Public Interest Transit Forum:

Lead Story Number Five:

Where will Puget Sound citizens find all the money needed for regional and local transportation?

by the Forum Editors

The RTA Plan is the main act in the much larger drama of competing transportation needs and scarce revenues. On stage is the fundamental question about the RTA Plan: how will we residents of the central Puget Sound Region pay for other transportation priorities -- from fixing the roads to improving non-motorized travel to providing incentives to use existing transit -- if we spend large sums on rail transit that serves a very limited number of travelers, most of whom already ride a bus?

This is the unwritten but very real question the voters will be deciding on November 5, and the answer is problematic, as will be described in this story. The question arises because of the unique way that we divide public responsibility for transportation among state, regional, and local governments. Each government independently identifies needs and then seeks the revenue to carry out its proposal. The public is rarely given a peek at the total transportation budget, which would be the best basis for allocating scarce resources among the various competing government proposals to meet transportation needs.

Transportation, getting from A to B by way of C, is a big part of our lives and cost of living. Plans under consideration by state, regional, and local governments could make transportation an even bigger part of our family budgets and tax burdens.

The high private costs of transportation, including taxes

On average, personal mobility absorbs 20 percent of our income. For the Puget Sound region, that translates to about $10 billion per year for the purchase, maintenance, and repair of private vehicles, and the fuel to make them go, and to provide the public’s share of the transportation system -- the roads, bridges and transit service.

Puget Sound citizens pay annually about $1.5 billion in taxes to federal, state and local governments that directly or indirectly support the surface transportation system. Contrary to statements by some state transportation officials, the major state transportation taxes (gas tax and MVET) when added together have kept pace with population growth and inflation. Click here to see an analysis of State Transportation Tax Trends.

But that does not mean that revenues actually available to transportation have kept pace with growth and inflation. Unlike the gas tax, the MVET is a non-earmarked tax that can be allocated to the general purposes of state government. The legislature has found other priorities for the MVET, tapping it for a number of non-transportation purposes. In the 1993-95 biennium, 31% of MVET revenues ($368 million) went into the state’s general fund.

The State Transportation Plan: Major Funding Shortfall for Growing Urban Areas

The State Transportation Commission, in its recently completed 20-year plan (Washington’s Transportation Plan 1997-2016), identified $104 billion in total needs. Included in the list were state highways, county roads, city streets, ferries, transit, inter city passenger rail, freight rail, and non-motorized -- pedestrian and bicycle -- facilities. Current taxes and rates would cover only $46 billion, not enough even to pay for the repair and replacement of current facilities.

Recognizing that enacting sufficient new taxes to meet all needs is politically unrealistic, the Commission scaled back its plan to a “target” level of $57 billion, exclusive of city streets and county roads, for which targets were not established. Part would be funded by the state, and part by federal and local governments, including transit agencies. Of the state’s $24 billion share, $14 billion would be covered by current revenue sources, leaving an $8 billion shortfall (in 1995 dollars) to be made up from new tax revenue. Most of this would go to fix freeways and state highways that are aging and rapidly deteriorating, and to increase the capacity of these freeways and highways in growing urban areas. The central Puget Sound region, with two-thirds of the state's population, has the lion's share of these needs and would feel the greatest impact if the shortfall is not remedied.

Not included in this shortfall are the increased costs of meeting mobility needs for city streets, county roads, and local public transit in the growing suburban areas of the region. The state estimates these needs total $35 billion. These are costs that the state has shared with local government in the past.

Clearly, a major increase in the state gas tax, and perhaps the MVET, is needed to meet the target level for just state highway improvements and repairs in the Puget Sound region. The state gas tax of 23 cents per gallon provided $330 million in 1995 for state transportation programs, including the ferry system. Had the gas tax been raised by 10 cents in 1996, it would have generated approximately $3.5 billion by 2017.

The amount of additional state transportation revenues that can be expected in the next 20 years is difficult to predict. It is highly dependent on political and economic circumstances. It obviously depends on the timing of tax increases and whether the gas tax, as some have advocated, is indexed to inflation.

Over the last three decades, the highest single increase in the gas tax was 6 cents. It was a phased increase in two increments, 4 cents in 1983 and 2 cents in 1984. In 1996 the legislature failed in an attempt to place a 5 cent increase on the ballot for voter approval. If history is a lesson, the legislature can be expected to raise the gas tax in small increments over the next 20 years. The Transportation Commission has estimated that this would generate an additional $15 billion, considerably short of the $38 billion total if the state “target” and city and county need levels are to be met.

Recent public surveys taken by the state give further information about the willingness of the public to pay increased transportation taxes. Eighty percent of respondents preferred a tax increase of 5 cents or less.

Government’s strategy to meet the shortfall and improve urban mobility: Build high capacity transit and manage demand. Will it work?

The state plan, with the concurrence of the Puget Sound Regional Council, assumes that expanding the roadway system will be the last resort to improve mobility within congested urban corridors in the Puget Sound region. The first choices are transportation demand management (TDM) which encourages people to take transit, carpool, or bike, managing the roadway system so that it operates more efficiently through transportation systems management (TSM), and land use alternatives that reduce auto travel. It also assumes that some form of high capacity transit, either commuter buses or rail, will be in operation in the region.

As we have indicated in another lead story, land use alternatives and high capacity transit alone have little impact on congestion. TDM -- principally financial incentives and disincentives to encourage use of transit and carpooling for commute trips -- and TSM -- including ramp metering, changeable electronic traffic signs, better traffic reports, and other transportation information technology -- can have an important impact if well designed and targeted to specific transportation markets.

TDM and TSM are important strategies for reducing congestion, but these strategies have significant costs that are not acknowledged in state or regional plans. Nelson and Shakow in their cost effective strategy alternative estimated that $700 million could be effectively spent over 10 years in the form of a tax credit to employers who give transportation allowances to employees if they shift from single-occupant vehicles to buses or other alternative modes for the commute trip. Previously, the Puget Sound Council of Governments (now the Puget Sound Regional Council) in the regional plan, Vision 2020, indicated that $3.5 billion should be spent on TDM.

The bottom line? There isn't enough money to build highly capital intensive rail systems and also fund the incentives and traveler information systems that will actually produce new transit riders. There may not be enough money to improve local roads in growing suburban areas of the region. Whatever tax capacity is available for regional transportation should be used as cost-effectively as possible. The RTA Plan fails that test.



A new document produced by planners at the Puget Sound Regional Council corroborates previous state estimates that the Puget Sound region faces a major gap between available revenue and funds needed to keep up with growing demand for roads and bus service.

The PSRC’s Regional Six-Year Action Strategy indicates that expected public revenue for transportation over the next six years is only 45 percent of what is needed to make near-term improvements in our public transportation system. The shortfall is $9.5 billion, while revenues from existing sources total $8.5 billion. This is about enough to maintain and operate the existing system. Even if adjusted for the revenue in the RTA Plan, $3.9 billion, the gap is still $5.6 billion.

What the planners are saying is that we need to buy another RTA and one-half in the next six years!

Per capita revenues from the three major tax sources, the gas tax, MVET and registration fees, have remained virtually constant (actually climbed a little) over the last 20 years, with some ups and downs. The problem is not the level of transportation taxes but their allocation by the legislature. The MVET, which is not earmarked for transportation, has been used for other state priorities like education, health care, and prisons.

Clearly, the region has a serious predicament: where will it find all the new money just to keep up with growing population and transportation demand, given the public’s demonstrated unwillingness and inability to pay significantly higher taxes, and given the many competing needs? The RTA Plan does not answer that question.

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Last modified: February 07, 2011