Transportation for America has recently published the most comprehensive document on transit project funding I’ve ever read (warning, large PDF file). It’s extremely wonky, with explanations for a myriad of different financial instruments and federal grants, information on the pros and cons of different local revenue sources (sales taxes, user fees, property taxes, etc.), and data for how ballot measures pass with each combination. There’s also a few really interesting examples from projects whose funding has been secured over the past few years.
I won’t try to sum up an 80 page report like this in a short blog post, but I would like to point to a few things that really jumped out at me. For one, the funding sources that are least popular with voters are car license fees and sales taxes, which happen to be precisely the funding sources that have been available to transit projects around the Puget Sound area. On the other, the most popular mechanisms – fuel taxes and income taxes – are completely disallowed here. Also, Denver is paying for a remodel to their Union Station partially with tax-increment financing and the DC area is paying for part of its Dulles Metro line with roads tolls and a special tax district, so creative financing really is possible: you don’t have to build a whole bus and rail system on sales tax alone.
With the federal government in an austerity mood, it’s going to be ever more important for local agencies to come up with creative ways to fund transit projects. It’s an interesting report, and this is good background for those eventual conversations.
I’m on my phone and can’t really read the report right now, but would an MVET be a property tax or a license fee?
MVET would be a licence fee.
MVET = Motor vehicle excise tax
Right, but to my knowledge an MVET is a tax based on a % value of a certain kind of property, a motor vehicle. Whereas a License Fee is a flat fee.
Oh I see, yes, that distinction isn’t made in this.
I don’t understand why bonds are listed as a tax. Bonds are simply borrowing money – you still need a source of money to pay them back.
Yes, that is confusing. The text isn’t, but the graphic is.
I would think property tax is the most fair way to fund…more than sales or income.
Property tax is local so those who get the benefits pay the cost. (This can be said about anything really.)
Why should a guy buying a cola in Yelm fund a BRT in Lynnwood?
Actually the most fair way to fund is for users to pay the full cost.
You’re assuming there’s no externalities. Buses help reduce traffic, which saves time for motorists. This is a positive externality, which in the interest of fairness should be internalized back into the cost of driving a car, in the form of congestion pricing and/or license fees.
I suspect that if all modes of transportation were self funded that transit would become much more popular. If taxes had not been used to fund road infrastructure, cars would have never have become the mode of choice it is today. This heavy subsidy continues today. That also killed many profitable passenger railroads. They could not compete with heavily subsidized autos. Same story for air travel.
We need to use public money in a balanced ways to ensure more efficient ways to move people, not just cars.
You could also make the argument that existing rail is subsidized by the need to haul coal to generating plants (that generates 50% of all revenues).
People voted for those taxes. In the case of federal highways primarily in form of a gas tax. Local roads are funded through property and sales tax in this state so that property owners could enjoy access for everything from autos to police/fire protection and in some cases transit. I don’t understand why single issue transit supporters keep bringing up subsidies when it’s just so bad for that side of the equation. Denial?
When did the gas tax last go up, even to match inflation? Not in this century. The gas tax does not cover the cost of highways, it needs to draw from other general revenue.
So, Bernie, you’re absolutely OK with any taxes as long as people voted for them, since that was your only unrebutted argument for why the massive taxpayer subsidy for roads was OK?
I agree. If people vote for the taxes, that’s good, we should go ahead and build what people voted for. Most roads are NOT funded by taxes which we voted on separately. If they were, I would be a supporter of them. But I can’t remember the last time I specifically voted on an increase in taxes for the “road fund”.
So I assume you will be a full-throated supporter of *any* project which passes as a ballot referendum, from now on? And you will campaign for all road projects to go to the ballot?
(Didn’t think so.)
I have, by contrast, specifically voted on an increase in taxes for the “fire fund”, so it’s not like it’s impossible to have specific “road fund” ballots at the local level.
So I admit I did nothing more than skim the 84 pages in this report, but after skimming I did not find a single mention of fare boxes as a source of funding. Now don’t get me wrong, I am not proposing that fare box revenues be the sole method of funding since ALL forms of transportation are subsidized by taxes in some form, but really? Riders need to pay something toward paying back construction costs. And riders certainly need to cover operating costs, although that doesn’t happen very often anywhere, certainly not Metro.
This report is a prime example of the issues driving the arguments over government spending. People want lower taxes, and “free” government services. (sigh)
I challange your claim that riders need to cover costs. As a society, we get to decide what benefits all of us and fund those benefits. I don’t “need” to cover the construction cost of a sidewalk every time I use it. The same goes with streets, fire departments, etc. The benefit that everyone gets from transit, whether they use it or not, include traffic reduction and the transit capacity that’s available to them (for instance, if their car breaks down). Transit fares are often used more to limit demand and are generally used to fund operations, but neither of these are fundamental requirements.
I concur 100%. This notion that the riders need to cover 100% of the cost is pure silliness.
I’m the most conservative guy who follows this blog (I will wager lunch on it), but I agree with the premise that a society can decide what services and benefits it provides (my opinion, though, is that it ought to be funded and managed at a smaller level, without federal funds or intervention. Let Seattle decide how to manage Seattle’s transit. Still, that’s the world we live in – federal money is part of the game). But fares are an important part of funding, and I’m surprised they’re not mentioned.
Don’t rip Jay for asking a fair question. He clearly said he doesn’t think transit needs to be funded entirely by fares. But it’s good to know the share individual users pay, right? All part of the decision.
It was a fair question, but his proclaimation of “need” was begging to be addressed.
It’s true that we should examine how the government is spending it’s money when something as simple as funding a bus can be so complex. I’d take that wager on which of you and I are more conservative.
However, as Matt has said, the issues is with the “need”. That idea anything the government does “needs” to pay for itself can be reduced to absurdity extremely quickly (I gave a version of that below).
Unless you are a fairly extreme anarcho-libertarian, you have to admit a place for government somewhere. At that point it becomes which projects you think are reasonable, which are prudent and which are right. You can’t really argue that we X is fine even though it doesn’t pay for itself, but Y isn’t without asking how much we value X and Y relative to each other. It’s whether or X and Y are good, and what are we willing to give up to get X or Y.
Yeah, while we’re at it, we need to tax those in wheel chairs for ramps and elevators in stations. At very least they need to pay to operate the elevators. You can’t get up stairs? pay a damn elevator fee, don’t come to me for a hand out.
We also need to tax the children for their education. Freeloading little shits, why am I paying for their school? I already went to school, I don’t need any more. The worst are kindergartners. Have you ever seen a kindergartner’s art project? Those little shits are can’t even crayon correctly. Clearly a waste of money teaching those snotty brats. At very least they need to pay for their crayons.
And don’t get me started on those damned mentally disabled people living on my dime. Why don’t those bunch of ne’er-do-wells get jobs as doctors and lawyers already?!?! At very least they need to pay for their own social welfare.
And the worst of all are those damned special education kids. First, I don’t need school and they are taking my money for their damned education. Next, they may not even get jobs to pay their taxes back and then I have to foot the bill to make sure they don’t die on the side of the road. They need to pay for their own well being.
Don’t get me started on the military. These arseholes need to buy their own gear. You want to kill someone, buy your own bullets. No one’s giving me free bullets. You want to fly a fighter jet? Buy your own damned jet instead of leaching off me. At very least pay for your own fuel. I pay for all these jets and aircraft carriers and I don’t even get to fly them. I pay for all the nukes, where’s my button? This is bullshit. No more Mars rovers until everyone gets a turn on the joystick.
The worst offenders are scientists at national labs. You want to cure cancer? Pay for the research yourself. Don’t come to me for a handout.
This was meant sarcastically if it wasn’t clear.
It was. LOLZ
Maybe some day the air force will have to hold a bake sale to buy a bomber… :-)
It’s a good read from a policy makers standpoint, listing lots of approaches to getting transit funded, which is what you would expect of an organization promoting more, bigger or better of what ever they are pushing. Well done in this case.
As for giving any insight into how much transit is politically feasible in given situations, or how much transit can collectively be purchased with whatever funding source you choose, is missing.
Many would argue that Seattle is nearly tapped out when compared to peer cities for total taxes extracted for all transit. Just building and operating more transit has a diminishing return on investment. Are we there yet? I don’t know the answer, but future votes will tell the tale.
Yes, you have a good point. I think that the political piece can be relatively capricious, so timing can often the most important thing.
We aren’t even close to the top of the curve of transit benefits vs costs. If you want to see the top of the curve (or at least as close as available in societies like ours) go to NYC, Germany, Scandinavia, or DC. A comprehensive system of rapid transit, 24-hour buses, an all-day regional rail and intercity rail that gives people a real alternative to cars and airplanes, and corresponding land uses that put most home/work/activity destinations near stations. Those are the places where transit is most effective and most competitive, and over 50% of the population in the cities don’t have cars. The reason you see less than stellar outcomes in Seattle is we’ve just barely started to make the large-scale changes necessary. A streetcar in mixed traffic that stops every two blocks and runs every 15 minutes until 10pm is not comprehensive transit, it’s just a token that can have only marginal benefits.
NYC isn’t at the top of the curve because its system is unevenly distributed and poorly coordinated. This is due to the original construction of the subway by three competing companies, two of which were private — so, lots of redundancy in some areas — combined with an aggressive government program to remove privately owned and operated streetcars and elevateds (often without replacing them), which created large gaps. In regional rail, again, construction by multiple competing companies and lack of coordination.
This is why “privatization” sucks in public transportation, by the way.
Yeah, go look at Germany, Scandanavia, or DC (where the whole thing was masterplanned) for a decent example. NY would be an excellent example except for these artifacts of historical non-planning and hostility to rail.
They make it seem so insignificant. Yet every time a Tim Eyman license tabs initiative gets passed, or a hundredth-of-a-percent sales tax fails, transit agencies (most esp. Pierce Transit) make deep (almost catastrophic) cuts. And where do farebox receipts or pass sales factor into this graph?
[sock puppetry]
“Employers are the primary beneficiaries of rail”
That’s the short-sighted vision that leads to peak-only commuter rail like Sounder. The best contribution transit can make is when it runs 24/7, comes every few minutes, and doesn’t get stuck at stoplights and traffic bottlenecks like cars. The majority of trips are not to work: they’re to the store and events and friend’s houses. Yet we focus on work only, which leads to suburbs with commute-oriented transit so people buy a car to go to Fred Meyer and thus tend to use it for everything and to vote against transit taxes — because transit isn’t there when they need it or might use it.