Tag Archives: mass transit

Uh, Oh, Metro Needs Another $9.5 Billion

Washington Metro General Manager Paul J. Wiedefeld has been pushing for $15.5 billion in additional contributions from participating states and localities over the next 10 years, including $500 million in dedicated funding, to make the ailing commuter rail system safe and reliable.

That request has set off serious jockeying between Maryland, Washington, D.C., and Virginia over who should pay how much, and which reforms the Metropolitan Washington Area Transit Authority (MWATA) must make before anyone trusts it with more money.

But at a recent MWATA board meeting, reports the Washington Post, Chairman Jack Evans enumerated $9.5 billion in anticipated needs not covered in Wiedefeld’s $15.5 billion figure.

Wiedefeld’s proposal “will only keep us where we are right now, which is not a good place to be,” Evans said. “What the region does, what the elected leadership, the business [community does] — they will seize on the easiest approach. So when he put out the number ‘500,’ everybody seized on ‘500,’ which gets you to $15 billion — which gets you to where you are today. Nobody wants to be where we are today.”

“We’re asking for the wrong number,” he said. “I think it was a mistake on behalf of the GM . . . to ask for the lower number.”

Bacon’s bottom line: Well, you have to appreciate Evans’ honesty. No one wants to hear that revitalizing the Metro will cost an astonishing $25 billion, not a mere $15 billion. As Virginians discuss how they will find their multibillion-dollar share of the Wiedefeld proposal, they should be acutely aware that they would be meeting only the Metro’s most urgent needs — “nonnegotiable” safety and system upgrades. They to ask themselves, will $15.5 billion be enough, or will it just paper over the problems?

Metro is “too big to fail.” Its collapse would throw the Washington region’s transportation system into turmoil, with endless repercussions for the economy and economic development. For instance, the Washington region would be an attractive location for the Amazon second headquarters in many ways, but the company is sure to ask itself, does it want to locate 50,000 employees in a region whose commuter rail system is falling apart and a proposed $15 billion fix merely preserves a deficient status quo?

Metro must be salvaged. But Virginia needs to hang tough and demand comprehensive management, labor, and governance reforms before coughing up hundreds of millions of dollars a year for a bail-out that may not accomplish much.

Washington Metro as Wealth-Redistribution Tool

Paging Karl Marx. Karl Marx, please. Three left-leaning think tanks think businesses should be taxed to subsidize lower Washington Metro fares.

The progressive outfits — the Virginia-based Commonwealth Institute, the DC Fiscal Policy Institute and the Maryland Center on Economic Policy — have declared their opposition to a region-wide one-cent sales tax to fund the Washington metropolitan region’s decrepit Metro heavy rail and bus systems. Such a tax would fall disproportionately on poor families, they argue, taking five times the share of income from the bottom 20% of earners when compared to that of the top 1%.

“It does not make sense to add an extra cost to families who already struggle from stagnant wages, rising housing costs, and Metro fare hikes and service cuts,” says the joint position paper. “Black and Latino families are more likely to be living on low incomes than white families, which means that a sales-tax approach would ask communities of color to devote a greater share of their incomes toward fixing Metro.”

Who, then, should pay for Metro, which requires billions of dollars in maintenance and capital improvements to reverse a vicious cycle of poor service, eroding ridership, and declining fare revenue?

“Those who benefit the most should pay the most, including businesses,” say the think tanks. “A strong Metro is critical to a functioning economy. This suggests that businesses should be expected to shoulder a substantial share of the costs, since their success depends on a strong public transit system.”

All businesses should be expected to contribute, whether they are close to public transit or not, since even businesses not near public transit benefit from the reduced traffic that results from having a strong public transit system. Public transit takes cars off the roads and reduces congestion for those who drive.

The think tanks did suggest, however, that localities might consider imposing the biggest taxes on businesses located closest to Metrorail lines. “While it’s likely that these businesses already face higher rents and property taxes because they are in a desirable location, it’s also the case that these businesses have the most to benefit from a strong Metro system.”

The authors also oppose cost-cutting measures such as reducing hours of operation or cutting low-usage bus lines on the grounds that they would fall hardest on low-wage workers and economically disadvantaged communities.

Bacon’s bottom line: Wow. I would be hard-pressed to devise a way of thinking more diametrically opposed to my own. My core principle is that all modes of transportation should be self-supporting to the greatest extent possible, and that those who benefit from a transportation asset should be the ones who pay for it.

The most immediate beneficiaries of the Metro system are the riders — the people who actually use it. In an ideal world, fare box revenue would cover all operating expenses. Politically, that is impossible, of course. A major cause of Metro’s slow-motion fiscal train wreck is that the Washington Metropolitan Area Transit Authority has kept fares excessively low for years, largely on the grounds that higher fares would harm the poor and minorities. Decades of under-funding have led to the situation WMATA now finds itself in.

The absurdity of holding down fares is that it subsidizes fares for the non-poor as well as the poor. If the think tanks and WMATA board members really want to help the poor, then they should find a mechanism that targets low-income people rather than subsidize all Metro riders equally. To the extent that Metro rail serves suburbanites commuting to work in the region’s urban core, many are well-off and can readily afford a fare increase.

The second set of beneficiaries is not the generic business community. While businesses may benefit from proximity to Metro stations, they pay for that location through higher rent. The real beneficiaries are the property owners. A respectable body of thought says that heavy rail can be financed through “value capture” — capturing the increased value of the real estate created by building a Metro station. That value represents a windfall to the property owner who did nothing to create it. Insofar as property owners near Metro stations can charge higher rents, it is reasonable to ask them to pay a real estate tax surcharge out of their higher cash flow. But that’s not what the think tanks are arguing. They advocate charging everyone, including tenants who are already paying higher rents to landlords for the privilege of proximity to Metro.

While it may be true in a very general sense that businesses benefit indirectly from the construction and operation of mass transit, that is no justification for compelling them to subsidize Metro service. Businesses benefit from people having food to eat — why not make them subsidize grocery stores? Businesses benefit from people knowing how to read — why not make them subsidize schools? Businesses benefit from the digital revolution — why not make them subsidize the cost of PCs, laptops and smart phones?

Subsidizing everyone to benefit the poor becomes an opaque and open-ended handout. If left-leaning think tanks want the poor to have more money, perhaps they should help elected officials create a program that precisely targets lower-income Americans and appropriates funds annually in a transparent process visible to all.

Another Useless, Irrelevant Debate

Sterile

Ed Gillespie, Republican candidate for governor, has gotten himself in a political pickle. According to press reports, he has been blasting his Democratic rival Ralph Northam for backing the 2013 transportation tax package as “the largest tax increase in Virginia history.” But as Democrats have been pointing out, Gillespie was gubernatorial campaign chairman for Bob McDonnell, who pushed the bill through the General Assembly with significant Republican support.

The criticisms don’t address the substance of what Gillespie is saying — Northam did back the biggest tax increase in Virginia history. But the pushback raises an obvious question: What would Gillespie have done differently? How would he have proposed to fund Virginia’s pressing transportation needs?

Frankly, both Republicans and Democrats are incoherent on the subject of transportation funding. Both sides base their arguments on three untenable propositions: (1) that building more roads or commuter rail will solve our transportation problems, if only we build enough of the right thing; (2) that someone else should pay; and (3) that current transportation solutions will be relevant in the rapidly approaching era of driverless cars, transportation as a service and Uberization of transportation.

Let’s address these issues point by point.

Building more roads and commuter rail will not address transportation congestion unless local governments allow developers to transform what we commonly call “suburban sprawl” into traffic-eating walkable urbanism. Pedestrian-friendly, mixed-used development built at moderate densities substitutes foot travel for car trips, substitutes short car trips for longer trips, and makes mass transit a attractive to more riders.

While this market-driven transformation is taking place in fits and starts — mainly in Virginia’s urban-core jurisdictions and around Washington Metro stops — it is not taking place nearly fast enough. There will never be enough money to provide congestion-free transportation for sprawling, low-density land use patterns.

The second problem is that everyone wants a better transportation system, but no one wants to pay for it themselves. Having long ago abandoned the idea of a user-pays system, Virginia politicians excel at singling out others to pay. The result is an absurd system in which there is no connection between those who use transportation infrastructure (roads and rail alike), and those who pay for it. Thus, 85-year-old, blue-haired ladies who drive 2,000 miles a year pay sales taxes to subsidize road warriors who drive 20,000 miles, Dulles Toll Road users pay inflated tolls so Silver Line riders can enjoy below-cost fares, and everyone subsidizes tractor-trailers whose taxes don’t come close to covering the wear and tear they cause on roads. The perverse result: When people don’t pay the full cost of their travel decisions, they travel more.

The third problem, approaching insanity, is that Virginia continues to build roads and rail on the assumption that driving and commuting patterns will be the same in 20 years as they are today. But that is a manifestly idiotic assumption. The advent of driverless cars will drive down the cost of taxi-like, bus-like and jitney-like transportation services, making shared ridership services a more attractive option. The rise of subscription-based transportation-as-a-service enterprises will provide an alternative to individual automobile ownership. There is no way to forecast with any certainty how these innovations will affect driving habits and the need to build more highways and commuter rail.

The debates that politicians should be having, but aren’t, are these:

  1. How can we relax zoning codes to encourage land use patterns that put less strain on the transportation system?
  2. How can we reform transportation funding to support a user-pays transportation system?
  3. How should Virginia position itself to take maximum advantage of the fast-approaching driverless/electric/transportation-as-a-service revolution?

None of these conversations are occurring. Ed Gillespie isn’t talking about them — but neither are his critics. The debate is more sterile than a mule with a vasectomy. Virginians should demand better.

Business Leaders Demand WMATA Governance Reform

An alliance of Washington-region business groups is calling for a fix for the Washington Metropolitan Area Transit Authority (WMATA) that would create dedicated funding streams for the Metro rail system and a restructuring of the authority’s board.

Twenty-one chambers of commerce and employers groups outlined the proposal in a letter to the region’s political leaders, reports the Washington Post. The proposal is expected to have influence, the Post says, noting that executives with the signatory businesses are frequent campaign contributors.

WMATA has said it needs at least $500 million a year to restore to functioning condition the commuter rail transit system, which has been plagued by maintenance issues, safety incidents, and declining ridership. The letter signatories did not specify a particular funding mechanism.

“We’re not trying to get into the weeds,” said Bob Buchanan, founder of the 2030 Group, told the Post.

One commonly floated proposal is a region-wide, penny-per-dollar sales tax, but Northern Virginians have objected on the grounds that Northern Virginia would wind up paying more than Maryland and the District of Columbia combined.

Describing the Metro as in a state of “crisis,” the letter linked the creation of a dedicated revenue source toward a revision of the tri-state governing compact and a restructuring of the board. States the letter:

We reiterate our strong conviction that any reform effort must include reforms to WMATA’s governing, financial and operational structures. Reform of any one structure alone will not be sufficient. For instance, additional funding for Metro will only be beneficial if it is accompanied by structural changes that give WMATA’s board the flexibility to effectively allocate resources and staff the flexibility to leverage additional resources to make operational improvements.

Governance reforms include “right-sizing” the WMATA board and requiring directors to have expertise in specialized areas, including transit operations, management, finance and safety.

Bacon’s bottom line: WMATA is critical to the functioning of the Washington metropolitan region. After decades of short-changing maintenance, WMATA needs billions of dollars to remain a viable transportation mode. There is no avoiding the necessity for regional taxpayers to cough up more money to restore the rickety system to health. Washington-area residents have been enjoying the benefit of a heavy-rail transit system for years without paying its full cost — now it’s time to pony up. But given WMATA’s dismal history, the NoVa business leaders are absolutely right to demand reforms that will ensure that any new funds are not mis-spent or frittered away in concessions to WMATA labor unions.

Working out a compromise with Maryland and D.C. won’t be easy, but Virginia’s political leaders need to hang tough.

$150 Million a Year More for WMATA? Good Luck with That!

Source: Virginia Department of Rail and Public Transit. (Click for larger image.)

Downstate Virginia legislators are inclined to block increased capital funding for Washington’s dysfunctional heavy-rail commuter system unless the Washington Metropolitan Area Transit Authority (WMATA) undertakes serious structural reforms.

WMATA officials say they need about $15.5 billion for capital spending over the next 10 years to work through a massive backlog of deferred maintenance. Virginia’s state-government share would be about $150 million a year over and above the $200 million it allocates annually to operations and capital spending.

“I want value. I’m willing to deliver,” said state Sen. Mark Obenshain, R-Rockingham, in a meeting of the Senate Finance Committee yesterday, reports the Richmond Times-Dispatch. “But I want to see problems solved. And all too often when we talk about solving problems, the easy way to solve it is just throw more money at it. It’s a workplace problem; it’s an efficiency problem.”

Convincing constituents that giving Metro more money is a hard sell when in his district the Robert O. Norris Bridge “is literally falling into the river,” said Sen. Ryan T. McDougle, R-Hanover. “How is it that I can go to my people and say, ‘We’re going to spend money on an organization where we have no control from the state, we have no say so in the administration based on the board is put together? … There’s no way I can justify a vote to spend that kind of money for an entity that we have this little control over and is refusing to change how that structure is done.”

(For the record, the Robert O. Norris Bridge is not “literally” falling into the Rappahannock River. Transportation Secretary Aubrey Layne told the committee that the state does not even consider it to be structurally deficient.)

Ray LaHood, the former U.S. Transportation Secretary chosen by Governor Terry McAuliffe to review WMATA’s performance and governance, told the Finance Committee that he is trying to develop consensus around four areas: WMATA’s governance structure, its funding structure, its legacy labor costs, and maintenance.

The current management team has cut 1,000 of 1,300 WMATA workers, mostly nonunion employees and tightened ethics and nepotism policies. Also, said LaHood, “We’re going to try to fix the governance part so you feel you do have a voice. We can figure out how to fix your bridge and have a good transportation — Metro system — in Washington, D.C., that you can be proud of.”

Bacon’s bottom line: Obenshain and McDougle are absolutely right. Virginia should not fork over one red cent until WMATA can prove it won’t become a fiscal black hole. It appears that the new management team has taken some important steps with the nonunion workforce, but the real challenge will be extracting major concessions from the union. If it chooses to strike, the union can virtually shut down Washington, D.C. The only way — the only way — for Virginia legislators to stiffen management’s spine in a confrontation is to withhold that $150 million a year.

Even if WMATA delivers needed reforms, pumping another $150 million a year into the authority would aggravate an already lopsided distribution of rail and transit revenues.

As can be seen in the Virginia Department of Rail and Public Transit’s fiscal 2017 budget atop this post, DRPT hands out a total of $437 million a year in grants to cover operational expenses and capital spending for rail, buses and handicapped transportation around the state. Of that amount, $303 million already goes to Northern Virginia. Adding another $150 million a year to that sum would favor Northern Virginia even more lopsidedly — boosting its share from 69% of the DRPT budget to 77%.

Where would the money come from? Shifting money from inside the DRPT budget would eviscerate non-WMATA programs, most of them downstate. Most likely the money would have to come from road & highway spending. Virginia Department of Transportation funds allocated to construction spending in fiscal 2017 amount to about $802 million. Taking the WMATA money from roads & highways would reduce construction spending by 19%. Not just one year, but for 10 years.

Even Northern Virginia lawmakers might balk at that.

McAuliffe Orders WMATA Review

Governor McAuliffe has ordered a sweeping review of WMATA, the Washington area's train-wreck of a commuter rail system.

Governor McAuliffe has ordered a sweeping review of WMATA, the Washington area’s train-wreck of a commuter rail system.

Governor Terry McAuliffe has announced an independent review of the Washington Metropolitan Area Transit Authority (MWATA), the troubled organization that runs rail and bus systems in the Washington metropolitan area. Hampered by massive maintenance backlogs, high labor costs, safety issues and declining ridership, the authority requires billions of dollars in capital funds and hundreds of millions a year in operating funds to reverse a devastating loss of traffic. There is no consensus on where the money will come from.

Ray LaHood, former U.S. Secretary of Transportation, will lead an “objective, top-down review” of WMATA, said a statement issued by the governor’s office today. Virginia will pay for the review but will not control it. WMATA is governed by an interstate compact between Virginia, Maryland and Washington, D.C.

WMATA’s rail and bus operations move more than one million people a day, making it essential to the Washington-area economy. “Unfortunately,” the statement said, “WMATA today has significant problems that hinder its ability to serve this region’s residents and businesses. It did not happen overnight. It is the result of decades worth of decisions.”

“Everything will be looked at, including operating, governance, and financial conditions,” the statement said. That includes board governance, labor policy, and long-term financial stability. The study will benchmark system costs and expenses, governance, funding levels, cost recovery, maintenance costs, and rail safety incidents. A final report is expected to be issued this November.

The latest fiasco. There was no explanation of what prompted McAuliffe’s decision to launch the review, but news of another management fiasco today illustrates how badly WMATA has broken down. Federal track inspectors have found that the new 7000-series rail cars, which are heavier than the older cars, may be damaging the tracks, reports the Washington D.C. Patch.

WMATA purchased 528 of the 7000-series rail cars in 2013. News reports revealed last year that the cars wouldn’t be used on Blue, Orange and Silver lines because they can’t navigate a steep curve on a stretch of tracks shared by the three lines. Then this year, it was reported that the trains were experiencing failures every 5,000 to 10,000 miles, way below the contract expectations of 20,800 miles.

The decision in 2013 to purchase rail cars that can’t navigate a critical curve, experience failures at three times the contracted rate, and also damage the rail lines is a management failure of spectacular proportions — and the responsibility doesn’t go back decades.

McAuliffe’s decision to act is welcome, even if it’s overdue. The Commonwealth of Virginia cannot continue to dump money into a dysfunctional organization without concrete assurances that the money won’t be wasted.

Update: I was curious about how the McAuliffe administration came to the decision to launch this review but had no insight to share when I made this post. Turns out that the 2017 budget bill called for it, ordering the Secretary of Transportation to “initiate an objective review of the operating, governance and financial conditions” at mWATA.

The review shall encompass the following: (1) the legal and organizational structure of WMATA,; (2) the composition and qualifications of the WMATA board of directors; (3) potential strategies to reduce the growth in labor costs; (4) options to improve the sustainability of employee retirement plans; (5) safety and reliability; and (6) efficiency of operations.

Loudoun County Never Bargained on This

Loudoun County doesn’t even have service on the Metro Silver Line yet, but potential liabilities are escalating beyond levels county officials ever imagined when they signed up to participate.

Metro’s capital needs and operating deficits are growing as the transit system grapples with a multibillion-dollar maintenance backlog, union featherbedding, and declining ridership.

The system’s operating shortfall of nearly $300 million by fiscal 2018 and could double by 2019, said Jim Corcoran, a Virginia representative to the Washington Metropolitan Area Transit Authority (WMATA) board. “If things don’t change, it will be impossible. … We’re at $300 million this year … but next year it’s going to be $500-$600 million.”

WMATA hopes to close the gap through some combination of help from the federal government, the states of Virginia and Maryland, Washington, D.C., and local governments served by the commuter rail system. There is nothing close to a consensus on how to apportion the costs. Many, including Corcoran, said that changes to the regional compact between Virginia, Maryland and D.C., may be necessary to reach a financial agreement.

Writes the  Loudoun Times-Mirror:

According to the Metropolitan Washington Council of Government’s latest projections from October, Loudoun will start to pay Metro around $12 million in fiscal 2019 in annual operating and capital costs. The next year, the number is slated to jump to $50.8 million, then to $58.4 million in 2024 and as high as $82.1 million in 2025.

Phase 2 of the Silver Line, which is still under construction, is scheduled to go into service in Loudoun in 2020. How much more the county will have to pay as its share of keeping the rail system solvent is not known, but it is sure to measure in the millions of dollars yearly.

Virginia’s Infrastructure Deficit

Virginia's infrastructure deficit, though not as big as that of many other states, still represents a multibillion-dollar liability.

Virginia’s infrastructure deficit, though not as big as that of many other states, still represents a multibillion-dollar liability.

I have often opined on Virginia’s hidden deficits — fiscal time bombs in the form of budgetary gimmicks, pension under-funding, and deferred infrastructure maintenance. These problems are national in scope, and Virginia has been somewhat less derelict in its duty than other states, but sooner or later the Old Dominion will have an ugly confrontation.

The 2017 Infrastructure Report Card conducted by the American Society for Civil Engineers (ASCE) rams home the message. The U.S. overall infrastructure rates a D+ rating. Virginia-specific infrastructure rates a C-. (For whatever reason the 2017 national report card links to the 2015 Virginia report card.)

Here’s a summary of the ASCE’s run-down of major infrastructure categories.

Bridges. Virginia has 20,977 bridges and culverts, and their overall health is in decline due to age and lack of funding. Fifty-six percent are approaching the end of their 40-year anticipated design life. Some 30% are more than 50 years old. In 2013, 23% were found to be either structurally deficient or functionally obsolete.  “Available funds are often used to address immediate repair or replacement needs, leaving few remaining funds for preventative maintenance. … The statistics indicate an impending peak of replacements which may be required within the next 10 years.”

Dams. Virginia’s dam inventory continues to grow older and more susceptible to damage. The majority were built in the 1950-75 era, and their average age is 50 years old. Of the state’s high-hazard dams, 45% have conditional certificates, indicating that they do not meet current safety standards. The rehabilitation cost for high- and significant-hazard dams is estimated to be $392 million.

Drinking water. Virginia has 2,830 public water systems supplying drinking water to more than 7 million Virginians. A large number of these systems have passed 70 years in age. The Environmental Protection Agency’s latest assessment showed that Virginia waterworks need nearly $6.1 billion over the next 20 years. “Deferral of the necessary improvements has worked so far, but can result in degraded water service, water quality violations, health issues, and higher costs in the future.”

Parks & recreation. Park attendance in Virginia is on the rise, and state parks are consistently ranked as some of the best in the nation. The ASCE commentary vaguely states that “a lack of commitment to adequately fund and maintain our facilities will change things for future generations.”

Rail and transit. The report focuses mainly on the inadequacies of funding for passenger rail, which must share rail lines owned by railroad companies that give their own commercial traffic priority. Virginia did recently set up a Rail Enhancement Fund, and it created an Intercity Passenger Rail Operating and Capital Fund, although it did not actually put any money into the latter. “The current funding is not sufficient to meet the increasing demand for rail and passenger service or to complete the much-needed rail infrastructure improvements and upgrades.”

Roads. The condition of Virginia roads is tolerable from a maintenance and safety standpoint, but traffic congestion in the Washington and Hampton Roads metropolitan areas has a huge negative economic impact. The average Washington-area commuter experiences 74 hours a year of delay. Despite an increase in transportation funding in 2013, “a network that has grown by 14% over the last 35 years and with every dollar buying less construction work, more funding is needed to maintain safe roadways while adding needed capacity, making this a  high priority for Virginia.”

Schools. More than 1,800 public school buildings serve Virginia’s K-12 students. A comprehensive 2013 analysis found that 60% of schools are at least 40 years old. Estimated renovation costs exceed $18 billion for schools more than 30 years old.

Solid waste. Virginia’s solid waste infrastructure is in “good” condition. Increased recycling, a reduction in out-of-state waste, and the addition of 11 additional waste facilities have increased the state’s capacity from 20 years to 22 years.

Stormwater. About one-third of Virginia’s stormwater infrastructure is more than 30 years old, and much of the remainder was built 25 to 30 years ago. Most stormwater infrastructure has a 50- to 100-year lifespan. But the ASCE report is not impressed. “There are shortcomings to address for state-level, standardized reporting, public education, and ensuring a dedicated source of funding commensurate with the economic benefits of a healthy Chesapeake Bay and Virginia ecosystems.”

Wastewater. Virginia has $6.8 billion in wastewater needs over the next 20 years, a 45% increase from ASCE’s previous report card in 2009. That includes $1 billion for combined-sewer overflow, and much  more to achieve Chesapeake Bay clean water standards. “Virginia has made progress with considerable investments and has a comprehensive plan, but has tremendous challenges ahead.”

I don’t share the ASCE’s sense of urgency for every category. If we want to reduce traffic congestion, there are alternatives to building more road and transit projects: (1) reforming land use to provide a better balance of jobs, housing and amenities, and (2) accelerating the Uber-ization of ride sharing in order to reduce the number of single-occupancy vehicles on the road. I also question whether 40 years is an appropriate standard for rehabilitating or replacing school buildings. Clearly, many schools need rehabbing, but the study may overstate the number.

Even with these caveats, Virginia’s infrastructure deficit runs into the billions of dollars. And this analysis does not address recurrent flooding, an increasing problem in Hampton Roads. On top of all the other issues mentioned above, hardening the region’s infrastructure will cost billions of dollars of dollars more.

Update: Charles Marohn over at the Strong Towns blog eviscerates the ASCE report, which he describes as a “propaganda document.”

The reason why we can’t maintain our infrastructure is not because we lack the money or are afraid to spend it. It is because the systems we have built and the decisions we’ve made on what is a good investment are based on the kind of ridiculous math you see reflected in this ASCE report. We spend a billion here and a billion there and we get nothing but a couple minutes shaved off of our commutes, which just means we can build more roads and live further away from where we work. (Or, as we call that here in America: growth.)

Sixty years of unproductive infrastructure spending later, we are awash in maintenance liabilities with no money to pay for them. This is what happens when you have a government-subsidized, Ponzi-scheme growth system that, at all times, lives for the next transaction. America is all about new growth, which is why we don’t even bother to question the findings in a study like this.

MTR, Would You Take over Metro, Please?

MTR, the Hong Kong commuter rail system, is arguably the world's most efficient.

MTR, the Hong Kong commuter rail system, is arguably the world’s most efficient.

Here’s an idea for readers to chew on while the Big Bacon is on vacation: How about privatizing the Washington Metro system? Honk Kong privatized its subway system in 2000, and it has worked out pretty well.

Writing on the Cato Institute blog, Chris Edwards quotes a report by McKinsey:

Hong Kong’s MTR Corporation has defied the odds and delivered significant financial and social benefits: excellent transit, new and vibrant neighborhoods, opportunities for real-estate developers and small businesses, and the conservation of open space. The whole system operates on a self-sustaining basis, without the need for direct taxpayer subsidies.

MTR’s railway system covers 221 kilometers and is used by more than five million people each weekday. It not only performs well—trains run on schedule 99.9 percent of the time—but actually makes a profit: $1.5 billion in 2014. MTR fares are also relatively low compared with those of metro systems in other developed cities. The average fare for an MTR trip in 2014 was less than $1.00, well under base fares in Tokyo (about $1.50), New York ($2.75), and Stockholm (about $4.00).

The ratio of passenger fares to operating costs is a high 185 percent, which means that fares cover not only operating costs but a share of capital costs. MTR raises other funds for capital from real estate deals under which it gains from land value increases near stations — a concept known as “value capture” that we have touted on this blog. MTR is so highly regarded in the mass transit world that it has contracted to run commuter rail systems in cities China, the United Kingdom Sweden and Australia. Why not Washington? (Hat tip: Tim Wise.)

Bacon’s bottom line: It would be unrealistic to expect Hong Kong results in in the Washington Metro. For one reason, Hong Kong is far more densely populated and rail is a more attractive option compared to driving. For another, it’s not clear whether Washington Metro could extract the same economic benefit from putting real estate deals together that MTR could. Zoning controls and land use planning may work very differently in the U.S. than in Honk Kong.  But the idea certainly appears to be worth pursuing. If MTR could do no more than bring operational efficiencies to Metro, Virginians would benefit from better service and lower subsidies.

Washington Metro Needs another $1 Billion… Fast

The Washington Metro train wreck keeps piling up.

Washington Metro needs another $242 million from Virginia and its localities over three years.

The train wreck of the Washington Metro keeps piling up higher. The Washington Post sums up the situation this way: Local governments are “alarmed” as Metro says it needs an extra $1 billion over the next three years from Virginia, Maryland and Washington, D.C.

Metro General Manager Paul J. Wiedefeld has earned credibility as an executive willing to make tough decisions, such as shutting down rail service at times and locations where maintenance and repairs are urgently needed. Now he’s telling local governments in the Washington area that fulfilling his goals for safety and reliability — needed to reverse a continued decline in ridership — will cost them an additional $1 billion over what they’ve budgeted for the next three years. That translates into a 36% increase in annual operating subsidies. Writes the Post:

According to Metro’s new forecasts, the District’s total contribution for operations and capital would jump from $467 million in the current budget year to $735 million in fiscal 2020. Maryland’s total would rise from $479 million to $727 million, and Virginia’s would increase from $332 million to $574 million. (Metro’s fiscal years run from July 1 to June 30.)

“We have a $40 billion investment [in Metro], and it’s 40 years old,” said Wiedefeld. “As we replace that, there’s big numbers going forward, and they grow with inflation. . . . Either we start to wrestle with this so it’s where we want it to be, or we just push it down the road.”

Bacon’s bottom line: Maintenance is a bitch, especially when you fail to properly fund it over 40 years. Politicians love the accolades for building new highways, bridges and transit projects. Of course, the ribbon-cutters are long gone when the infrastructure wears out and someone else has to pay to fix it. I wonder how many other Metros there are in Virginia, quietly racking up unfunded maintenance liabilities while nobody notices.