June 16, 2008

Get on the Bus: Recent Changes Demand New Tax Policies for Public Transportation

Posted at 6:06 PM by Stephen Jackson

Rising gas prices, the now evident dangers of greenhouse gas emission, and high rates of population growth have fundamentally tilted the transportation equation in the last few years towards public transportation.

Rising gas prices are driving a new demand for public transportation. Gas prices have increased 35% in North Carolina, on average, in the last 6 months, and have tripled since June 2003, unadjusted for inflation. Not surprisingly, estimates of the vehicle miles driven in North Carolina show a 6.3% decline from March 2007 to March 2008. The number of riders on the new Charlotte LNYX light rail line exceeded projections by over 40% through April 2008 and is expected to reach 2025 projections by 2015. Bus rider numbers in Charlotte rose 7% in April of this year alone. April 2008 riders on the Triangle Transit Authority bus system is up 20.5% on April 2007 figures.

The dangers of global warming have made imperative a new emphasis on public transportation. A 20 mile round trip commute using public transportation every working day cuts a household's greenhouse gas emissions, on average, by 10%.

Growing population will drive increasing demand for public transportation. The population of North Carolina will increase by 50% in the next 25 years resulting in more congested roads absent public transportation options. Between 2000 and 2030, the number of adults aged over 65 is expected to more than double to over 2.1 million. This growing fixed income population, many of whom will have a limited or no capacity to drive a vehicle, will rely on public transportation. Add in the 7% of households who do not have access to a vehicle and the imperative to act is clear: Do we want to see up to 15% of our population essentially trapped in their homes?

Meeting the demand for public transportation and preparing for its future growth is the prudent policy choice. Two initiatives are required. First, it is time to create a dedicated revenue stream for public transportation at the state level. Second, the General Assembly should grant local government greater freedom to raise revenue for public transportation as they see fit. This should go beyond allowing counties to impose sales taxes dedicated to public transportation.

Public transportation should have revenue sources that are appropriate for its central role in our transportation policy. The sources need to be stable, providing predictable amounts of money in the short to medium term, and they need to be balanced, taxing appropriate activities and having long-term viability. Sales taxes fall short on both criteria.

Sales tax revenue is not stable. During economic downturns, times when more people use public transportation, sales tax revenue declines. Sales tax is an unbalanced revenue source. The tax applies to goods only, not services. North Carolina is already a service-driven economy. It will only become more so. Hence the sales tax revenue base will decline over the long-term, with negative consequences for public transportation. Revenue for public transportation should come from all those who benefit from it – potential riders, developers and business alike. Sales taxes fall harder on low-income households. Should business and developers get a free ride?

Sources exist that are more reliable and balanced than sales taxes: property taxes, business taxes, developer impact fees and fees tied to vehicle registration and use. These should be preferred to sales taxes. Where necessary, local governments should be given expanded taxation authority to cover all these options, if only for the purpose of funding public transportation activities.

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1 Comment

1 Comment Add yours »

Kevin 16 Jun 2008 8:59 pm

Telecommuting needs to grow as well: reduces traffic congestion, demand for gasoline, improves air quality, and yes the workers save. The technology is there for many jobs to be done through access to computer and telephone systems, with no requirement that workers be in a certain physical location.
There must be a way government can push this along.

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