How Public Decisions Get Made

The Anti-Planner has an absolutely fabulous article about a Wisconsin passenger rail proposal, but in fact what the article really is about is how government decisions get made.

According to RTA's latest newsletter,
the KRM would cost about $200 million to start up and would require a
$6.3 million annual operating subsidy. For that it would carry about
1.7 million trips per year, which translates to 6,700 per weekday.

In other words, RTA wants to spend $200 million to take 3,350 people
to and from work each day. The Milwaukee-Racine-Kenosha urbanized areas
have about 750,000 commuters, so RTA's proposal would take less than
half a percent of them to work. But they would all have to pay for it
in the form of some local taxes plus a diversion of a share of federal
and state gasoline taxes to fund the rail line.

By the way, though this post isn't meant to be entirely about rail itself, let's use Coyote's test on this rail proposal.  As a reminder, here is Coyote's test:

Take the total capital charge and compare it to the cost of buying every projected rider at $22,000 Prius.  Then, take the operating subsidy (which is always higher than projected) and see how it compares to the average gas consumption in a year of said Prius's.  If the projected capital charge and subsidy could have bought every rider a car and all the gas they need to drive it, then the rail line is not only an average run-of-the-mill government boondoggle, but a total and complete ripoff.

And, the KRM... FAILS.  And fails miserably.  The $200 million charge would have bought every rider TWO Prius's and still have some money left over, and the operating subsidy, sure to be larger in reality, would buy each rider about 627 gallons of gas a year, which at 30mpg would get them 19,000 miles per year.  But don't worry, KRM, every single new rail system to which I have applied the test has failed (Phoenix, Houston, LA, Albuquerque).

But lets continue:

The planned commuter line would run 14 round trips per day, which
means each train would have about 240 people on board. That's about
five bus loads. So why not just buy five buses for each planned
trainset and move people by bus instead?

The newsletter explains that RTA considered a bus alternative, but
it would attract only a third as many people as the rail line. It would
also cost only an eighth as much to start up, so I always wonder why
don't they just invest three-eighths as much in buses and carry as many
people as the rail line.

But then I noticed that the rail line was projected to have seven
stops between Milwaukee and Kenosha, while the bus line would stop 27
times. As a result, the bus would take almost twice as long as the
train. No wonder it attracted so few people!

The train would average just 38 miles per hour and RTA admits that
it would not go significantly faster than motor vehicles, so there is
no reason why buses could not be run on schedules similar to the train.
So why didn't they consider an alternative in which buses stopped only
seven times?

It turns out they did. The report
from the consultant hired by RTA included a bus-rapid transit
alternative that stopped fewer times than the regular bus alternative.
It included some exclusive busways, so it cost a lot more than the
regular bus alternative, but it would cost only half as much as the
train. Moreover, it was projected to carry as many riders as the train.

Naturally, RTA told the consultant to drop this alternative from further consideration.

The Anti-Planner shoots back what to me looks like a really good proposal:

The consultant had also estimated that the bus-rapid transit
alternative would disrupt traffic more than the trains. But if the
busways (which would move no more than about 5 buses per hour) were
opened to low-occupancy vehicles that pay a toll, they would actually
relieve congestion. Plus, the tolls would pay for most if not all of
the new lanes, and by varying the toll, the lanes would never get
congested so the buses could meet their schedules. This would result in
transportation improvements for both auto drivers and transit riders,
and at a very low cost to taxpayers

  • dearieme

    My own scheme, which would be brilliant for flat cities, is really cheap. Dig a network of shallow ponds and canals. Freeze them and invite the citizens to buy ice skates. Not only does everyone get a little exercise, but they get to work with speed and grace.

  • http://amateureconblog.blogspot.com/ Chris Meisenzahl

    Nicely done. ;-)

  • dski

    Sounds like the Rail Runner that currently runs between Belen, New Mexico and Bernalillo, New Mexico with Albuquerque in the middle. Late this year or early next year it is supposed to go to Santa Fe. They have already put most highway projects in New Mexico on hold because their estimates of construction costs were far too low. As usual they don't have enough money to run it and want to create tax districts in the four counties "served." Another example of greedy government.

  • Bearster

    In Laissez-Faire Capitalism, people can spend their money on whatever brings them the highest value. This not only works well but it's simple and easy enough for everyone to understand. The standard of value is: value.

    In any other kind of system, government takes money from people by force. The purpose of this is to achieve a standard other than value--because you don't need a gun to make people use value as their standard.

    I contend that if it's not based on value, then it's based on non-value or anti-value.

    And as Warren shows, in this particular case, the principle is still true. They are looting the taxpayers of Wisconsin in order to provide something few people want at a price higher than any alternative.

    My point is: what other result could subsidized rail have??

  • SunSword

    Not all rail is equal. There are some (very few) places in the USA where rail is economical. For example, in the Chicago 6 county metro, the METRA system runs about 80 million passenger trips with an expense of $400M (annually.) That works out to about 5 bucks per trip. Considering that pulls those 80 million trips off the Chicago road system, that is a pretty good deal.

    Why does it work? Because Chicago has a true "hub and spoke" rail system. All those suburbanites ride the rail down the spokes to and from the hub -- downtown Chicago. (There is a small amount of inter-suburb and reverse commuting, but not enough to mean much.)

    The Chicago metro is one of the few places where rail transport works, and works pretty well.

  • Dan

    As a suburban Chicago commuter, I want to back up SunSword's fine post. The system works great, and it keeps cars off the road. If you are a person who commutes on a highway to work, think twice before bashing the idea of commuter railroads, because without them, your commute would be a lot worse.

    Also, I think commuter rail may seem to some like an expensive and unlikely notion for cities like Milwaukee. But realize that all it would be doing is re-creating a system of electric railroads that 100 years ago did a great job moving people around many cities in the days before everyone had a personal automobile. Now, you can joke about the cost to taxpayers of paying for a commuter rail system, but it's no joke to taxpayers how much it costs to buy and maintain an automobile - thousands of dollars a year. And the pollution and energy use of hundreds of millions of cars is beginning to make the nation less liveable and, with energy supplies becoming depleted, less economically realistic in the years to come.

  • Bearster

    Thank you Sunsword for making my point. The standard for rails is not value, obviously, but "pulling trips off the road system." Dan confirms that it is about "keep[ing] cars off the road".

    Well, I have to admit I was completely wrong, and my argument completely fallacious. Compared to pulling trips and keeping cars off the roads, of what relevancy is mere value?!?

    No cost is too high for me to bear to keep your trips and cars off the roads!

    P.S. The beneficiary of any subsidy will always come forward and try to defend it. The bottom line is that it isn't rationally defensible--that's why they need the gun.

    P.P.S. For bonus points, spot their implied zero-sum view in that "the roads" are a static quantity and that even hundreds of millions of dollars could not build more roads.

  • http://space4commerce.blogspot.com/ Brian

    If you are a person who commutes on a highway to work, think twice before bashing the idea of commuter railroads, because without them, your commute would be a lot worse.

    This is probably true for Chicago. It is less true for other places.

    Now, you can joke about the cost to taxpayers of paying for a commuter rail system, but it's no joke to taxpayers how much it costs to buy and maintain an automobile - thousands of dollars a year.

    I have no problem if the taxpayers in the areas want to pay for a railroad. My problem - as a guy who lives in Wisconsin - is that the state is going to subsidize at least part of the operating cost for the system.

    I've lived here for going on six years - I've never even _been_ to Racine or Kenosha. I drive through Milwaukee more often than I go there.

    Why should a guy who lives a few hours from the place, and rarely goes there, pay for their transportation system?

  • Dan

    OK, Brian - but using your argument, I could also could say that as a guy who almost never travels to Wisconsin, why should I subsidize the roads for that state (as I do by paying federal taxes for highway construction)? Why do roads get a pass while rail is held up as an easy target when people talk about waste of taxpayer money?

    Conceivably, a lot of the goods I buy come through Wisconsin on trucks that use those roads, which would justify my having to pay taxes for them (although the interstates were originally designed with civil defense in mind). But if I could prove that few or none of the goods and services I use are dependent on Wisconsin roads being in good shape, couldn't I argue that there's no reason for me to pay for those roads?

    If we did succeed in building numerous copies of Chicago's Metra system around the U.S. in different cities, and those rail systems resulted in keeping many cars off the roads (saving wear and tear and also making trucking faster and more economical) as well as in less energy use, lowering gasoline costs for everyone, isn't that something we should all feel comfortable paying for?

  • TC

    There is a massive difference between adding a rail system to an area that has been built around roads vs maintaining and expanding an area that has been built around rails.

    Salt Lake City added one a few years ago, but it seems that it's one very thirsty, (for money), item. Even though ridership seems to be pretty good, I don't think it has effected traffic all that much. That is really a SWAG as I only go there about once a year. But SLC continues to grow and sprawl across the Wasatch front so one might have to consider more people to move each day.

  • basher20

    I grew up and lived my early adult life in that area. I can state state with all confidence that the routes chosen do a very good job of connecting places where people don't live to places people don't want to go.

    Most of the growth in the Milwaukee area is happening north and west of the city. The only purpose I can see to this system is to increase the rate of change of the former industrial cities of Racine and Kenosha into bedroom communities for Milwaukee and Chicago.

    In short, it's a propsal to use 21st century money to provide a 20th century solution to a 19th century problem.

  • http://space4commerce.blogspot.com/ Brian

    But if I could prove that few or none of the goods and services I use are dependent on Wisconsin roads being in good shape, couldn't I argue that there's no reason for me to pay for those roads?

    Go right ahead. Heck, draft a law cutting off federal funding for highways - I'm with you. The more private tollroads we have, the better.

    If we did succeed in building numerous copies of Chicago's Metra system around the U.S. in different cities,

    Going by what your fellow Chicagoan, sunsword, said, you can't duplicate the success that Chicago in other areas. They're not Chicago and won't work on a hub-and-spoke system.

  • Bob Smith

    I would argue that far from being why rail is successful, hub and spoke is one of the things that makes rail bad. Few trips in the Chicago metro area are likely to have Chicago in between their beginning and ending points. Hub and spoke guarantees trips are both unnecessarily long in duration (wasteful trip to center of city and back) and maximally congested (everybody is going the same place at the same time). Unless you specifically have to go downtown, hub and spoke systems are awful.

    Many cities have designed their freeways like that, in an effort to privilege downtown at the expense of the suburbs. Free movement from suburb to suburb means many people will rationally decide to avoid urban downtowns entirely, something which smart growthers hate, as do city managers, since that means taxes are going elsewhere and their city is reduced in relevance and prestige. Thus old, powerful urban areas have a big incentive to resist and sabotage transportation plans that move goods and people around them rather than through them.

  • SunSword

    Sorry Bob Smith but your assertion that "Few trips in the Chicago metro area are likely to have Chicago in between their beginning and ending points" is both just an assumption on your part -- and also poorly defined. Yes, almost certainly the majority of travel in the Chicago metro is not between downtown and elsewhere, it is inter-suburban. BUT a lot of travel IS between downtown and the suburbs during rush hour. That is because there are still a huge number of jobs downtown. That is why there are all those office skyscrapers -- they are full of jobs.

    Chicago has an advantage in that it is a rail hub for the country. Rail freight runs through Chicago between East and West. So there is already a need for a rail infrastructure. And yes that freight does run on the Metra tracks too. So Chicago didn't need to build rail just for passenger traffic.

    The advantages of passenger commuting by rail in the Chicago metro are many:
    (1) Don't need to pay $20/day to park in the Loop.
    (2) Each rail passenger is one less person clogging the road net during rush hour. Chicago metro rush hour is one of the worst in the country -- it can take 60 to 90 minutes to travel 30 miles. Dump that extra 100,000+ people per day on the roads and you would see multi-county gridlock.
    (3) It is pretty cheap. It IS subsidized but doesn't need to be. I pay less than $150/month for monthly ticket plus parking. But if I drove my monthly costs would run north of $600/month for parking, gas, tolls, and auto maintenance. So I would pay more for the train -- happily.

  • http://highwayx.wordpress.com Highway

    The reason that rail transit in places like Chicago, NYC, Boston, and Washington DC works as well as it does is because there are just so many trips being made anyway. It doesn't matter if a majority of trips are made from suburb to Central Business District. It just matters that enough to fill up the trains are. And in those major cities, where 'rush hour' is now from 5 AM to 8 PM, there's more than enough people willing to take rail.

    But that has absolutely no bearing on any other city. You might say that, as Sunsword and Dan have argued, the rail pulled cars off the road. But that's because there was a lot of pressure on the road. And in places where there isn't that pressure, like nearly everywhere else, the effect of rail is going to be much less beneficial. If someone can adjust their commute by 15 minutes and see a big reduction in traffic (like in most places) then that's a lot easier than driving to rail, changing modes, and then doing the same on the way out.

    There's no Rails of Dreams. It's not a case of 'if you build it they will come'. In some places, if you build it, people will see it's better than the alternative. But in most places, it won't be. And those are the boondoggles, an almost cargo cult mentality of 'big successful cities have rail mass transit, if we make a rail mass transit system, we'll be a big successful city.' Places like where I live in Baltimore, with a heavy rail system that fills up the parking lots yet is still empty for 9 out of 14 hours of operation per day.

  • MJ

    Comparing the Milwaukee proposal to Chicago's Metra system is not entirely reasonable. Research has shown that the most important determinant of urban rail demand, particularly commuter rail, is CBD employment. Chicago is in this respect unusual for a Midwestern city. It has a very large CBD employment base (I believe somewhere around 1 million, but need to confirm). In terms of CBD employment, it is much more like the older, northeastern cities (e.g. New York, Boston).

    Other Midwest cities do not have this advantage, including cities like St. Louis, Milwaukee and my native Minneapolis. The difference is striking. In the Minneapolis-St. Paul region, we will soon see the opening of the Northstar commuter rail line linking the Minneapolis CBD to the northwestern suburbs. Minneapolis has a much smaller downtown employment level, somewhere in the range of 140,000 to 150,000. This is reflected in the poor ridership numbers forecast for the service. The latest forecasts estimate between 5,200 and 5,900 boardings per day, even less than the Milwaukee proposal (despite costing more: $320 million). Worse yet, many of these boardings will simply be former bus riders from eliminated or drastically reduced express bus service. I predict that the impact on traffic will be nil. I also estimated the total subsidy per boarding to be around $18.

    In debates about rail transit subsidies are a major issue. Rail proponents get defensive when the large per-rider subsidies are mentioned. They often respond that public transit systems should not have to be profitable, after all highway networks aren't, right? Leaving aside the problems with public ownership and finance of roads, I agree tentatively that profitability need not be the end result. Yet the further a project diverts from profitability, the less likely it is to yield net social benefits, since most benefits derive from actual use. This is also the case with most new rail systems, since they are often sold in terms of benefits of avoided auto use.

    A good way around this is subject projects to standard benefit-cost analysis. Yet this is no guarantee that a sound decision will result. If the results are unflattering, public officials are usually able to ignore them and continue on, as in the case of Minneapolis' Hiawatha light rail line (B/C ratio: 0.42). Or, as in the case of the Northstar Line, they can continue to fudge the numbers until they get something they are comfortable with. To the best of my knowledge, Northstar has been subject to three separate B/C analyses. The first two came in well below 1. The third, using some questionable methods and assumptions that ranged from unconventional to fraudulent, ended up at 1.15. One of major differences was that the third evaluation added benefits for improved highway speeds, with increases of up to 8 mph by 2020. Needless to say, none of this will come to pass.

    The moral of the story is that in cities where the CBD is no longer primal in terms of regional employment, efforts to build fixed rail systems will be essentially useless. Also, because of their low demand, their effects on issues like energy consumption, pollution and climate change will be negligible. If you choose to believe that peak oil will be a catastrophic event for the U.S., suit yourself; but whether we have fixed rail systems or not will probably be immaterial.

  • Dan

    MJ,

    Thanks for a very well thought-out analysis.

    However, I happen to think we're in big trouble as far as oil supplies, and if a major oil crunch comes, light rail will be more useful in many cities than it is today.

  • Mr. Kelly

    So far, to date. Oil crunches are a self imposed problem caused by government mandates, taxes, and restrictions on refining and development. Mainly caused by the policies of light rail supporters (Not so much because of the light rail, but other policies those people support). Such as Ethanol, wind energy mandates, bans on nuclear power development, restrictions on increasing refinery capacity, carbon type taxes, CAFE standards, etc.
    When you mess with supply and demand like that, the only possible result is high energy prices. Duh!!!
    Only we feel the pain now, rather than later.

    It's the only way to force toy trains on people that otherwise wouldn't want to pay for them. Force the above mentioned government mandates, and you artificially create a crisis. People are only willing to fund something this big, if there is a crisis. If energy prices were low like they would be in a free supply and demand society. We wouldn't be wasting our money on these trains. Instead, we would be spending it on alternatives that actually show promise
    .