Thursday, May 27th, 2010
FTA Administrator Peter Rogoff, in a recent address that drew heated debate, gave some tough love to transit advocates by telling them to get over their infatuation with rail, and to focus on maintaining and operating the system we’ve got vs. expanding it.
Rail vs. Bus
Here’s Rogoff on rail:
Supporters of public transit must be willing to share some simple truths that folks don’t want to hear. One is this — Paint is cheap, rails systems are extremely expensive. Yes, transit riders often want to go by rail. But it turns out you can entice even diehard rail riders onto a bus, if you call it a “special” bus and just paint it a different color than the rest of the fleet. Once you’ve got special buses, it turns out that busways are cheap. Take that paint can and paint a designated bus lane on the street system. Throw in signal preemption, and you can move a lot of people at very little cost compared to rail.
A little honesty about the differences between bus and rail can have some profound effects. Earlier I pointed out that our new estimate for the deferred maintenance backlog for the entire transit universe is roughly $78 billion. But you should know that fully 75 percent of that figure is to replace rail assets….. Communities deciding between bus and rail investments need to stare those numbers in the face. Some communities might be tempted to pay the extra cost for shiny new rails now. But they need to be mindful of the costs they are teeing up for future generations.
Rogoff made an overly-glib remark about painting buses that some have pounced on. Clearly, Bus Rapid Transit is more than just a different color paint. But Rogoff is right on that BRT can provide much better service levels than POBS (Plain Old Bus Service) at a fraction of the cost of rail.
And actually, POBS service can be very attractive to riders too, when it operates on appropriately chosen routings, at good frequency and reliability. The Chicago Transit Authority is famed for its ‘L’ system, but it’s a little known fact that its bus network far outdraws rail – to the tune of 100+ million riders per year.
Even New York City, the ultimate appropriate American market for rail transit, is looking to do a lot more with bus. I was privileged to see NYC DOT Commissioner Janette Sadik-Kahn speak recently, and when someone asked her about bus vs. rail, she pretty much said you’ve got to a hard look at bus service because rail timeframes are very long and the costs are very high. Her department doesn’t run transit, but they are doing street projects to make buses operate better. If NYC is making a big bus push, there’s no reason most other places shouldn’t.
Which reminds me that most of the stridently anti-bus positions seem to come from smaller cities, not the biggest cities like NYC, Chicago, or SF where almost everyone rides the bus. But those smaller places are precisely the cities that are least suited to rail. I wrote the reasons why in my 2007 piece, “Why Rail Transit Is a Bad Idea for Indianapolis.”
Of course there are good candidate corridors for rail. New York has several of those underway too. And Rogoff said that as well. But clearly as advocates we need to get over the “bus bad, rail good” mentality that is too often prevalent and take a hard look at what the most appropriate and cost effective way is to make transit happen fast – and to keep is sustainable for the long haul.
New vs. Existing
Here’s Rogoff on the matter of running what we’ve got vs. building new:
I meet with a great many transit general managers. While these meetings are all different, they often follow a certain pattern. I start off the meeting by asking how things are going. They express gratitude for the new Recovery Act funds but then go on to explain that the downturn in municipal revenues, the downturn in sales tax receipts, the cutbacks in the city and state levels, has necessitated service cuts. Sometimes we talk about serious service cuts of 20 percent or more. We talk about: route reductions, layoffs, furloughs, significant chunks of capital reinvestment being deferred as they use Federal capital dollars for preventive maintenance to close operating gaps. It’s all very grim.
But then we get to the second part of the meeting. The consultants start to get excited and the glossy brochures come out. And the next thing you know, the general manager wants to talk about their new plans for expansion — the spanking new rail service to communities not yet served….At times like these, it’s more important than ever to have the courage to ask a hard question: if you can’t afford to operate the system you have, why does it make sense for us to partner in your expansion? If you can’t afford your current footprint, does expanding that underfunded footprint really advance the President’s goals for cutting oil use and greenhouse gases? Does it really advance our economic goals in any sustainable way? Are we at risk of just helping communities dig a deeper hole for our children and our grandchildren? Might it make more sense for us to put down the glossy brochures, roll up our sleeves, and target our resources on repairing the system we have?
Again, some pounced on the point that the feds don’t fund operations, only capital, so there are separate buckets, etc., etc. True – and that’s one reason I wanted to quote the extended passage where he does talk about diverting capital funds to operations. Also, local dollars are fungible and many cities have significant tax levies earmarked for expansion, and/or never established appropriate operating reserves.
Still, I think the critics have a point. Want agencies to stop coming to the FTA with requests for new rail lines when the existing system is collapsing? Stop encouraging that bad behavior. It just so happens one of the major funding programs is called “New Starts.” As the name implies, it can only be used for new service, not for rehabbing existing. If there is money available earmarked solely for expansion, don’t be surprised if people go after it. It’s not like forgoing the application will reduce the deficit. Somebody’s going to get that money.
Interestingly, fully $50B of the nation’s entire $78B repair backlog is accounted for by only the top seven rail operators. The other 690 rail and bus operators combined only add up to $28B, showing how concentrated transit system intensity is in the nation’s largest cities – a political problem right there. Most places don’t have aging rail systems to repair – hence the built in bias for New Starts type programs.
The federal transit funding is extraordinarily baroque. I feel like I’ve got a pretty good handle on the various pots of highway-related money, but transit is a labyrinth of Section 2FX38S-SubchapterJ9 type funding programs, all set aside for different stuff. I know one particular small transit agency that recently spent $300,000 on a study to ask its riders what they wanted while it was gearing up for a major service reduction, and which has a bus fleet with numerous problems like broken air conditioners – just because it could get a federal grant to pay for it. I can tell you want riders want. They want buses…clean, well maintained buses…that come…on time. The money this agency frittered away on a survey would have bought a new bus. What a waste.
I’d like to suggest Rogoff make a major push with Congress to radically simplify this. I don’t know if you need to get to one category, but more flexibility is clearly key. Because as it stands now the core competency of some transit agencies appears to be rent seeking, not transportation. It’s like a lot of non-profits that chase project specific grants that distract from their core mission. We’ve got to stop doing that.
Also, if this is what the feds want, there needs to be a clear policy and set of guidelines that favor “fix it first” and “keep it running.” This means money needs to be apportioned this way. It means money for expansion ought to be tied to a credible, long term plan to sustain the system on an operating and capital basis, and the existing system being maintained and operated appropriately.
And I would suggest that the feds establish a “truth in budgeting” rule. Transit agencies, like most government entities, run their books on a cash basis, with an operating budget and a capital budget. But this means non-cash expenses like depreciation – which is huge in a capital intensive business like transit – aren’t appropriately accounted for. The books look balanced every year, right up to the minute the system falls apart.
Transit agencies ought to aggressively publicize financial statements based on private sector GAAP as a supplement to their governmental budgeting. If we took a look at an income statement that recorded depreciation and such, I think we’d find most transit systems operating at a huge loss every year. This is one way to open some eyes.
Lastly, the feds need to make a huge push on bringing down the sky high prices of transit construction and operations in the US. City Journal just did fabulous article on Madrid’s brand new, low cost subway system. Now City Journal is a right leaning publication to be sure, but many have noticed how US costs are far higher than overseas. Frequent blog commenter Alon Levy posted some figures previously on how even in Tokyo deep bore subway construction is cheaper than in New York. Seoul has gotten some very attractive bids on subways recently. Clearly something is wrong here. I previously addressed this matter with regards to Chicago’s overly expensive rail expansion projects in a previous posting.
The State and Local Challenge
Back to this notion that the answer is to have the feds subsidize operations too, a $2 billion bill to do just that was recently introduced in Congress. As much as I think agencies ought to have the flexibility to use federal funds for operations, a federal operating bailout of transit agencies would be a mistake because it would let state and local government off the hook for all the actions they’ve failed to take to make their own systems better and introduce more rational operations.
Yes, transit agencies have experienced funding shortfalls that they cannot be blamed for because of the recession. However, look all over the place and find a litany of governance and other issues that are clearly within the sphere of state and local control. Consider:
- New York. Mayor Bloomberg put forward a very sensible plan to implement congestion pricing on bridges into Manhattan in order to provide funds for transit, similar to the very successful London congestion charge. It was shot down in Albany due to the vagaries of New York politics. I don’t know all the details, but apparently some people didn’t like the idea of tolls on the East River bridges that are currently free. Now this failure might not be Bloomberg’s fault – he doesn’t even run the city’s transit agency, the state does – but it is hard to see why, if New York won’t implement a solution that is readily at hand, the feds should take action. Or why if New Yorkers don’t want to pay tolls for New York transit, the rest of America should have to pay taxes.
- Chicago. The state of Illinois has decided that seniors, even multi-millionaires, should ride transit free, a change implemented just recently and one that costs transit agencies tens of millions of dollars per year. The commuter rail agency, Metra, was for the past decade run by an executive director who had his hand in the till. It continues to operate like a 19th century railroad and resists any innovation fiercely. They refused to accept credit cards until the legislature pressured them to do so. They refuse to install wi-fi on their trains even though airlines can do it on planes and MegaBus can do it on their motorcoach fleet. Again, it’s not clear to me why the federal taxpayers should have to ante up so that wealthy Illinois seniors can ride transit for free and to facilitate obsolete business practices.
- San Francisco Bay Area. The Bay Area has 26+ separate transit agencies, clearly too many. Muni’s drivers have raises written into the city charter and are guaranteed to be the 2nd or 3rd highest paid in the country, no matter what. They also have the right to a number of “unexcused absences” where they can simply not show up for work or even walk off the job without being punished. Muni’s cost per mile of operation is nearly double comparable agencies. Again, this looks like a region that could do a lot for itself before asking everyone else to step up.
I won’t pretend these are easy problems to solve, but if the feds simply hand these agencies money to get them through the recession, rationality will be even harder to achieve. The pressure of this recession is one of the most powerful forces driving for previously unthinkable state and local government reform. If anything, the feds ought to be delivering a tough message to state and local government that reforms need to happen before money is delivered. We’ve got to keep the pressure on for reform.
I for one hope that Rogoff’s speech does prompt a re-examination of these matters. We should be looking at more bus solutions. We should prioritize fixing it first. We’ve also got work to do at the federal level to encourage good behavior by reforming the funding programs, and to bring down costs. And also at the state and local level to reform the way transit is governed and operated to convert it into the essential public service that it clearly is and needs to be.