Two not unrelated reports

Friday saw two reports drop:
Minnesota Transportation Finance Advisory Committee
Summary Report and Recommendations

In short, what transportation will cost

The Itasca Project’s Regional Transit System: Return on Investment Assessment (Executive Summary)

What spending money on new transit infrastructure in the Metro area will get us.
[I was on the Technical Advisory Committee of the latter report, which constitutes neither endorsement nor lack thereof. The final technical report has not dropped as far as I can tell.]

Road, transit supporters hope for new revenue

Drew Kerr @ Finance & Commerce has this article up on Minnesota’s new attempt at raising transportation money: Road, transit supporters hope for new revenue

Sadly the article is behind a paywall. The Transportation Finance Advisory Committee has been looking at these issues for a year. The report is due out Thursday, but obviously has been leaked. With a DFL legislature and Governor, this looks like the shape of things to come.
I am quoted:

While expansion is on the table, David Levinson, a transportation engineer with the University of Minnesota’s Center for Transportation Studies, said money should be directed first to preserving existing infrastructure.
Levinson also said officials will have to offer a lot of details on bridge repairs, road improvements and congestion relief projects if they want public support for tax increases.

According to the article the Big items:

  • 10 cent increase in fuel tax (or a bigger increase phased in)
  • 0.5 cent on Metro-area sales tax for transit
  • 10% increase in vehicle tabs
  • 30 million in sales tax revenue on leased vehicles to be dedicated to outstate transit
  • giving local governments powers to implement higher wheelage taxes, transportation improvement districts, or local option sales taxes
  • tolling new system expansion
  • expanding MnPass

This is mostly good. Too bad the Stillwater Bridge isn’t being tolled. Or the Vikings Stadium.
An incomplete list of what I wish were on it:

  • Local option value capture
  • Local option congestion charging
  • Increasing the state gas tax further to help local governments pay for transportation, moving some road costs off of the property tax funding base they currently use (since a local option gas tax begets a race to the bottom). (Beyond what is currently proposed).
  • A well-capitalized state infrastructure bank to lend money to locals or private firms to provide transportation services, with loans paid back by user fees or value capture.

I would also like to see some more structural reforms:

  • A major reconsideration of who manages the network (we have three layers of road management in Minnesota (State, County, Municipal), I bet we could get by with two or one.
  • Moving MnDOT to be more like a Public Utility, with rates gaining approval from a PUC-like organization, rather than the legislature.
  • Charging the full cost of all transportation services as directly as possible, recognizing administrative costs of very precise pricing, (and providing direct subsidies to those who need it, rather than everyone)
  • Competitive tendering in transit provision

[I am not on the Committee, and have not been asked to present.]

Load Balancing



A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King
A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King

Road pricing has been unsuccessful because it is framed wrong. I say it is unsuccessful because it is not widely adopted, despite being a policy proposal on the table for decades, despite its widespread support among transport economists. Unfortunately, it is perceived (by drivers) as punitive.
Pricing has two complementary objectives, raising funds and allocating resources. We already raise funds for roads, with gas taxes. Gas taxes are in the present (non-EV) world almost perfect as a fund raising mechanism, as they don’t have much in the way of administrative costs, but they are poor at allocating resources. See Marty Wachs’ paper on this.
We of course might want more funds, but I believe we cannot raise revenue and switch methods at the same time. If we want to switch methods (to better allocate roadspace) we need to be revenue neutral. If want to raise revenue, we should raise rates under whatever system is adopted. These two debates should not be conflated.
The primary objective of any new road pricing strategy should be to better balance loads, i.e. manage the use of a scarce resource, roadspace, during the peak hours. Basically we want to move some drivers from the peak to the shoulders of the peak or the off-peak to reduce congestion.
Because it is costlier to provide extra capacity to support travel in the peak, and because of congestion externalities, travelers in the peak should pay more than travelers in the off-peak to satisfy both equity and efficiency arguments. Currently most federal and state road funding is from a gas tax that is proportional to fuel consumed, more or less proportional to miles traveled, but almost entirely independent of when that travel takes place (more fuel may be consumed per mile in the peak than the off-peak because of additional braking events in stop-and-go traffic, but this is too small to affect people’s behavior).

Temporal variations

The critical aspect of urban travel is its peak by time of day. We have morning and evening rush hours, corresponding to when most people go to and from work. However, there is a lot of non-work travel in these periods as well, people going shopping, to the gym, or eating out, which may have more sensitivity to price than work travel. We can see peaking in the attached figures. Demand for work travel peaks in the morning and evening (non-work trips are flatter, but not flat). Speeds drop in the morning and afternoon peaks. If we balanced the load more evenly, average speeds would rise in the peak and drop in the off-peak. But the net should be an overall gain, since there is excess off-peak capacity.
Figures from Parthasarathi, Pavithra, Anupam Srivastava, Nikolas Geroliminis, and David Levinson (2011) The Importance of Being Early. Transportation 38(2) pp. 227-247

Spatial variations

Just as we want to balance trips across time of day, we might want to balance trips across the network. While during the peak, some links are congested, others have spare capacity. Perhaps we can move travelers around?
Work in our labs with computer models of the Twin Cities road networks is that moving from a user equilibrium solution, where each driver selfishly chooses his or her own route, to a system optimal solution where each driver chooses a route that is best for society, reduces total Vehicle Hours Traveled by less than 5 percent. This suggests there is not much to gain for all of the complexity involved in getting travelers to switch routes, but keep their time of day.

A strategy that respects privacy.

A concern that arises with most road pricing proposals is government tracking. While I am personally of the belief we don’t really have privacy anymore, I can understand the desire to at least make it more difficult to track you. Installing devices in vehicles as a government mandate is not reassuring to anyone, tin-foil hat wearing or not. To be adopted, policy has to respect that.
Suppose we increase the gas tax to the desired peak hour rate. [This is the politically difficult part.] We then offer a discount for off-peak travel. This discount requires voluntarily installing in your vehicle a device which tracks when your car is in operation, and the odometer reading. (Not where, just when). For each hour of travel during the peak, you have already paid the peak rate. For each hour of travel in the off-peak, you get an off-peak discount.
So for instance, let’s assume you consume 500 gallons of fuel per year (@20 MPG, this would be 10000 miles). Let’s assume half of your time is in the peak and half is in the off peak, as measured by the clock. Assume previously, the gas tax was 35 cents a gallon, all the time. You would have paid $175 a year.
Now the “peak” gas tax is 50 cents a gallon, so you paid $250. The off-peak gas tax is 20 cents a gallon. If you install the device, you would get an annual off-peak travel rebate of $250-$175 = $75 (500 gallons * 50% of time * $0.50/gallon peak + 500 gallons * 50% of time * $0.20/gallon off-peak = $175). If you wanted to keep your privacy, you would not install the device. Privacy is not costless.
The device of course makes the system somewhat more complicated than existing, but is hopefully inexpensive in large numbers (my insurance company issues one to me, it can’t be that expensive), and the rates make the system slightly more complicated. Altogether, that is unavoidable if you want to add a time dimension to the prices charged to travelers.
As the saying goes YMMV (Your Mileage May Vary), so while this example was revenue neutral in a world of static demand, it might lose money if everyone installed the device and people respond to incentives and change behavior. Based on experience with changes in gas prices, we expect those changes are relatively small (the elasticity of demand with respect to gas price changes is pretty low). Further, not everyone will install the device. But changes don’t have to be large to have an effect, and we don’t want them to be too large (otherwise the peak is uncongested and the off-peak is congested). We could come up with schedules that would be appropriate, and might have different rates at different times (e.g. peak of the peak, shoulder, mid-day, and off-peak).
Another objection is out-of-state travel. Here, we are simply computing when you travel and assuming all fuel is purchased in the home state. If every state has such a system, this probably has very small boundary effects. If one small state adopts this, and its neighbors don’t some residents might travel out of state to purchase fuel (leading them to not adopt this). Again, I suspect the losses will be small, though they may be measurable. There could either be a federal mandate for such a system (which I would not like), or agreement among the various states to coordinate the pricing mechanism. If the rates differences (peak vs. off-peak) are small, they will not distort behavior much, and that might be the best way to implement, and then the differences can be increased over time (peak prices increasing, off-peak decreasing, until the desired load balance was achieved).

Can Pay Stations for Parking be used as GoTo card readers for bus pre-boarding?

GoTo ParkingPay

Minneapolis and other cities have been putting up pay stations so that people can pay for parking via credit card. It seems to me those same technologies could be used to have pre-boarding payment for buses. If the meters could read a GoTo Card or accept payment for transit, they could be easily used along major bus routes and speed boarding. The same meters could be used where there is also on-street pay parking, but at least the same technology could be used elsewhere if not the same device, which should have synergy.
Is there any example of parking payment systems accepting transit payment (like GoTo Cards)?
I doubt it because of the institutional issues, and the general lack of coordination between parking and transit agencies, but it seems a simple opportunity for transit pre-boarding payment to piggyback on an infrastructure for collecting and transmitting money, rather than constructing their own.
Image from Bob Ingrassia

Americans support gas taxes for roads.

Asha Weinstein Agrawal: What Do Americans Think About Federal Tax Options to Support Public Transit, Highways, and Local Streets and Roads? Results from Year 3 of a National Survey :

“The survey results show that a majority of Americans would support higher taxes for transportation—under certain conditions. For example, a gas tax increase of 10¢ per gallon to improve road maintenance was supported by 58 percent of respondents, whereas support levels dropped to just 20 percent if the revenues were to be used more generally to maintain and improve the transportation system. For tax options where the revenues were to be spent for undefined transportation purposes, support levels varied considerably by what kind of tax would be imposed, with a sales tax much more popular than either a gas tax increase or a new mileage tax.

Cross-subsidies |

Cross-posted from Cross-subsidies:

“We subsidize transit to spur development. We subsidize development to spur transit ridership.”



We subsidize transit to spur development.

We subsidize development to spur transit ridership.

We cannot make up our minds whether we want development to drive transit use, or we want transit use to increase development. Advocates would say we want both to create transit-served high density communities because of all the good that it brings.

But if the transportation-land use cross-dependency is so strong, why do we need to subsidize both sides of the equation? If you subsidized transit to get the positive externalities which are beneficial to development, it might make sense (e.g. maybe transit is undersupplied because the private sector cannot capture the positive externalities due to transaction costs and prohibitions on value capture). If even after subsidizing transit, and there is still not enough demand for private development to proceed without subsidy, maybe you are trying to stimulate development in the wrong place.

What positive eternality is the private sector development producing which justifies subsidy? The best I can figure is transit ridership. (Which isn’t really a positive externality, but might lower the average cost of transit, which is often dominated by high fixed costs, and slightly reduce the negative externalities of other modes.) And we want transit riders and service to justify private development?

I believe that the transportation-land use system acts as a positive feedback system (but a self-limiting one), in the high growth phase of development, transportation investment does drive land development, and land development can induce construction of infrastructure. We have saturated this effect in many places, so the effects of additional accessibility are now quite small on mature networks. The marginal benefits of new infrastructure may no longer outweigh the marginal costs.

The beauty of a positive feedback system is that it takes off on its own, without interference. The subsidy is an indicator the economics of the positive feedback system are not there. The evidence is that there were such effects historically, see the Special Issue of JTLU on the Coevolution of Transport and Land Use for examples, as well as papers cited therein.

Advocates would again say: but you need to prime the pump. To which I respond, we have primed the pump for almost 40 years in the US, with a large share federal capital surface transportation funds going to transit systems that now collectively serve 1.5 percent of all person trips (according to summaries of the NHTS by Polzin and Chu).

To provide some recent evidence, federal capital expenditures on transit in 2008 (from2010 Conditions and Performance Report, the most recent available) was $6,400,000,000, of which 76.4% was on rail. Federal capital expenditures on highways in 2008 was $34,300,000,000. Transit’s share of federal surface transportation capital expenditures in 2008 was thus 16 percent.

This is not to say any transportation subsidies are inherently justified or unjustified. (That is for another post). It is just to point out that there has been massive transit investment over a period of decades far out of proportion to the relative demand for transit, and that investment has done almost nothing to boost transit’s market share (or ridership), almost nothing to stimulate development, i.e. nothing to “prime the pump”. And if 40 years of sustained investment won’t do it, it seems reasonable to suppose another 40 years won’t do it either.

The reason for this is simple. Transit is not perceived as a better mode for 98.5 percent of trips than something else. It is not faster and/or it is not higher quality and/or it is not less expensive in out-of-pocket terms. It once was, before today’s competing modes had matured, before different land use patterns locked-in.

There are things we can do to make transit better. (And there are certainly things we can and should do to make other modes less attractive, like internalizing negative externalities with better pricing). I think it is technically and economically (though not politically) feasible to double (or even quadruple) transit ridership nationally. But spending scarce resources to subsidize private development to produce transit riders while we simultaneously subsidize transit service to induce private development is not the path to increase in ridership. It just gets us lost.

When transit was on the upsurge from 1880 to 1920, its competitor was walking and horse. It outperformed both. The US was growing fast, and it grew around new transit lines. But with the advent of automobility, paved roads, large lots and thus increased distances between homes, the suburbanization of retail to serve new suburban residences, and then suburbanization of employment, and then new highways to serve these new markets, those advantages withered.

Remember, the built form of the 1880s-1920s still mostly exists, and transit market share is low even there, where it could be much higher. We don’t necessarily need more development in those areas, certainly not development requiring subsidy. We need the residents and workers in those areas to want to take transit more. It already has the potential to be a decent choice, since the land use pattern was constructed with transit as the preferred mode.

We spend too much capital trying unsuccessfully to convince people with better choices to use transit. We don’t spend enough on those without good alternatives and who might travel more or farther, or those where transit is actually competitive, where the built environment still resembles transit’s glory years of the early 1920s.

Instead of requiring the public to subsidize land development near transit, transit shouldcreate value for land development that can be captured to help pay its capital costs. If a new route doesn’t create enough value to cover its costs or generate land price appreciation, maybe we should spend finite transit-supportive resources somewhere that does.

Rough road ahead for Minnesota drivers

Conrad deFiebre @ MinnPost: Rough road ahead for Minnesota drivers:

“‘Misaligned funding incentives’
The authors, Matthew Kahn of UCLA and tough-minded transportation engineer David Levinson of the University of Minnesota, fault the feds for ‘misaligned funding incentives,’ a lack of cost-benefit analysis and ‘mispricing of use.’ Their solution: radically reform federal highway progams to direct all current fuel taxes away from new construction and instead use them to ‘repair, maintain, rehabilitate, reconstruct and enhance existing roads and bridges.’ They call that step ‘Fix It First.’
But what about growing areas that really need new roads? The next part of Kahn and Levinson’s plan, ‘Expand It Second,’ calls for a Federal Highway Bank that would offer states construction loans ‘contingent on meeting strict performance criteria and demonstration of an ability to repay the loan through direct user charges [read: tolls] and capture some of the increase in land values near the transportation improvement.’
Those would be tough pills to swallow, sure to be loudly opposed by any driver or landowner asked to pay more for the direct benefits of new public investment. The hit could be softened, however, by Kahn-Levinson’s final proposal, ‘Reward It Third.’ If a new construction project met or exceeded performance targets such as on-time completion or environmental improvement, the bank would collect a reduced interest rate on the loan, resulting in lower tolls or less value capture from adjacent properties.
There’s plenty of sense in these ideas to correct the incentives and pricing around highways, even if a few oxen get gored. While the current federal highway program encourages new infrastructure at the expense of maintaining what we have, the rate of return on these greenfield projects has been declining for decades. That’s because the most economically efficient facilities have already been built, even if they’re often left to crumble. Furthermore, some studies have shown that road repairs produce more jobs and economic bang for the buck than new construction.
Congress is currently negotiating new a federal surface transportation bill, nearly three years after the last one expired. We’ve had nine temporary extensions since then, with no change in policy. The prospects for reforming the program along Kahn-Levinson’s lines range from slim to none this time. But eventually we’ll have to come to grips with the accelerating disintegration of the world’s greatest highway system and its negative effects on our economy, our job and cultural opportunities and even our pocketbooks.
Conrad deFiebre is a Transportation Fellow at Minnesota 2020, a nonpartisan, progressive think tank based in St. Paul. This article first appeared on its website.

Who should pay for roads, transit projects?

I was interviewed by Dan Haugen of Midwest Energy News:

Who should pay for roads, transit projects? :

“It’s true that local property taxes, not gas taxes, pay for building and maintaining most roads, says David Levinson, an associate professor of civil engineering at the University of Minnesota, but whether or not that’s a subsidy for drivers is debatable.
“There isn’t a person in the United States who doesn’t get some use out of the roads,” says Levinson, who also writes the Transportationist blog. Even people who don’t drive still benefit from things like fire protection, ambulance services, and mail delivery — all of which depend on roads. “I suppose you could be Ted Kaczynski, but even he had to use the U.S. Postal Service to mail his bombs.””

Linklist: March 12, 2012

Modeled Behavior: Smart Speed Limits :

“Variable speed limits, in contrast, present a more flexible, even Hayekian, way of setting the speed limit. One example is Interestate 80 in Wyoming, where sensors detect driver speeds, which are then used in an algorithm, along with weather conditions and other factors, to set speed limits that vary. An interesting article, via Radley Balko, provides more information on this road”

Av Stop: Airline Passenger Travel To Nearly Double In Two Decades:

“FAA Aerospace Forecast Fiscal Years 2012-2032 projects RPMs will nearly double over the next two decades, from 815 billion in 2011 to 1.57 trillion in 2032, with an average increase of 3.2 percent per year. The number of commercial operations at FAA and contract towers is expected to increase by more than 45 percent from current levels.”

[Is this with or without High-speed rail? Oh, that’s right, it doesn’t matter.
Anyway, for some really interesting analysis of Airline data, see this presentation by Prof. R. John Hansman.]

Smithsonian: The Great New York-to-Paris Auto Race of 1908

Hennepin County Library on Tumbler (via AO) Twin City Lines Ad, March 1967 :

“Who knew that they would be headed for public ownership in less than 4 years?  The Fares vs. Wages chart looks especially unsustainable.”

Brookings Institution: Transformative Investments in Infrastructure, Chicago Style:

“The CIT hits on most of the important elements of past infrastructure bank proposals. It’s a market-oriented institution that attracts private capital interested in steady returns and makes investment decisions based on merit and evidence rather than politics. Like California’s I-Bank it cuts across different types of infrastructure such as transportation and telecommunications, and like Connecticut’s Green Bank it emphasizes the generation, transmission, and adoption of alternative energy. The CIT also embraces advanced technologies to support next generation place-making by wiring low-income neighborhoods with broadband and developing high-tech research campuses.”