Funding Bad Decisions: Urban Rail And Federal Money

Editor’s Note: This Op-Ed was submitted to Breitbart Texas by the Texas Public Policy Foundation and was written by Chuck DeVore, vice president of national initiatives.

The federal government transfers some $628 billion every year to state and local government. All of the money, much of it borrowed from future generations, comes with strings attached as it flows into hundreds upon hundreds of programs. About 83 percent of this federal aid is spent on social programs, most of which is for federal health programs, such as Medicaid.

States and local governments have their own taxing authority and the ability to set up their own programs as well. But, the attraction of “free” federal money distorts local government decisions—we can’t leave federal money on the table, the thinking goes.

To see how “free” federal money drives silly decisions at the local level, look no further than transportation policy, where federal funds totaled $64.4 billion this year of which $9.4 billion was for urban mass transportation grants. One particularly notable federal transit effort is the $2 billion New Starts program—a program that incentivizes local government to think big, promising matching funds for new rail or other fixed guideway projects larger than $250 million.

When competing for a New Starts grant, the federal government considers highly subjective criteria such as “environmental benefits,” “land use,” and “economic development,” along with more objective criteria such as congestion relief and cost effectiveness—although even these “objective” criteria are subject to wildly optimistic estimates that game a system that wants to be gamed.

Federal transportation policy’s effect on the two largest states can be clearly seen in current headlines.

In Texas, the “TEX Rail” project is a 27-mile, $1 billion commuter train planned to link downtown Fort Worth to the Dallas/Fort Worth Airport. Local officials have amassed almost $530 million in TEX Rail funding, including $150 million from the federal government. Under New Starts, the federal government might chip in a few hundred million more, leaving local residents with the choice to increase their taxes or cut back on traditional bus service to find the additional quarter-billion dollars or so needed.

Ironically, Texas, a state known for zealously trying to protect itself from the vagaries of federal overreach, may see its local governments willingly bend to federal urban land use policies in a quest to secure “free” federal transportation funding.

As for congestion relief, a stated goal of New Starts funding, TEX Rail’s own environmental impact study forecasts “negligible effects on traffic patterns and volumes.” This is the case with most rail projects—they don’t really reduce congestion—nevertheless, they get built, usually at the expense of existing bus service.

Further south in Austin, Texas, voters rejected a billion dollar, 9.5 mile urban light rail line in November, 2014 by 57 percent to 43 percent. But, with zombie-like powers infused with the elixir of federal funds and powerful special interests, the costly light rail project is poised to reanimate. Amazingly, the rail project, which would consume existing road space, could actually decrease commuting throughput if completed.

It seems that the only thing more invulnerable to death than a government program is a bad government program.

In Southern California, federal funds appear to be encouraging serial bad decision making.

The Los Angeles County Metropolitan Transportation Authority is planning to spend more than a billion dollars a year for a decade to build two new passenger rail lines and extensions to existing rail lines in the nation’s largest transit agency capital expansion. This might make a modicum of sense, if it worked. But, as a recent article by the Los Angeles Times noted, “For almost a decade, transit ridership has declined across Southern California despite enormous and costly efforts by top transportation officials to entice people out of their cars and onto buses and trains.” In fact, Los Angeles County Metropolitan Transportation Authority (Metro) lost 10 percent of its passengers since 2006, a trend that the Times notes is “accelerating” with fewer riders than it had three decades ago. Adjusted for population, the mass transit ridership decline looks even worse. Since 1985, per capita ridership has plunged more than 30 percent in Los Angeles.

Yet, in spite of this decline in ridership, mass transit bureaucrats are doubling down on the same failed policies with Metro’s top boss promising ridership increases—once the rail network is built out in a few decades, long after he’s retired on a generous taxpayer funded pension.

Because pulling down “free” federal dollars for urban rail requires a reliable stream of matching funds, Los Angeles County may seek a second half-cent sales tax increase for transportation this November on top of its already high 9 percent sales tax.

While buses are more flexible and less costly than rail, traditional bus service doesn’t qualify for New Start funding. As a result, Metro and analogous transit agencies across the U.S. tend to cut back on bus service to fund the sexier, and far most costly, rail projects.

While not likely seeking to convey a sense of irony, Metro says it wants to triple transit ridership from about 7 percent of L.A. County residents to up to 25 percent. Separately, the median household income for a mass transit user in L.A, is less than $16,000 vs. the county’s median income of almost $56,000. In other words, full-time employment is rare in most mass transit households. So, either Metro sees a massive increase in unemployment as key to making their ridership numbers or is simply relying on the ongoing effort to squeeze commuters out of their cars by making drivers progressively more miserable.

Federal funds are too often used to incentivize state and local government to conform to federal priorities, producing a powerful inducement to create and maintain inefficient and ineffective programs. Short of ending federal funding for hundreds of programs, Congress needs to resist the urge to micromanage distant states, counties and cities and shift to block grants with few strings attached.

Chuck DeVore is vice president of national initiatives at the Texas Public Policy Foundation and served in the California State Assembly for six years.