The Economic Returns of a National Transportation Infrastructure Initiative

The American Public Transportation Association (APTA), the National League of Cities (NLC), and the Environmental and Energy Study Institute (EESI) held a briefing showcasing examples from communities across America of transportation investments that benefit the national economy, by creating direct and supply-side jobs while boosting regional economies.

A reboot to America’s transportation infrastructure would be the investment that keeps giving back. Public transportation investments not only create immediate jobs necessary for project construction, but also spark and underpin ongoing job creation by linking people to markets, thereby providing access to jobs; by linking employers to workers; and by making the overall transportation system more productive, efficient and economically competitive.

 

HIGHLIGHTS

 

Valarie McCall, Immediate Past Chair, American Public Transportation Association (APTA); Co-chair of the National League of Cities' Transportation & Communications Committee; Chief of Government & International Affairs, City of Cleveland (OH)

• An infrastructure bill is coming from the new administration—it is important to ensure that public transit has a permanent spot in it.
• The 2017 Infrastructure Report Card put out by the American Society of Civil Engineers (ASCE) gave America's transit infrastructure a D-. This is the lowest grade of any sector, and a grade that is on the verge of failure. Currently, the United States has $90 billion in backlogged needs for transit.
• Transit investment generates jobs. In fact, the number is around 50,000 jobs per $1 billion of investment. Transportation underpins the economy on an ongoing basis; it is the investment that keeps paying back.
• The American Public Transportation Association (APTA) has released a new report, Who Rides Public Transportation.

 

Greg Evans, City Counselor, City of Eugene, OR; Co-chair of the NLC Transportation and Communications Committee

• The city of Eugene, OR, with help from the Greater Cleveland Regional Transit Authority [whose HealthLine bus rapid transit line has become a model for similar initiatives], launched an innovative Bus Rapid Transit line with a new bus that mimicked a rail car, and this was revolutionary. It runs between Eugene and Springfield, OR. Currently there are two lines, with work being done on a third – overall, it has a 61-mile footprint.
• America's current transit system is on the road to failure. In Eugene, OR, alone, there is a $300 million backlog in terms of road improvement and repair needed. But, we don’t just need repairs; we need NEW roads and NEW transit systems.
• The U.S. population is rapidly growing, and will reach 450 million by 2040. Right now, our country’s transit cannot handle that increase. We can’t just focus on where these new people will live and work; we must also figure out how they will get there.
• We cannot remain married to the single occupancy vehicle. We must become more open to public transportation systems.
• President Trump has proposed a $1 trillion investment in infrastructure; this is good, but it needs to be more than just talk. We have no idea what, specifically, this money would be invested in.
• Public Private Partnerships (3Ps), which the administration is emphasizing as a cost-effective way to build infrastructure, are indeed a useful tool in the toolbox, but they are merely a tool, not a strategy. We need an overall strategy.
• Right now, we have a number ($1 trillion), no plan, and thoughts of cutting transit – the public transit community has a lot of work to do. We cannot let transit die, and if we are not focused on the big picture, this could happen.
• Transit is a critical piece of sustainability; moving 450 million people will take a lot of energy, but there is the potential for deep electrification with mass transit.

 

Paul Balmer, Legislative Assistant, speaking on behalf of Rep. Earl Blumenauer (D-OR)

• Trump’s proposal of $1 trillion for infrastructure spending has been, perhaps, the least contentious of his proposals. In fact, Congressional Democrats have shown support for it. This is a good start.
• We also need to take more action at the local level to help solve these infrastructure issues, especially since local needs are so unique and there might not always be a one-size-fits-all solution.
• Rep. Blumenauer has reintroduced a bill, H.R. 1458 (“Raise It”), that would increase the “gas tax” by 15 cents over three years, and index it to inflation to pay for transportation infrastructure repairs. Raising the tax on gasoline, diesel, and kerosene fuels would promote the usage of mass transit.

 

Peter Rogoff, CEO, Sound Transit (Seattle, WA)

• The mobility needs of Americans are as diverse as the country itself.
• Infrastructure in the East is too old, and we’re “running out of duct tape.” Expansion of infrastructure, specifically transit, in the South and other high growth areas is not keeping pace with population growth, and as a result there are major traffic issues. The problem is financing.
• Not having enough transit has a major impact on the trajectory of a growing city’s economy. A city needs solid infrastructure and transit systems in order to recruit new economic opportunities – if there is not enough transit, new people and businesses will not move there, and existing employers may leave.
• The Department of Transportation's Beyond Traffic study shows that by 2040, there will be 70 million more Americans – BUT, they will be located in just 11 major megaregions.
• Puget Sound recently put in place a $54 billion plan to build 62 miles of light rail, highway improvements, and new additions to the commuter rail service.
• This ballot measure was approved by voters, even though it increased taxes $169 per person per year (on average); clearly this is something voters feel they need!
• In 2016, three new stations opened and there was about an 80 percent increase in light rail ridership overall.
• If you don’t invest in transit, traffic congestion undermines your ability to create jobs.
• Investment in transit also creates family wage jobs that don’t always require a college degree, such as construction work and materials manufacturing. With the voter approved 25-year plan in Seattle, the jobs created can last an entire career.
• The Puget Sound infrastructure plan will create 78,000 direct jobs, and many more indirectly. Now, 84 percent of people in the region will have easy access to rail.
• Rogoff and other transportation officials are worried President Trump's first budget proposal will have very little funding for the Department of Transportation (DOT). It is important to remember that a one-time package like the potential $1 trillion investment is no substitute for the yearly budget funding for DOT. In fact, the current budget is not even adequate – we cannot sustain cuts.

 

Question and Answer Session

 

What are your opinions on Dynamic Scoring [dynamic scoring helps Members of Congress evaluate tax policy tradeoffs by estimating the effect tax changes will have on jobs, wages, private investment, federal revenue, and the size of the economy]? If a project brings economic activity and increased revenues, should that be scored? In the past that has not been allowed—but is dynamic scoring a good idea?

Peter Rogoff:

• Economists have questioned this method.
• We shouldn’t be wooed into these budgetary concepts – good investments don’t always result in increased federal revenues. Many advocates of dynamic scoring actually want to use it to bypass federal rules. A more interesting conversation is having separate operating and capital budgets for the federal government.

 

We’ve heard a great deal about the new transportation technology that is about to sweep over us (self-driving cars, car-sharing, etc…). Should we push the pause button on major megaprojects until these technologies sort themselves out?

Peter Rogoff:

• Road congestion has almost doubled in five years in the Puget Sound region, and ride-sharing vehicles get stuck in this same congestion as everyone else. The notion that new technologies are a panacea did not hold water with the voters of the Puget Sound regions.
• Rogoff views companies like Uber and Lyft as an opportunity to augment the transit services we have. A Bergen County, New Jersey community provides one example of this: rather than investing in a new parking lot at a transit station, they subsidized ride shares (with Uber and Lyft) to transport people to and from their homes to the existing station – the “last mile” challenge. New transit stations in Puget Sound will include turn-around and drop off facilities to accommodate ride-sharing and, eventually, self-driving vehicles.

Paul Balmer:

• We should take into account the advent of self-driving vehicles when making policy and planning investments. In a study last year, only 6 percent of cities incorporated self-driving in their last transportation plans.
• Uber and Lyft have become very adept at monetizing the cost of congestion. Transit agencies must learn to do the same.
• Ultimately, Rep. Blumenauer believes we should move to more of a congestion-pricing scheme to fund transportation infrastructure. A gas tax does not really pay for one's use of the transportation network [especially with the rise of electric vehicles]. Congestion pricing, once people become more comfortable with it, can be a way to incentivize people to choose to take the train!

Valarie McCall:

• We can’t stop all major transit investments and wait because technology is ever evolving, but we certainly do need to pay attention to it.

Greg Evans:

• We have had pilot programs in Oregon, Washington and California with vehicle miles traveled (VMT) pricing. Being able to capture VMT as a way to pay for our infrastructure systems is critical. I know some people push back against this, but you pay for what you use.

Peter Rogoff:

• Technology advances are not only a threat to transit: they also benefit our industry. Sound Transit has become a new partner in a Wind Power generation facility. Thanks to this wind power, combined with a high level of hydroelectric power generation in the region, Sound Transit may be the only carbon-neutral rail system in the United States.

 

Perhaps instead of VMT pricing (which can be avoided by telecommuting), you should start looking at auto insurance pricing to cover these costs. You should be taxing insurance fees rather than gasoline or charging VMT because people can avoid using your roads [and still benefit from them].

Valarie McCall:

• We do need to start thinking outside the box for how to fund transit.

Paul Rogoff:

• We need local-level solutions; all types of transit must work together to come up with creative ways to fund public transportation.

 

Can private funding really build the transportation infrastructure we need while keeping it accessible to all, especially the most disadvantaged who need public transit the most?

Greg Evans:

• Public Private Partnerships (3Ps) are not a panacea for public investments in infrastructure – it doesn’t get to the broad investment we need to achieve goals.
• So far, President Trump has given us a huge number ($1 trillion) and some “sketchy” talk about Public Private Partnerships – that’s it.
• Evans is not very hopeful that this new plan will have any real “beef” to it.

Valarie McCall:

• Public Private Partnerships (3Ps) are not a new thing—we do it on a local level all the time.
• We just need to focus on our balancing of the systems, and make sure that we all have the same definition of 3Ps across the board. It should truly be a partnership, not a business deal.

Peter Rogoff:

• In Puget Sound, we have an electronic fare payment system, Orca Pass, that makes it easy to subsidize low-income individuals using public transit. Such a system could help address some of the concerns about keeping public transportation affordable for those in need. Affordable access for low-income persons is critical.

 

What is Congressman Blumenauer’s feeling about his gas tax bill getting through? What are local returns on public transports?

Paul Balmer:

• Rep. Blumenauer has introduced his gas tax proposal, a 15 cent increase phased in over three years, in each of the past two Congresses.
• Though there was momentum last time, much of it generated at the local level, Congress is distracted by other issues at the moment, and the bill has not gotten much attention.

Peter Rogoff:

• Transit can better capture revenue from its investments. Tax Increment Finance Districts could be established in states where it is legal, so that those benefitting directly from new transit infrastructure (in terms of real estate appreciation and business creation) help pay for it through additional taxes, while also ensuring that affordable housing units are reserved near transit stations.