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Transit Bill Hearing Postponed – Outlook Perhaps Cloudy

The Senate Finance hearing of H 148, the Transit bill, has been postponed until Wednesday 1 pm, LOB 544. There are reasonable doubts as to whether it will be heard at that time.

Latest intel and whispers suggest that amendments may be offered in the Senate Finance Committee that, if passed, will change the bill that passed the House by a large margin (77-40) in fairly significant ways. More time behind the scenes may be needed to iron out differences. S 910, solely sponsored by Senate Finance Chair Dan Clodfelter, may offer some clues as to the desired direction by some Senate members, as does previous information on the bill outlined here.

Roads and Public Transportation

The point of departure for S 910 is the co-mingling of dedicated local revenue for both public transportation and highway projects. This co-mingling, to this point, has not only been resisted by public transportation advocates for H 148 but also advocates for more funding for highways.

Local Government Cooperation

The bill mandates that at least two local governments must cooperate in order to levy dedicated taxes to fund a list of transportation projects capable of completion within seven years. That list must include public transportation (at least 35% of funds) and road projects (remainder). The tax authority sunsets after seven years or the completion of the final project. The seven year list and sunset provision looks borrowed from SC law.

Changing MPO boundaries

S. 910 mandates that urban local governments wanting access to new funding for public transportation or local road projects align their relevant MPO’s (Metro Planning Organizations – urban transportation planning boards responsible for long range plans under Federal law) to their federal EPA (air quality) boundaries. Currently, MPO boundaries may be changed if the affected counties, municipalities and the Governor agree.

This would align long-term urban transportation planning with air quality conservation and promotion. At present, they are hopelessly out of whack.

This goal is desirable, but it is not the only important one for transportation planning. Access to mobility for people of all incomes – access to transportation choices to get people to jobs and services -must be another. In an era of improving vehicle emissions control, limiting sprawl must also be another. The relationship between sprawl and air quality degradation may be changing. Slowing sprawl under strict CAFE standards and a cap and trade regulatory regime may be emerging as a separate albeit related process from improving air quality.

It should be noted that under S 910 cooperating local governments not in MPO’s must fall within an EPA boundary. Local governments outside EPA boundaries don’t appear to be eligible for access to new funding.

The Taxes

All participating local governments must levy similar taxes, or the scheme fails. The tax authority granted to eligible local governments includes a 5 cent local gas tax and a half cent sales tax. Cooperating governments must therefore all levy the gas tax, the sales tax, or both. No referenda are required. Counties may use any other lawful source of revenue to fund the projects, including property tax revenue. Administration costs cannot be covered by sales or gas tax revenue.

Restrictions

Road projects are bounded by restrictions: they must be consistent with MPO plans, they must promote EPA air quality attainment standards, and they must promote connectivity. Public transportation projects must reduce congestion and improve regional air quality.

Some Problems with S 910

While the goal of aligning MPOs and EPA districts is laudable and desirable and should be promoted in any amendments to H 148 if possible, the bill draft has serious problems that come to top-of-mind:

First, by restricting the criteria by which local money for public transportation may be expended, S 910 may reduce the likelihood of projects being started. If the local option referenda route is not taken by legislators (as in H 148), then the eligibility criteria should be more open-ended and allow projects that promote one or more goals, including but not limited to: improving access to jobs and services for those who do not have good mobility options, air quality improvement, or the reduction of congestion. The narrow criteria of S 910 (must reduce congestion and improve air quality) provides a legal avenue to thwart and delay projects that may have the broad support of the population.

Second, the bill takes the decision to invest in public transportation away from the people. The public transportation referendum process has a strong track record in recent years all over the country. It promotes public transparency – people will vote yes if they know what the project is, like what they see and are willing to pay for it. The same can be said of the 1% local sales tax referenda for highway projects in SC (although there may be other reasons not to like that method of funding – see below). The S 910 process is far more opaque by comparison and relies on compliance with what can fairly be described as a labyrinthine set of federal air quality regulations and an unknown set of congestion measures.

Third, the bill allows the use of sales taxes for roads. The Justice Center opposes the use of sales taxes for roads. The regressive nature of sales taxes, the fact that up to 7% of households do not have vehicles, that many retirees do not drive much at all bolsters the conclusion that the move away from a user pays system (gas taxes and vehicle sales taxes) to a general sales tax to fund roads is a backwards step, divorcing road use and demand from revenue generation. Compared to gas taxes and property taxation, sales tax revenue is also volatile and may lead to the underfunding of projects.

Fourth, S. 910 makes no provision for the funding of transportation projects by local non-government entities such as the Research Triangle Park. RTP and RTP corporations agreed to an expansion of their self taxing capacity by 10 cent/$100 property value to be spent on public transportation in H 148. That means that one of the big beneficiaries of expanded regional public transportation in the Triangle – companies in the RTP – will be able to contribute to that network under H 148. That seems reasonable and fair.

Finally, S 910 makes no provision for the provision or planning by local governments for the provision of a decent stock of affordable housing near transit hubs. Public transportation, especially around hubs and stations, substantially increases land values. Low-income neighborhoods are transformed by public transportation, especially rail, and low-income families are usually forced to leave by rising rents. H 148 directed local governments to plan for this eventuality and draft a plan to preserve a reasonable amount of affordable housing near transit facilities. This promotion of access to mobility is absent from S 910.

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