Andrew Austin reports that Pierce Transit is also seeking to raise fares in January. Fares would go up by quarter for local service (unchanged since 2006) and 50 cents for the Olympia Express (unchanged since 1999).
Since Pierce Transit runs on Compressed Natural Gas, I would view this more as general inflationary pressure, rather than the sales tax/gas price implosion facing Metro.
Actually… for the moment PT has a favorable contract for natural gas. That contract expires in 2011 from what I recall, when they’ll have to go back to the market and secure a new price for their supply.
PT really needs to put some funds into converting some routes to trolley bus. Our electricity is dirt cheap, electric traction is uber efficient, and the acceleration even with a full load uphill is fantastic.
If I can treat this as an open thread, maybe someone can answer a question that has long been on my mind.
Before the rollback of federal subsidies that began sometime in the ’80s, I have heard that those subsidies could be as high as 90% of project cost, with a locale bearing as little as 10% of the cost. After the rollback, the numbers reversed, and today ST will have something like 10% federal investment, while our area bears as much as 90% of the cost.
It would stand to reason that such a switch in the cost burden would considerably increase the project’s financing costs (how much was borrowed from banks), since the local area could not raise the same amount of money as the federal goverment, within the same time frame. In short, financing costs would both drive up the total project cost, be a larger share of that project cost, and increase both the construction time of the project, as well as the length of time that local taxes were levied for financing. And if the project’s time is lengthened, and people are taxed longer, than the deleterious effects of the local taxes become more ingrained, while the actual economic benefits that the project would provide upon completion are considerably delayed.
If true, this obviously makes the case for a return to much greater assistance from the federal government. Even if our federal taxes went up somewhat in order to finance projects nationwide, those taxes would not be as high as the alternative of taxing locally (because financing costs decline dramatically), those monies would be directed to the project itself (again, not financing), and since the project would be completed earlier, the economic benefits would be realized much sooner.
So first of all, feel free to totally knock this apart, as I could be completely wrong in my understanding of the situation, or of the contribution ratio between local and federal levels.
But second, there just has to be a study out there that examines financing costs of public construction projects over the last 30 years, and how the decline in assitance from the federal government has impacted the same, and I’m wondering if anyone can point me to it?
Thanks in advance.
An easy step is to not pay state sales tax on these types of projects, that would save financing an extra 8.8% right there…
Well, a portion of that 8.8% goes to financing, the rest does not.
Even if that 8.8 were borne by a state income tax (which I would certainly be in favor of, in lieu of high sales taxes), the need for the federal government’s assistance would still arise, unless the revenue intake by the state was to such an extent that it removed the need for any serious financing costs.
Martin,
I would recommend reviewing Sales Tax distribution data that is published by the Department of Revenue: http://dor.wa.gov/Content/AboutUs/StatisticsAndReports/stats_localsales.aspx
Through June of this year, Pierce Transit received 36.38 million in sales tax, while last year the number was 36.98 million. This is a small drop, but it’s still a drop. Inflation often brings higher tax receipts and this time it’s not (stagflation is rumored, others say Depression). An added problem is that Pierce Transit’s farebox recovery is second lowest among the list of “urban transit” agencies (as defined by WSDOT). Only Everett Transit is lower.
The use of CNG is good if Pierce has until 2011 on its natural gas contract. But they will face other pressures before then. Every government agency at this time will have major choices to make. Remember also that a gallon of CNG does not provide the same amount of energy as a gallon of diesel fuel. TCRP Report #38 states that studies have shown a 20-40% efficiency penalty of CNG engines over diesel engines. We are beginning to rely partly on imports for Natural gas, which means prices will be more volatile and higher than in the past.
Also realize that, as has been stated often on this blog, labor is a bigger cost of operations than propulsion costs. Union contracts often require COLAs and since they are bigger part of costs than fuel inputs, can have a bigger influence on costs, even if the percentage increase is smaller.
I endorse the comment about trolley buses being introduced to Tacoma. Every major city in the northwest should have a trolleybus component.