Tag Archives: Stephen Smith

WMATA’s failures are institutional, not personal

Chris Barnes who writes the DC blog FixWMATA  is supporting a petition to replace the Board of Directors of the Washington Metropolitan Area Transit Authority. Frustration with the transit agency is growing among Washington-area residents as ongoing system repairs have made the system’s weekend service increasingly unusable. The situation has led to the birth of multiple blogs documenting WMATA’s failures. As an intern in DC from the Czech Republic recently summed up the situation, “Metro is both terrible and expensive.”

While the need for reforms at WMATA is clear, replacing the Board of Directors is unlikely to lead to significant improvements in the system. Rather, WMATA’s problems are institutional, and new actors facing the same incentives as the current WMATA Board are unlikely to produce better results. Some of the institutions preventing a Metro of reasonable quality and cost include:

1) Union work rules. Stephen Smith, my co-blogger at Market Urbanism, has done an excellent job of explaining how union work rules make transit needlessly expensive. One of the biggest culprits is requiring shifts to be at least eight hours and preventing the hiring of part-time workers. WMATA rationally runs trains and buses more often during morning and evening rush hours, but it is not permitted to staff these time periods at levels above mid-day staffing because of the eight-hour shift requirement. Combined with the above-market wages and benefits that WMATA employees make, these bloated employee costs prevent WMATA from achieving a higher farebox recovery rate and having more resources to dedicate to needed capital improvements.

2) Intergovernmental transfers. Over half of WMATA’s current capital improvement budget comes from the federal government, meaning that while the benefits of the system are narrowly bestowed on riders, a large share of the capital improvement costs are spread across U.S. taxpayers. This large dispersal of costs permits much more expensive transit than would be tolerated if all funding came from the localities that benefit from the system. Furthermore, with funds coming from the District, Maryland, Virginia, and the federal government, the flypaper effect comes into play. This means that a $100 million infusion from the federal government to WMATA will not reduce the cost born by local taxpayers by $100 million; rather, total spending on the project will increase with grants from higher level of government. Absent incentives to spend this money well, WMATA demonstrates that high levels of federal funding will not necessarily result efficiently carried out capital improvements.

At Pedestrian Observations, Alon Levy provides a comparison of transit construction costs across countries, and finds that U.S. construction costs are exorbitant. The reasons for these cost disparities are many and not well-understood. One reason for high costs in the U.S., though, may be that the prevalence of  federal funding comes with the strings of costly federal regulations.

3) Accountability. While all U.S. transit systems suffer inefficiencies from intergovernmental transfers and union work rules, DC’s Metro has a unique governance structure that seems to produce particularly bad and costly service. WMATA has the blessing and the curse of being multijurisdictional. On the one hand, the Washington region is not plagued with the agency turf wars that New York City transit sees. Several of the system’s rail lines run through Virginia, DC, and Maryland, providing many infrastructure efficiencies and service improvements over requiring transfers between jurisdictions.

Despite these opportunities to provide improved service at a lower cost, WMATA’s lack of jurisdictional control seems to do more harm than good. No politician can take full credit for running WMATA efficiently, so none prioritize the agency’s performance. It’s a tragedy of the political commons.

Josh Barro has recommended directly electing the Board of Directors of WMATA to create elected officials with an incentive to improve service. This institutional change would be more likely to improve outcomes than replacing the current Board with new members who would face the same incentives. Clearly, WMATA’s Board of Directors is failing in its job to oversee quality and cost-effective transit for the region; however, replacing the board members without changing the institutions that they work under will not likely improve outcomes. Intergovernmental transfers and union work rules limit transit efficiency across the country, but WMATA’s interjurisdictional status exacerbates inefficiencies and waste.

Local control over transportation: good in principle but not being practiced

State and local governments know their transportation needs better than Washington D.C. But that doesn’t mean that state and local governments are necessarily more efficient or less prone to public choice problems when it comes to funding projects, and some of that is due to the intertwined funding streams that make up a transportation budget.

Emily Goff at The Heritage Foundation finds two such examples in the recent transportation bills passed in Virginia and Maryland.

Both Virginia Governor Bob McDonnell and Maryland Governor Martin O’Malley propose raising taxes to fund new transit projects. In Virginia the state will eliminate the gas tax and replace it with an increase in the sales tax. This is a move away from a user-based tax to a more general source of taxation, severing the connection between those who use the roads and those who pay. The gas tax is related to road use; sales taxes are barely related. There is a much greater chance of political diversion of sales tax revenues to subsidized transit projects: trolleys, trains and bike paths, rather than using revenues for road improvements.

Maryland reduces the gas tax by five cents to 18.5 cents per gallon and imposes a new wholesale tax on motor fuels.

How’s the money being spent? In Virginia 42 percent of the new sales tax revenues will go to mass transit with the rest going to highway maintenance. As Goff notes this means lower -income southwestern Virginians will subsidize transit for affluent northern Virginians every time they make a nonfood purchase.

As an example, consider Arlington’s $1 million dollar bus stop. Arlingtonians chipped in $200,000 and the rest came from the Virginia Department of Transportation (VDOT). It’s likely with a move to the sales tax, we’ll see more of this. And indeed, according to Arlington Now, there’s a plan for 24 more bus stops to compliment the proposed Columbia Pike streetcar, a light rail project that is the subject of a lively local debate.

Revenue diversions to big-ticket transit projects are also incentivized by the states trying to come up with enough money to secure federal grants for Metrorail extensions (Virginia’s Silver Line to Dulles Airport and Maryland’s Purple Line to New Carrolton).

Truly modernizing and improving roads and mass transit could be better achieved by following a few principles.

  • First, phase out federal transit grants which encourage states to pursue politically-influenced and costly projects that don’t always address commuters’ needs. (See the rapid bus versus light rail debate).
  • Secondly, Virginia and Maryland should move their revenue system back towards user-fees for road improvements. This is increasingly possible with technology and a Vehicle Miles Tax (VMT), which the GAO finds is “more equitable and efficient” than the gas tax.
  • And lastly, improve transit funding. One way this can be done is through increasing farebox recovery rates. The idea is to get transit fares in line with the rest of the world.

Interestingly, Paris, Madrid, and Tokyo have built rail systems at a fraction of the cost of heavily-subsidized projects in New York, Boston, and San Francisco. Stephen Smith, writing at Bloomberg, highlights that a big part of the problem in the U.S. are antiquated procurement laws that limit bidders on transit projects and push up costs. These legal restrictions amount to real money. French rail operator SNCF estimated it could cut $30 billion off of the proposed $68 billion California light rail project. California rejected the offer and is sticking with the pricier lead contractor.