Streetsblog Capitol Hill

A burgeoning congressional push to let urban transit agencies tap federal funds for operating their systems is not sitting well with the transit industry's largest D.C. lobbying group, the American Public Transportation Association (APTA).

Paul Dean, APTA's government relations director, told Streetsblog Capitol Hill yesterday that legislation permanently opening the cash-strapped highway trust fund to transit operating budgets is "really not consistent with our position."

APTA, which has advocated for the transit industry on the Hill for more than a century, wants to see the highway trust fund remain a dedicated source of transit capital aid -- purchasing new equipment or maintaining existing infrastructure, for example.

The group continues to support temporary federal operating aid during the recession, which has forced many local rail and bus systems into layoffs, service cuts, and fare hikes. Still, APTA's skepticism could be a major obstacle to passage of the legislation setting up permanent operating assistance from Washington, which is sponsored by Rep. Russ Carnahan (D-MO) and Sen. Sherrod Brown (D-OH).

Dean noted that congressional budget scoring treats a transit-capital dollar, which has a long-term impact on the value of equipment, more favorably than a transit-operating dollar, which tends to be spent immediately on employee salaries. Congressional aides and lawmakers have told APTA that "they can give us a bigger, better bill if funds are used primarily for capital," he said.

Dean also highlighted the importance of ensuring dedicated financial support for transit from outside the federal sphere.  "A lot of folks look at it as a zero-sum game," he added, "that if you add a federal subsidy, that's going to lead to state and local governments decreasing their contribution, and you're going to be back in the same place you were -- with less money available to meet your capital needs."

APTA's stance leaves the transit industry split on the operating-aid issue. A new lobbying coalition, the Alliance for Transit Operating Assistance, reflects a collaboration between the Amalgamated Transit Union and the Community Transportation Association of America (CTAA), where rural transit agencies have a strong voice.

CTAA spokesman Scott Bogren told Streetsblog Capitol Hill that his group continues to talk with APTA about finding common ground on operating aid, adding that concerns about transit capital budgets are shared across the board.

But Bogren described existing law, which allows cities with fewer than 200,000 residents to spend federal money on transit operating, as oftentimes incompatible with the daily reality of many growing urban areas.

Read more...

The American Public Transportation Association (APTA), which has represented the transit industry in Washington for more than 120 years, has openly welcomed the year-long push for Congress to relax longstanding rules that prevent large urban agencies to spend federal grant money on their operating costs.

APTA president William Millar wrote on the National Journal's transport blog in June that the economic recession has heightened the need for extra federal operating assistance to keep local rail and bus networks running. "The decline in operational revenue is creating budget crises for many public transit systems – leading to fare increases and service cuts," he said.

But there is a crucial caveat to APTA's support for federal help with transit operating costs: the group does not want to see it come from the highway trust fund (HTF), which is facing a dire fiscal future as lawmakers struggle to raise money for a new long-term transport bill.

J. Barry Barker, APTA's vice chair of government affairs, outlined the group's nuanced stance in an op-ed this week (emphasis mine):

And finally, 2009 also brought a shift in APTA legislative policy with the adoption of new policies and an amendment to APTA’s Surface Transportation Authorization Recommendations. In addition to funding traditional transit priorities, the recommendations now include a policy supporting temporary operating subsidies from non-Highway Trust Fund monies, a result of the worsening economic situation and its impact on state and local transit aid.

APTA's resistance to letting HTF money go towards operating costs as well as transit capital projects, such as new rail-car purchases, is borne out by its dwindling coffers. Federal estimates show the HTF transit account, though not as cash-poor as the highways account, starting to run at a deficit in 2012.

Still, APTA's support for tapping non-HTF sources of federal operating aid could become a major sticking point going forward. Rep. Russ Carnahan's (D-MO) legislation on the issue -- which picked up a Senate counterpart this week as well as the endorsement of influential Rep. Charles Rangel (D-NY) -- would allow urban transit agencies to use federal formula grants on operating. Those formula grants come from the HTF, a detail that could well run afoul of APTA.

Local transit officials seeking more federal operating aid during lean budgetary times got a new ally today in Sen. Sherrod Brown (D-OH), who introduced legislation in Congress' upper chamber to give rail and bus agencies more flexibility to spend funding from Washington on averting service cuts and layoffs.

Brown's plan aligns with a House bill sponsored by Rep. Russ Carnahan (D-MO) and endorsed by 95 other Democrats. At a press event today announcing the Senate bill, the duo was joined by transit-boosting Rep. Betty Sutton (D-OH) and members of the Transportation Equity Network (TEN), Transportation for America (T4A), and the Amalgamated Transit Union (ATU).

The Brown-Carnahan measure would allow urban areas -- now barred from spending federal money on operating, save for 10 percent of their stimulus allocations -- to use between 30 percent and one-half of their federal transit grants to defray the cost of keeping trains and buses running.

The bill also would free up more funding for urban transit agencies that have demonstrated cuts in carbon emissions after getting anti-pollution stimulus grants and those agencies that can increase the amount of money raised for transit operating using sources other than the farebox.

ATU legislative director Jeff Rosenberg said in an interview that transit groups believe Brown's seat on the Banking Committee, which has jurisdiction over rail and bus networks, will put the bill in a good position as senators prepare to take up their version of long-term federal transport legislation.

Read more...

Rep. Betty Sutton (D-OH) was one of the prime movers behind the economically and environmentally misguided "cash for clunkers" program, but she is switching gears to help save transit in Lorain County, Ohio, where bus service could be canceled in 2010 after voters rejected a sales tax increase to raise operating funds.

The local Chronicle-Telegram newspaper reports that Sutton is seeking approval from congressional leaders for the county to reprogram $1.5 million in unspent stimulus money:

Sutton sent letters this week to David Obey, D-Wis., chairman of the U.S. House Committee on Appropriations, and Jim Oberstar, D-Minn., who chairs the U.S. House Committee on Transportation & Infrastructure, seeking approval for LCT to use $1.5 million in untapped American Recovery and Reinvestment Act of 2009 funds to operate the bus system.

“We hope new appropriations bills can be OK’d by year’s end that will let us use this unspent capital money,” Cordes said. “We’re trying to avert a total shutdown.”

Officials have said it is vital for the county to maintain some form of public transportation to remain eligible for federal transportation funds.

The inability of many localities to spend federal aid on transit operating costs -- thus creating jobs for drivers, maintenance workers, and other day-to-day staff -- has left many rail and bus networks facing punishing service cuts.

Congress agreed in June to let states use 10 percent of their stimulus grants for operating assistance, but Sutton's move could open the door for that number to increase in the coming weeks.

One thing the government's CARS program -- a.k.a. "cash for clunkers" -- has clearly stimulated is commentary. For a policy involving a shade under $3 billion in federal spending, it has enjoyed no shortage of media coverage.

In part this is because the program looks like a big success, and certainly congressional leaders and the White House have not been bashful about touting it as such. The original $1 billion allocation for the program was exhausted within days, and as sales data for August begins to emerge it is clear that car sales experienced a banner month.

Was CARS a good policy, all things considered? Let's look at a few of the latest numbers on the program.

There were approximately 1.17 million vehicle sales in August, which works out to a seasonally adjusted annual rate of about 14 million vehicles. June's sales rate was under 10 million and near the recession low, while last August's rate was also about 14 million. Meanwhile, the August norm in good times was about 16 million.

What does that say about the value of the program? Well, let's say that August sales would have matched June's sales in the absence of CARS. They almost certainly would have been higher given economic improvements between June and August, but for argument's sake, let's say they were the same. We can then estimate how many additional sales CARS produced and the actual subsidy per new sale.

Here's economics blogger Calculated Risk:

If Edmunds.com is correct, and total sales were 1.17 million...in August, then the tax credit only generated about 320 thousand extra sales. Of course some regular car buyers might have put off a purchase to avoid the rush in August, so this isn't perfect, but instead of costing taxpayers $4,170 per car (as announced by DOT), the cost to taxpayers per additional car sold was close to $7,200.

In other words, CARS just didn't generate that many new sales. Much of the subsidy went to buyers who would have purchased anyway.

As it turns out, much of the subsidy also went to people who weren't interested in purchasing GM or Chrysler vehicles. While year-over-year sales figures rose in August for Ford, Honda, and Toyota, sales declined by 15 percent and 20 percent respectively for Chrysler and GM. To the extent that CARS was designed to help struggling American automakers, it doesn't seem to have had the desired effect.

Particularly worrisome is today's report that sales fell precipitously in the last week of August -- after the CARS program ended. Rather than generate momentum for the automobile industry, CARS may have primarily moved sales around. To a certain extent, it might also have been counterproductive. How so?

Read more...

At this point, it's difficult to know exactly what the government's "cash for clunkers" program is supposed to accomplish.

Claims about its economic and environmental benefits are increasingly detached from reality, and the chief advantage of the program would seem to be that it "worked," in the sense that it was popular among those looking to buy a car.

To add to Elana's post yesterday on the "myths" circulating about the program, let me offer a few thoughts on how best to think about whether the program has provided actual net benefits.

The first thing to consider is what would have happened in the absence of the program. Vehicle sales rose fairly strongly in July, and this will no doubt be attributed to the "clunkers" rebates.

But during the recession, sales hit historic lows. Replacement rates for vehicles sank to unsustainable levels, suggesting quite a bit of pent up demand in the economy.

With economic recovery and continued improvement in credit markets, sales were sure to begin rising, with or without a government subsidy.

"Cash for clunkers" may have altered the timing of purchases, but in all likelihood most of these buyers were going to be in the market soon anyway.

What about the efficiency savings generated by the program? To generate its 0.5 percent of oil consumption savings estimate, the study Elana cites used the following assumptions:

The projection assumes some 250,000 "clunkers" with an average 15 miles per gallon efficiency are traded in for vehicles rated at an average 25 mpg, and travel an average 10,000 miles per year.

Given that far less than a 10 mile per gallon improvement is required to get a $3,500 voucher for a car or any voucher on an SUV or truck, it's not clear that this is an appropriate number to use. And even when efficiencies do improve significantly, the increase in mileage can't be solely attributed to the program.

Moreover, most of the clunkers being traded in this summer will have been purchased at a time when oil prices were lower than they are at present. Real oil prices in 2003 were half their current level; those in 1998 were one-fifth of prices now.

So in all likelihood, efficiencies for new vehicle purchases would be, on average, higher than those of trade-ins even without the program.

Read more...

Ed Glaeser is a fantastic economist. He has done magnificent work analyzing the economics of urban growth and written indispensable papers on the connection between housing regulations and migration.

But when the man picks up his pen to write a piece for public consumption, he tends to take complete leave of his senses. I realize that this is a common affliction among economists, but Glaeser suffers from a severe case of the syndrome.

In a Friday piece in the Boston Globe, Glaeser takes on the administration's push to fund construction of high-speed rail corridors around the country. In doing so, he combines the cognitive failures of every amateur train hater with a serious lapse in critical thinking.

He begins by making two very valid points: transit agencies are currently suffering serious and unfortunate shortfalls, and transportation funding generally is allocated where it's least needed -- to states with low levels of population, population density, and congestion.

But then he rapidly goes off the rails. Glaeser writes:

Now the administration wants Americans to envision high-speed rail lines in the wide-open spaces of Texas.

For most workers in America’s sprawling metropolitan areas, no train is going to drop them within walking distance of their home or job. In Greater Houston, only 11.6 percent of jobs are within three miles of an area’s center and more than 55 percent of jobs are more than 10 miles away from the city center.

Of course, Texas has four of the nation's fastest growing metropolitan areas, all within a few hundred miles of each other -- an ideal distance for high-speed rail. Austin, Dallas, Houston, and San Antonio are currently home to some 16 million people, and those metropolitan areas have added 3 million people since 2000 alone. Congestion is an issue within those metropolitan areas and will continue to worsen as they grow.

Not only is it entirely appropriate to build transportation infrastructure with future growth in mind, it's imperative. America's current sprawling growth pattern resulted in no small part from the mass construction of interstates and highways, which drew suburbanites to previously unsettled areas.

Moreover, Texan metropolitan areas are working to accommodate future growth in a denser fashion by building miles of metropolitan transit systems. Transit and rail are complementary technologies, each of which will increase the return on investment of the other.

Glaeser's errors continue. Read more...

President Obama has signed into law a $106 billion war funding bill that includes a provision allowing local transit agencies to spend 10 percent of their stimulus money on operating costs.

That sounds good ... but how much money are we actually talking about? According to the Federal Transit Administration (FTA):

• St. Louis' Metro system can spend up to $4.6 million in stimulus cash on operating. When added to the $7.5 million in FTA aid approved on Wednesday, that fills about one-quarter of the transit agency's $50 million shortfall. 

• San Francisco can spend up to $17.4 million in stimulus cash on operating. Total size of the local BART's deficit for next year: $23 million, even after fare hikes take effect.

• The New York-New Jersey-Connecticut area can spend up to $118.2 million in stimulus cash on transit operating. Total size of the deficit for next year at New York's MTA alone: $1 billion.
  

• Los Angeles can spend up to $38.8 million in stimulus cash on transit operating. Total size of the system's deficit for next year: $200 million, as my colleague Damien Newton has reported.

If your home city isn't one listed above, check out the apportionment tables available for download here.

House and Senate negotiators struck a deal last night on a $106 billion war spending bill that also gives cash-strapped transit agencies the ability to use 10 percent of their economic stimulus grants to pay operating costs.

The issue of operating costs has heated up in recent weeks, with local transit officials supporting federal aid as a step towards more equitable funding consideration of all transportation modes.

Critics of the idea contend that it is disingenuous to bill stimulus money for transit operating as a short-term response to the economic recession -- or as Rep. Tom Latham (R-IA) put it last week, "there is nothing more permanent than a temporary government program."

But despite Latham's skepticism, the deal is done. The final version of the war spending bill, with the transit operating aid provision intact, is expected to become law as soon as next week.

While lawmakers maneuver to fill local transit agencies' operating budget gaps with economic stimulus cash, Rep. Russ Carnahan (D-MO) is taking it a step further with a proposal that would make federal operating aid permanent -- and use it as an incentive to spur more state-level funding as well as emissions reductions.

Carnahan introduced his bill on Monday with a single co-sponsor, Rep. Doris Matsui (D-CA), but the Missouri lawmaker is courting 10 other colleagues to sign on, according to advocates at the Transportation Equity Network.

At issue is the federal government's current ban on transit operating aid for cities with populations larger than 200,000. Yet cities are free to spend federal money on transit capital upgrades, leading to problems for agencies that can afford to purchase new trains but lack the money to run them.

Carnahan's hometown of St. Louis is feeling the sting of the current rules: Its Metro has had to cut bus service by 44 percent to help close a $50 million operating budget deficit.

But could permanent federal help with transit operating encourage urban areas to become unduly dependent on Washington? Yonah Freemark suggested this week that Congress should conclusively revamp its formula for transit funding before using stimulus money to rescue local agencies.

Carnahan's bill seeks to start that process by requiring larger metro areas to run at least 100 buses during peak travel times before federal operating aid can be used. State and local governments would also have to kick in extra money for transit operating to match the feds' increased contribution.

Transit agencies in areas that win some of Transportation Secretary Ray LaHood's $1.5 billion in stimulus grants would be eligible for even more federal money if they successfully reduce greenhouse gas emissions by 10 percent.

Carnahan's statement on the bill follows after the jump.

Read more...