Trump can lead compromise on transportation funding — here’s how
Emphasize local decisions, with federal guidance and advice.
The presidential election result was surprising to many not only for its result, but for the blunt demonstration of the cultural, political and economic “coming apart” of rural and urban America. The American electorate has a lot of baggage to sort out, but in the meantime, the election did bring good news at the local level, both rural and urban: Some 49 state and local transportation proposals worth $200 billion went before voters, of which 34 passed. This general trend toward local investments in transportation is a healthy one.
Too many issues today are decided or predominantly funded at the federal level. Transportation is one of many possible examples: The Interstate Highway System dominates the modern popular impression of how infrastructure investment is done. Yes, it makes sense to have federal coordination and planning of major transportation networks that cross state lines. But commuter transportation networks — especially transit systems — are inherently local.
Transit directly benefits two main groups: users and local property owners. If a transit project creates net value for them, it should be able to recover its costs from a combination of user fees and “value capture” — the sale of denser development rights or collection of extra property taxes on land near the rail or bus rapid transit stations.
Even when transit funds are raised from taxes levied on a local area beyond the direct beneficiaries — like with a city or county sales tax — the voters in the jurisdiction are still motivated to consider the net value of the project. Higher local taxes make a city less attractive, and that has to be offset by the value of the transit investment to the local area’s commute, built environment and general livability. Local voters and local politicians are often in a better position to decide that value judgment, and to be held accountable for it, than the proverbial “Washington bureaucrats.”
Not only that, “use it or lose it” federal funds restricted to particular projects can tempt local entities into making weaker cost-benefit decisions. I cataloged one instance, when Maryland chose the rail option over the bus rapid transit option for the Purple Line in its 2009 Alternatives Analysis — at double the price, roughly an extra $1 billion, for only 11 percent more ridership by 2030. The option was locally rational because the state expected the incremental cost to be covered by nearly $1 billion from the Federal Transit Administration’s Capital Investment Grant Program.
Proponents of federal involvement in local transportation value the technical expertise of the federal DOT. Sure, local politicians and voters have more local knowledge of their own preferences, but do they always have experienced staff economists and engineers to do the best cost-benefit analysis? The political distance of federal experts may even provide some measure of impartiality to a project analysis — a cool technocratic touch to the fevered brow of a mayor excited about a vanity project before the math has been done.
The incoming Trump administration has an opportunity for compromise on transportation infrastructure and spending. It should devolve more control of transportation funding to the state and local levels, but should continue and even expand the availability of federal cost-benefit analyses for large state and local projects. Smaller competitive grant programs, such as the federal “TIGER” discretionary infrastructure project competition, provide another opportunity to promote infrastructure investments that prioritize cost-benefit testing — and to provide federal expertise to the state and local projects that need it. The TIGER program isn’t perfect, but its structure is heading in the right direction, compared to older FTA grant programs.
State and local decision makers should develop the proposals and manage the projects and most of the funding, while the federal government relegates itself to a technical oversight role with competitively targeted contributions to the highest-merit projects. As a general framework for the future of federal involvement in local infrastructure, that’s the balanced change we need.
Alex Armlovich is a fellow at the Manhattan Institute. Follow him on Twitter, @aarmlovi. A version of this piece originally appeared at the Washington Examiner.
