to provide protection are limited. This means public pension plan sponsors should carefully craft COLA benefit and funding policies that help maintain financial security for retirees but do so in a financially prudent and risk-managed basis.

Following the best practices outlined in this paper should provide some important guardrails for designing effective COLA benefits, which will help plan sponsors as they strive to strike the proper balance between cost, risk, and benefit in a way that works for both employees and employers.

Full Brief — Best Practices for Cost-of-Living Adjustment (COLA) Designs in Public Pension Systems

This policy brief is part of the “Gold Standard in Public Retirement System Design Series,” which reviews the best practices of state-level public pensions and provides a design framework for states that are struggling under the burden of post-employment benefit debt.

The post Best practices for cost-of-living adjustment designs in public pension systems 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.

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.

A transition from per-gallon fuel taxes to a mileage-based user fee system should be considered as a strategy to ensure adequate road funding for Michigan’s future.

This shift would apply to both gasoline taxes and diesel taxes. The objective should be not only to replace the former fuel tax revenue but also to remedy a number of other fuel tax shortcomings: their lack of transparency, lack of accountability of road providers to road users, and the fact that the current fuel tax works less like a user fee and more like just a conventional tax. The transition should focus on the benefits of improving Michigan’s aging and ailing highways as critically important to the state’s economic competitiveness.

The shift from fuel taxes to per-mile charges should be gradual. The best place to start is with limited-access highways, such as Interstates and other urban freeways. They could be converted to the MBUF system as a way to finance their reconstruction and modernization via issuing revenue bonds based on the projected user-fee revenues. The charges would be collected using a system such as the widely used and accepted E-ZPass, which uses prepaid accounts linked to windshield-mounted transponders in most cases. Customers would receive rebates based on the estimated fuel taxes they paid for the miles driven on roads using an MBUF. This would demonstrate that MBUFs are to be the replacement for fuel taxes, not an additional charge.

Converting the limited-access highways first would avoid many of the problems likely to be encountered by the pioneer states that attempt to convert all roads to MBUFs at the same time. Converting limited-access roads first would enable the Michigan Department of Transportation (MDOT) to avoid having to use decreasing fuel tax revenues for the very important tasks of rebuilding and then maintaining its Interstates and freeways. Over the next decade or two, MDOT could use most of its gas tax revenue on non-limited-access state and county roads to bring them up to a state of good repair.

By temporarily deferring the conversion of these other roads to per-mile charges, Michigan could learn from the successes and failures of other states, as they use current MBUF technologies to convert all their roads.

A decade or two from now, there will likely be better technologies and processes available for recording and reporting miles driven. In addition, much larger numbers of participants in other states should lead to reductions in the unit cost of processing mileage-based transactions.

In the near term, it would be wise for the state legislature and MDOT to plan for Michigan to take part in one of the federally funded MBUF pilot projects. It would be timely to have such a pilot project under way in the months following the release of the forthcoming MDOT study on the toll-financed reconstruction of interstates and other limited-access highways.

The pilot project would introduce a cross-section of the population (and potentially some elected officials) to the case for transitioning from the gas tax to per-mile charges. It would also support the case for starting the transition with proven technology and the modernization of Michigan’s most important highways.

The post Replacing Michigan’s gas tax with mileage-based user fees appeared first on Reason Foundation.

As auto travel and the economy recover from the COVID-19-related slowdown, transportation planners and engineers will need to decide how much new roadway capacity to build. In the post-World War II years, the U.S. built thousands of miles of highways—40,000 miles of Interstate highway alone between 1956 and 1980. However, the country has added significantly fewer miles over the past 40 years.

One reason that highway construction slowed is the growing challenge of building roadways, particularly in urban areas. Starting in the late 1960s, community groups began protesting the construction of Interstate highways, some of which divided neighborhoods. These protests led state departments of transportation (DOTs) to cancel numerous freeway projects and, along with the growing concern about the environment, gave power to anti-roadway and “smart growth” groups.

Over time, groups opposed to highways have become more sophisticated as social justice groups, residents opposed to development (also known as Not In My Backyard, or NIMBYs), and opportunistic politicians have joined forces.

One justification these groups have for opposing new highway capacity is a concept called induced demand. Induced demand is the notion that when you add new capacity to a congested highway, that improvement reduces congestion, which then leads to more people opting to travel and the return of congestion.

While induced demand exists in some circumstances, smart growth groups often exaggerate the magnitude of induced demand or claim it exists when some other factor, such as rapid population growth, is causing the congestion. They also fail to appreciate how, even if congestion returns, a highway can accommodate more travelers after it is widened. The purpose of transportation systems is not to reduce congestion, but to provide mobility.

Increasing demand for travel leads to the need for new capacity, not the other way around.

As detailed in Part 3, the following five factors lead to higher travel demand:

1. Growth in demand attributable to population, employment, or new activities in the
   market area served by the roadway
2. Redistribution of existing travelers geographically across the roadway network to
   optimize travel routes
3. Altered travel times that take advantage of additional capacity at preferred travel
   times
4. Modified travel modes resulting from new roadways or missing links in existing roadways
5. New trip generation or trip length increases as trip distribution patterns change

Only the latter two are legitimately induced demand. And only demand associated with new trip generation or increased trip length is a significant contributor to induced demand.

At the same time, all five sources of demand for new capacity are driven by the benefits of additional travel. New capacity brings many benefits as well as costs, and all have to be evaluated.

While induced demand was a significant concern in the 20th century, the shifting nature of travel, including the increase in working at home and growth in the services economy, is likely to reduce induced demand in the foreseeable future. Further, induced demand is not always bad, because new capacity creating the demand allows folks to travel when and where they want, creates economic activity, and improves safety.

This brief begins by providing a history of induced demand. Then, it examines different scenarios to see when induced demand is an issue and when it is not and how that affects the benefits of a capacity expansion.

Next, this brief explores how current and future travel patterns are likely to lessen induced demand. After that, it highlights the advantages of induced demand and compares how society views induced demand of highways compared with induced demand in other areas.

Finally, this brief provides some policy suggestions on how to reduce induced demand.

Full Policy Brief: Induced Demand’s Effect on Freeway Expansion

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