Sunday, January 18, 2009

The Problem Using Auto Taxes to Pay for Transit

The Twin Cities funds transit partially through new car sales. In this recent economy its projected that the overall taxes from this method will be $200 million less than in 2003. The problem here is funding transit through increased auto sales. If more people have cars, how likely is it that they'll need increased transit alternatives? And in an economic downturn, the idea of funding transit through purchases is antithetical due to the greater need for transit during these periods, as evidenced in the last year. Even though transit receives a higher share of the car taxes today, that means a huge deficit for transit which in all likelihood means service cuts. But for capital projects, it means that like every other city, they have to hope for some funding that is likely not coming.
Despite a ridership increase of 6.8 percent for the first 11 months of 2008, the council predicts a budget shortfall of $72 million through the next biennium "just to maintain existing transit service and fund committed service expansions."
To me this is the problem with the stimulus, cities and regions which are the major economic drivers of this nation are getting the shaft when DOTs (aka Highway Departments) want to build new capacity to the outskirts. There's no more room for expansion in cities without tearing out more of the urban fabric. For too long we've funded roads to nowhere and with 50 years of the same policies, we have the problems we are in now. It's not like this is a new theory or something being tested, the new capacity idea has been tested for 50 years! We need to figure out a way to either make highways go through the same process as transit or loosen the strings for transit so lines can be built much easier. This also means more money for transit is needed in the stimulus package. Its time to start catching up.


Anonymous said...

Well, just about any kind of taxes fall during a recession. The MTA is not doing well with the real estate transfer tax. Sales taxes are down, as are income taxes. If you want a dedicated funding source, it's almost guaranteed to be dependent on the economic cycle.

Peter said...

I don't know what public opinion is like on other areas to the Twin Cities (or if any areas are like the Twin Cities, except maybe LA) but from what I see in the papers, the people here really don't get it. They want to drive their big SUV wherever they please, and they expect there to be uncongested roads and large empty parking lots along the way. They expect that even with two Large downtowns (Minneapolis and St Paul) and countless other office parks spread out across the metro area that highways should be clear the entire way. Never mind that it's impossible to build an efficicient transportation system when everything is spread out, they want it! And now some of them are wising up and choosing transit? Guess what? When you live an hour away by car in clear traffic from where you live, it's going to be difficult for transit to server you. Of course never mind again the people that expect efficient peak period door to door transit service to run on top of our grid development pattern. There is no way a commuter bus will be able to take you quickly from your exurban home to your exurban job on the other side of the metro. Not happening.

fpteditors said...

Here is an idea. Rename your transit authority to Metro-Bank-Authority. Then walk into U.S. Treasury, stick hand in till, take 20 or 30 Billion.

BruceMcF said...

Yes, all sorts of taxes fall in a recession ... which is why the national government should on average be running a cyclical deficit during a downturn.

And its the national government that can run the cyclical deficit, so there should be much stronger public transport capital and operating support in the Stimulus Bill.

$4b for rail and $6b for buses against $30b for highway spending is, IOW, absurd

Michael said...

Yes, tax revenue falls during a recession, but the problem is that transit funding is directly tied to the health of auto sales. That means that even if transit makes big gains during a strong economy, it can never gain on autos because decreased driving = decreased transit funding. That's a problem regardless of the economic situation.