Friday, January 29, 2010

Saved or created: one consultant 

The local newspaper tells us it's raining trains.
Plans to bring high-speed rail to Illinois, Minnesota and Wisconsin got a major boost Thursday from President Barack Obama administration�s commitment of $823 million to get projects rolling.

The money comes from $8 billion set aside from the economic stimulus package passed last year to develop the nation�s first intercity high-speed rail service, a top priority for Obama.

Obama announced the funding during an appearance with Vice President Joe Biden in Tampa, Fla. A high-speed rail project linking Tampa and Orlando was awarded $1.25 billion.

In all, 13 rail corridors involving 31 states will receive funding.
Hot damn! Choo-Choo Jim must have come through for us. And $823 million sounds like a lot of money. Except that ... it's not for us, exactly.
Of the funding announced Thursday, $810 million is planned to go toward building rail service between Madison and Milwaukee, and $12 million is designated for the Milwaukee-Chicago corridor.

An additional $1 million is planned to go toward developing the Madison-Twin Cities line.
$1 million for the home state? Really? This has transportation advocates fuming, it seems. Noted progressive activist Dave Mindeman is steamed:
$1 milllion for a study? That's like saying..."thanks for trying, we'll put you on our mailing list."
You don't even build anything with that $1 million. It's for a study, which would do what? Let's ask Assistant Choo-Choo guy Tim Walz:
"I have always advocated for a data driven process to determine the route for high-speed rail that's in Minnesota's long term best interests," Congressman Tim Walz, vice chair of the House Transportation Committees Subcommittee on Pipelines, Railroads and Hazardous Materials said in a press release. "This funding will be used to study possible routes that Minnesota outlined in its recent Statewide Rail Plan - including the River Route and the Rochester Route and put Minnesota in the running for future rail construction funding that will create jobs across our state."
The rest of Bob Collins' reporting describes the back story -- infighting between the Rochester/Mayo coalition that wants the train to go through Rochester that requires more track to be laid down. There is an existing line through Winona that takes you up the river directly to the Twin Cities; going by Rochester compels you to continue on to Owatonna before you can pick up a line to St. Paul unless you lay all new track. (I base that on this map of Minnesota rail lines.) The million dollars basically buys a consultant to write a report while the two sides in this battle continue their argument.

I wonder what the conversations between Oberstar and Walz are like?

UPDATE: How could I have forgotten? Stephen Karlson has a view from the other terminus.

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Friday, August 28, 2009

Twinkle, Northstar, price too high 

Last April I noted the nice service provided by the Albuquerque-Santa Fe Rail Runner, which cost me $8 for a round-trip. At that time I said
I'm not a transportation specialist, but I'm willing to speculate that the demand for urban rail is elastic, so higher prices decrease quantity demanded greatly. If so, would the fares being discussed for Northstar be too high?
We'll see shortly, because when they start running the train in November, you'll be paying $7 each way just to get to Big Lake, a much shorter distance than Albuquerque-Santa Fe. Weekends will have a discounted fare. There will now be as well another as-of-yet-undetermined charge for a bus link between St. Cloud and Big Lake.

According to a former public official $7 represents about 20% of the cost of running Northstar based on some assumptions about ridership. Wouldn't you want to price this to maximize total revenue? If so, do we really think $7 a ride does that? (For non-economists, here's a tutorial on the relationship between elasticity, pricing, and total revenue.)

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Friday, April 17, 2009

Other thoughts from Albuquerque 

Anyone who is contemplating the pricing of fares on Northstar should come look at the Rail Runner between Albuquerque and Santa Fe. �Open less than six months, the train carries traffic between cities about 60 miles apart and takes about 90 minutes. �When I rode up to Santa Fe this morning at 10:30 for lunch, more than half the people on the train were clearly tourists; I thought this was a waste of taxpayer money to buy me, a nonresident, a cheap ride. �But the 4pm train back to Albuquerque was full of commuters who live not in the bigger city but in northern suburbs around Sandoval and Bernalillo. �The train may have been at 70% capacity at its peak ridership. �My ride was $8 round trip, much cheaper than contemplated for Northstar. �

I'm not a transportation specialist, but I'm willing to speculate that the demand for urban rail is elastic, so higher prices decrease quantity demanded greatly. �If so, would the fares being discussed for Northstar be too high? �It seemed to me and my colleague with whom I traveled that there was enough fare on that afternoon train to more than cover the variable cost of the train. �But the question is whether the benefits of less congestion, emission, etc., are enough to warrant the $385 million spent on the route. �

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Thursday, February 28, 2008

The coalition to not leave you alone 

One product of being taught by free market types in graduate school -- my undergraduate education had mostly left-liberal faculty, where in my senior year I was the only econ major wanting to take the Friedman side of a debate on monetary and fiscal policy -- is a certain resignation that, at times, elections bring together enough people in a coalition to create a majority that imposes its will to take the income of the minority. You might wish to complain about it, and surely it's wrong, but the process may require a certain amount of wasteful spending in order to get something done. That's the logrolling I wrote about on Monday, for example.

So where does this coalition come from? Drew Emmer points to a "shrewdly calculated outcome" of a relatively large coalition of firms who stand to benefit from greater government spending on transportation. It's a pretty interesting group, including pavers, engineers, local government, and large associations of firms who want someone else to pay for improvements on roads they ship on. Even a few firms that provide professional services, like the contractors' law and accounting firms are in on the game. If you were teaching state and local public finance or political science and wanted to show how coalitions form, Drew's list would be a good one.

But it extends a little further. My own union's lobbyist makes his reasons plain:

This is good news for higher education because the $416 million the governor had designated for roads and bridges in the bonding bill is now available for other types of projects�like higher education. IFO supported the gas tax increase for this reason.
The public universities are relying on the government to definitely spend their 3% of the budget on bonds, and now that they pushed the governor's road requests aside there's more room at the trough for these porkers to lard up. Understandable, though hardly commendable. But look who else is in? I got a copy of an email sent by ISAIAH to its membership:

Congratulations everyone! ISAIAH marks a huge victory with the successful passage of the Transportation Funding bill into law on Monday February 25, 2008!

Over the last four years, ISAIAH leaders have been champions of a vision for a transportation system that works for everyone, including those unable to drive. Every person has the regular need to travel, whether it is to their home, workplace, school, church or another location. ISAIAH envisioned that Minnesotans should be able to rely on transit as a thriving part of the state's transportation system.

This law was made possible through Minnesotans gathering around a common vision for a transportation system that: gets everyone where they need to go; is a responsible stewardship of our resources for the public good; considers the legacy we leave for the Minnesotans who will live here 30-50 years from now. is critical to note that the content of this law was shaped by the participation of these groups and many others. This includes ISAIAH and the Transit Partners Coalition of which we were founding members.
ISAIAH, of course, is a social justice group that affiliate with churches. I attend church at one of the group's sponsors. I drive about 300 miles per week, and my wife another 100 or so. We probably consume between us about 25 gallons a week. I wonder how the stewardship committee would feel if I withheld $1.25 a week from my offering (rising to $2/wk over the next few years), since the church has now decided I should contribute more to roads? Does the church think the government is a collection agent capable of doing His work?

And these folks aren't through:

While this is a critical infusion into Minnesota's infrastructure, it is also the product of compromise. ISAIAH and transit advocates believe some areas of transportation policy and funding still need additional attention in order to provide adequate and equitable support to our growing transit system. We will bring these to your attention as necessary at ISAIAH gatherings over the next year.

Of course, and if you resist the holy coalition that will not leave you alone until you have paid from your pocket for every additional need that they decide you should pay for, well, that would make you unholy, right?

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Tuesday, February 26, 2008

An argument worth having 

My own representative, Larry Haws, is quoted in the local paper (not online, and my copy is at home so I'll do this from memory) saying he voted for the transit tax bill and its override based on thinking the gas tax was a better way of getting that money than getting it from grandma through property or income taxes. Again, not exactly those words, but that was the gist of what he was saying. And that's an argument worth having, a basis for voting that I can respect because that's the real choice that was made yesterday. I disagree with it vigorously, though.

I received a prepared email assailing yesterday's vote sent to a group of individuals mostly living in the Twin Cities directed against DFL Sen. Linda Berglin. I'm not sure how I ended up on this list, but it contains a number of prominent private citizens who I know to be conservative. One such individual sent back a message.

I agree that our overall tax structure is too high, but we need the roads and we need money to fund them.

I never thought that I'd support anything that Linda Berglin supported, but here it is. Thank you Linda.
I believe the description of my reaction would be 'gobsmacked', if you were British. I am admittedly one to respond to people who write things to me that leave me in such a state, and this was no exception.

I notice your address is in Minneapolis. I live in St. Cloud. Approximately 13,000 St. Cloud residents (out of the 105,000 workers in our area) drive outside our metro area to work each day, and most of those drive to some place in the seven-county metro. It�s about a 75-mile one-way trip. Assuming they get the average fuel efficiency of American cars, your �need� just cost my friends an extra $172 just to commute to work and back. They�d buy a more fuel-efficient car, but your �need� just hit them with an extra $200 for their tabs.

So as you enjoy the new roads and bridges you �need� � which will be not many, since a big chunk of this money will go for the half-empty trains you�ll watch while waiting at a crossing (but you�ll be waiting on new roads! O joy!) � thank a St. Cloud resident.
Using our benefit principle discussion from yesterday, I assume you to say that the commuters are paying for roads they benefit from so are properly charged. But the point is that all taxation and expenditure involves a reallocation, and the extra $172 is not going to improve I-94 or US 10. It's not going to be used to build a connector in Clearwater between those two highways. Rep. Haws chose to have his own residents who work outside of St. Cloud, who are likely to be wage earners with families, bear a larger burden instead of grandmothers. Even if we accept the premise of our interlocutor, that we "need" roads and bridges and even if we assume that we actually will get roads and bridges and not just more transit projects, what makes Grandma more deserving of protection from government taxation than the family trying to better themselves, provide for their children, and producing goods and services people want to buy?

As the old saying goes, those who rob Peter to pay Paul can always count on Paul�s support. If you're Grandma, Rep. Haws is your hero. If you're a worker commuting from St. Cloud to Hennepin County, or from Randall to Waite Park to work in our manufacturing plants, Rep. Haws decided you are Peter.

Here's Peter's friend
. I don't know if he would tax Grandma more; he might just decide to make some real budget choices.

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Monday, February 25, 2008

Who to build, how to build, where to build? 

As we continue the discussion of the transportation budget today -- liveblogging going on at Let Freedom Ring and Ladies Logic capturing everyone's attention (UPDATE: The override passes) -- it's worth pondering some points that have bothered me. I find as I go through this debate to find confusion on the terms public provision and public financing, about transportation versus transit, and over whether some people have plans. Let's pose this as a series of directed questions.
  1. Does Minnesota need more money spent on transportation? Now it is popular for many to focus on where the money we already budgeted was spent: "MVST was supposed to be a fix, but it isn't." "The Legislative Auditor tells us we built too many new roads and maintained too few existing ones." "Our bridges are falling down." "You should have spent less on bike trails." None of these points is now relevant. They are sunk costs. The question before us is simply, should we budget for building new roads and bridges? Since Gov. Pawlenty proposed bonding for bridges, he certainly wants more spent. The House caucus has repeatedly said there's a compromise available, which surely means more to be spent. So the argument isn't over whether to build more roads and bridges. That's been agreed to by all parties. You want to punish for past decisions on bike trails or MVST? There's an election for that. As Mitch pointed out, you had a chance last time.
  2. Are we buying the right roads, bridges, etc., or is this another transit boondoggle? The MnGOP has been labeling this the transit tax. Probably so, but how many of the legislators live in the seven county area? If you wanted to stop the transit boondoggle, the only way would be to stop awarding Senate seats by population, and switch to one vote per county or some other geographic division. The next apportionment in 2010 will probably move more legislative districts into the second ring suburbs -- what do you suppose that does to demand for rail projects? So my point is that outstate will always be in the minority on transit; the governor's veto only requires the Legislature to hold party ranks together and to bribe a few legislators -- which they've done. That's not extortion or coercion, that's plain old logrolling. Some payment is already in HF 2800, and others will be forthcoming in the bonding bill that the Legislature will now re-write; after all, there's money to spend!
  3. No, but really, are they in the right place? But that doesn't mean we bought the package of roads and bridges that we should have bought. The problem with government provision of public services is that it provides goods in return for political support, not for places where benefits exceed costs. If you want the latter, don't expect government to do it for you. Governments have no profit motive and thus no assurance that what they spend will have the value provided for. Jim Fedako writes at the Mises blog:
    The difference between government and business is the chain of taxation versus the dollar vote. The public school district taxes regardless of value produced. Once the bond issue passes the voters, the bill must be paid, to be enforced by the long, strong arm of government. On the other hand, the entrepreneur must face the consumer every day, product in hand, hoping to make a sale. The consumer can as easily bypass as enter his store, based on a whim if he so chooses. The taxpayer? Well, just try to hide.
    Did we build bike trails that provide too few benefits for their cost? Are we paying for trains that have low ridership? When private firms do this, they fail. Government passes another tax.
  4. How would we prefer to pay? Public finance students are given a set of lectures on the benefit versus ability-to-pay principle. I have argued before that since many people will use the roads a generation from now it made sense via the benefit principle to bond for those roads and bridges. The Legislature, seeing the bonding bill as an opportunity for other transfers of public money to political constituencies, chose instead to use something closer to a current benefit principle rather than future benefit. The gas tax is preferred by some for roads because people who buy gas use roads, so they are the ones benefiting from their construction. But when goods are shipped to us in Minnesota we now either pay for transporting them from out-of-state or we get fewer goods. And sales and excise taxes are usually seen as being regressive both on firms and on households (any wonder why the big hitters in the Chamber of Commerce like this bill? It's anti-competitive.) Indeed, the three most regressive taxes in Minnesota are the cigarette tax, the gambling tax, and the motor fuels excise tax. At least one might make the argument for the first two as reducing bad behavior. Does the DFL think driving is a bad?
The argument was not about past decisions. It was not about whether to build roads, and it was not really even about transit versus roads and bridges. Those decisions were already baked in the cake. The decision was over who will pay. Now we know. The question will be whether anyone has enough votes to demonstrate this was not the politically optimal solution.

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Wednesday, December 19, 2007

Psst, wanna ride a train? 

What should be the price of a ride on a public train? One of the things we know from basic microeconomics is that some element of price discrimination -- getting more from the inelastic demand riders and then offering a lower price from those with more elastic demand -- should result in more riders. If the purpose of LRT is to get cars off the street, finding ways to separate those groups and charge different prices will help.

Craig Westover and I exchanged some email about this a few weeks ago, and he now has an op-ed in which he tries to use a two-tier pricing mechanism to generate a proper price for transit and in the meantime provide a market for trading riding rights that could be income support for those with lower incomes. It's an intriguing idea. You cannot expand it too much, of course, because one problem with LRT will be congestion -- if the train is too crowded, you drive both the low price and high price riders off it. But I don't see the problem as being insurmountable.

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Friday, November 09, 2007

When pork meets green 

I was at a meeting in Benton County Wednesday and much talk occurred around the idea that the county commissioners, after many years of supporting Northstar, had decided to pull the plug on paying for the Northstar Corridor, which was planned to extend to the county town of Rice north of St. Cloud.

On Tuesday, commissioners Wollak, McMahon and Duane Walter voted for the withdrawal, while Earl "Butch" Bukowski and Dick Soyka voted against it.

Benton County has spent more than $500,000 in the last 10 years on Northstar with "nothing to show for it," Wollak said. "When is enough, enough?" Wollak asked. The county should be addressing larger problems, he said, such as the need for road improvements and building space.

Wollak said many people are surprised to learn that there won't be trains running up and down the line all day, but only in the morning and evening. He noted that the feasibility study predicted that there would be just 20-30 riders getting on the train at Rice by 2030.

"The ridership forecast has not changed in 10 years," he said.

Now I've looked at demographic data for the area for some time, and Benton has perhaps the fastest growth of any place in the area, a relatively small county sitting in a growth beltway around the Twin Cities. But that growth might not be sufficient for Rice. Most of the people living in northern Benton County (as well as Morrison County to the north of Benton) come to work in St. Cloud, and would not likely take the train for that 13-mile commute.

But as Peter Gordon notes, getting riders off the roads and into buses and trains is always the goal of public transportation advocates.
[Last Saturday] morning's LA Times includes the latest installment of the "subway to the sea" discussion about extending the Red Line west to the beach (but not yet beyond). The existing Red Line is about 16-miles of guideway that cost $4.7 billion to build, serves just 115,000 riders per day and costs $78 million a year to operate (the last time I looked). I have reported many times that this amounts to a $323 million/year loss -- which shrinks to $286 million/year if the most optimistic non-rider benefit assumptions (reduced auto use) are added.

These details are never addressed in the discussion of whether to spend another $6 billion on the 6-7 mile extension. The Times' coverage does mention that current daily bus boardings along the route are 64,300 (or 34,900, depending on the alignment chosen). It also mentions that costs on the currently-under-construction "Expo" light-rail line are running 23% above budget.

When pork meets green, anything goes.
Including bike bridges.

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Sunday, September 16, 2007

Why you want to have money 

I have found something I would give up this blog for.

I found Como.

This is actually up in Bellagio -- the only resemblance to the casino in Vegas is the port entry, which was actually disappointing -- which takes about 50 minutes by the fast ferry from Como. You could drive there if you wanted to, but the ferry and the small lake towns along the way are much better for the atmosphere.

The lake is long and thin with two branches, like an upside-down Y, and Bellagio sits at the junction of the two branches. Indeed, dinner was had today at a place called La Punta -- the point. Here's the view from there. The food was as always good. Hint: You need not ever order a real bottle of wine if carafes are available. The house wine is as nice here as any table wine in Paris.

Another fascinating thing: The use of pedals rather than handles in toilets. I consider this a great advance. In one very trendy club near the university at which I've been working, the styling is like an old taxi cab. This includes pedals for the toilet and the wash basin -- which is quite common -- with the foot pads for a car brake and an accelerator -- which is not. Better, the sink was styled like a drain pan for your oil.

The little bars and cafes are in the habit of putting food out with your beer. Tonight the first beer fetched chips with it. The second brought panini with Parma ham. And more chips after saying I don't eat ham. (My compatriots were grateful for zero demand from their drinking partner for the munchies.)

I also like the singing quality of the language here. It's not Chinese-style funky tonal. It's almost operatic. And how many ways are there to say Ciao? There are repetitive ones, there's a long one that sounds like a cat with a lisp, the one that comes with a kiss on the cheek, and the greeting that is like a ciao-contest. Who can make ciao sound more authentic? Film at eleven.

I have often argued that cities produce better styling particularly in females since competition is fiercer. Milan will stand as my proof. And this leads to molto coupling. Italians seem willing to neck anywhere, and in some cases they'd do well to stop at necking. This is the biggest annoyance I find -- the sound of smacking lips on the train is everywhere. The price of hotels may be part of the problem. But if this is the biggest problem, it isn't enough to detract from this place. Not that there's much to do in them. The room is hardly large enough to change your mind in, let alone be with the one you're with, as the Isleys might have sung. So you spend most of your time down here, which is the lobby of this hotel. (I'm currently sitting on that green couch that needs to be in Lileks next book of bad living rooms.)

It would be bad to be here without money, but nobody seems without money. The murderous part of being here is the current dollar-euro exchange rate, which is a hammer on my wallet every step of the way. There are very few Americans here, I believe in part, because of the cost of being in Europe right now. But the lake was worth it even at $1.4 per euro. What I need is enough money not to care.

BTW, right now on the radio in that lobby? Gorillaz.

Tomorrow: A really bad European classroom. And more food reviews!

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Monday, August 06, 2007

Speaking of cost-benefit... 

Mrs. S has penned her latest, arguing that the cost-benefit analysis for Northstar may have changed enough with shifting demographics to justify its build-out to St. Cloud. I do not necessarily agree with her about this, but the push for another CBA has been made around here recently and will likely come to pass shortly.

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